COMMISSIONER OF INCOME TAX Vs. ADITYA MILLS

JUDGEMENT

(1.) THIS reference has been made at the instance of the Revenue under S. 156 of the INCOME TAX ACT, 1961 (hereinafter referred to as "the Act"), wherein the following question has been referred for consideration of this Court:

(2.) THIS reference relates to the asst. year 1974 -75. The authorised capital of the assessee was Rs. 100 lakhs which was increased to Rs. 150 lakhs and, for that purpose, the assessee had to get the memorandum and articles of association amended and a sum of Rs. 7,500 was paid by the assessee to the Registrar of Companies, Jaipur, as filing fee for the said amendment. The assessee claimed deduction of the said expenses as revenue expenditure. The ITO disallowed the said claim of the assessee and allowed only 1/10th of the said expenditure in view of S. 35D(1)(ii) of the Act. The CIT (A) held that the expenditure was not covered by S. 35D(1)(ii) of the Act and no part of this expenditure could be allowed as deduction. He disallowed the entire expenditure of Rs. 7,500. On further appeal, the Tribunal allowed the said deduction of expenditure in the view that the said expenditure was not an expenditure which was capital in nature but was a revenue expenditure. Thereupon, the Revenue moved the Tribunal for referring the above question before this Court and the Tribunal has referred the question for consideration of this Court.

(3.) THE question as to whether the amount deposited with the Registrar in connection with the amendment of the memorandum and articles of association in relation to increase of the capital has come up for consideration before various High Courts and the view is consistent that the said expenditure is capital expenditure and not revenue expenditure and in this connection reference may be made to Mohan Meakin Breweries Ltd. vs. CIT (No.2) (1979) 117 ITR 505 (HP) ; Bharat Carbon and Ribbon Manufacturing Co. Ltd. vs. CIT (1981) 127 ITR 239 (Del), Bombay Burmah Trading Corporation Ltd. vs. CIT (1983) 32 CTR (Bom) 306 : (1984) 145 ITR 793 (Bom) and Groz - Beckert Saboo Ltd. vs. CIT (1986) 54 CTR (P&H) 221 : (1986) 160 ITR 743 (P&H).