INCOME TAX ACT, 1961

Section 35D

Business deduction under section 35D - Expenses incurred for the purpose of increasing authorised and paid up share capital in connection with expansion/setup of undertaking - -

Assessee incurred Rs. 5 lakhs for the purpose of increasing authorised and paid up share capital. According to AO, expenses were of capital in nature and accordingly not allowable as deductible. Held: A perusal of the audited accounts of assessee clearly revealed that addition of Rs. 23 crores was made to fixed assets including land, factory and plant & machinery. AO had not disputed this and also allowed depreciation on the same. This act in itself proved that there had been expansion/setup of undertaking during the relevant period. With these undisputed facts, expenses incurred for the purpose of increasing authorised and paid up share capital were allowable as deductible.

REFERRED :

FAVOUR : in assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 14A(2)

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