POYSHA INDUSTRIAL CO LTD Vs. INCOME TAX OFFICER
LAWS(IT)-1982-7-23
INCOME TAX APPELLATE TRIBUNAL
Decided on July 08,1982

Appellant
VERSUS
Respondents

JUDGEMENT

S.N. Rotho, Accountant Member - (1.) THESE two appeals, one filed by the assessee and the other filed by the department are heard together and disposed of by this common order for the sake of convenience.
(2.) The assessee is a company deriving income from business in the manufacture and sale of tin containers. The assessment year involved in this appeal is 1976-77 with the year ended 31-3-1976 as the relevant previous year. We first take up the assessee's appeal. The first ground in this appeal states that the claim of the assessee to deduct a sum of Rs. 45,000 while computing its business income, should have been allowed. This sum had been spent by the assessee as fees paid to the Registrar of Companies in connection with the increase of its authorised capital from Rs. 2 crores to Rs. 5 crores. The assessee claimed before the ITO that this expense of Rs. 45,000 should have been allowed as revenue expense. The ITO did not agree and disallowed the same on the ground that it was capital expense. The ITO relied on the decision of the Supreme Court in the case of India Cements Ltd. v. CIT [1966] 60 ITR 52. The assessee appealed to the Commissioner (Appeals) and contended that its claim should have been accepted. The Commissioner (Appeals) did not agree. Relying on the decisions in the cases of Upper Doab Sugar Mills Ltd. v. CIT [1979] 116 ITR 928 (All.) and Mohan Meakin Breweries Ltd. v. CIT [1979] 117 ITR 505 (HP), he held that the expenditure under consideration has been rightly disallowed as capital expenditure.
(3.) SHRI B.N. Pardiwalla, the learned representative for the assessee, urged before us that the claim of the assessee should have been allowed. He relied on the decision in the case of CIT v. Modi Spinning & Weaving Mills Co. Ltd. [1973] 89 ITR 304 (AIL), wherein amount paid to a lawyer for advising a company on amendments in the articles of association, in order to bring them into accord with the changes in the law, has been held to be allowable expenditure under Section 10(2)(xv) of the 1922 Act. He also referred to the decision in the case of CIT v. Elphinstone Spinning & Weaving Mills Co. Ltd. [1975] 100 ITR 139 (Bom.), wherein the amount spent by a company for making alterations in its memorandum and articles of association, in order to bring them into accord with the changes in the law relating to companies, has been held to be expenditure incurred solely and exclusively for the purpose of business. Further, he referred to the decision in the case of CIT v. Kisenchand Chellaram (India) (P.) Ltd. [1981] 130 ITR 385 (Mad.), wherein fee paid to the Registrar of Companies for increasing the capital of the company, has been held to be an allowable deduction. Finally, he referred to the decision dated 26-5-1930 of the Tribunal in IT Appeal No. 168 (Jp.) of 1979, wherein it has been held that fee paid to the Registrar of Companies for raising capital is an allowable revenue expenditure.;


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