ROC fees paid for increase in authorised capital is capital expenditure- ITAT Hyderabad
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Case Details: |
Moldtek Packaging Limited vs. ACIT |
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Appeal No.: |
ITA No. 938/Hyd./2017 |
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Order pronounced by: |
ITAT Hyderabad |
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Date of Order: |
02-07-2021 |
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In Favour of: |
Revenue |
Source: www.itat.gov.in
Brief Facts:
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The Ld. A.O. disallowed the claim of the assessee under section 35D of the Income Tax Act in respect of the preliminary expenses incurred by it in form of ROC Fees. Such ROC fees were paid for an increase in capital which the A.O. held as a capital expenditure. The Ld. AR submitted that the assessee company has incurred expenditure is a revenue expenditure which was incurred in the increase in the capital of the company. |
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However, the Ld. DR relied upon the order of the authorities below. He submitted that in respect of ROC expenses, the Ld. CIT (A) has relied on the decision of Brookbond India Ltd. v. CIT (1997) 225 ITR 798 (SC): 1997 TaxPub (DT) 1116 (SC) is squarely applicable in the present case. Therefore, the A.O. has rightly treated it as a capital expenditure. |
Ruling of the Tribunal:
This issue has rightly been decided by the CIT (A) on relying on the judgement of Hon’ble Supreme Court in the case of Brookebond India Ltd. v. CIT (supra) and Punjab State Industrial Development Corporation v. CIT (1997) 225 ITR 792 (SC): 1997 TaxPub (DT) 0919 (SC) wherein it was held that the ROC expenses claimed in the income tax return as fees for enhancement of capital were not revenue expenditure. Therefore, this ground of the assessee cannot be allowed.
Disclaimer: The article is based on the ruling of Hon’ble ITAT Hyderabad and is meant for informative purposes only. Readers are requested to act diligently and under consultation with a professional before applying the information contained in this article.
