Astron Paper & Board Mill Limited, Ahmedabad V. The Income Tax Officer, Ward-1(1)(4), Ahmedabad

ITA 1657/AHD/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1816 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 11-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (VIRTUAL COURT) BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDIC IAL MEMBER ASTRON PAPER & BOARD MILL LTD. D-702, 7 TH FLOOR, GANESH MERIDIAN, OPP. GUJARAT HIGH COURT, S.G. HIGHWAY, AHMEDABAD PAN: AAJCA0517E (APPELLANT) VS THE ITO, WARD-1(1)(4), AHMEDABAD (RESPONDENT) REVENUE BY: SHRI R.R. MAKWANA, SR. D.R. ASSESSEE BY: SHRI S.N. SHAH, A.R. DATE OF HEARING : 12-01-2021 DATE OF PRONOUNCEMENT : 19-02-202 1 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2015-16, ARISES FRO M ORDER OF THE CIT(A)-1, AHMEDABAD DATED 18-05-2018, IN PROCEEDIN GS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPE AL:- 1. THE HO'NABLE CIT-A-1 WITHOUT CONSIDERING THE PR OVISIONS OF SECTION 35D, NATURE OF EXPENDITURE INCURRED, FACTS OF THE CASE AND JUDICIA L PRONOUNCEMENT IN THIS REGARD WRONGLY CONFIRMED THE DISALLOWANCE OF RS. 4,58,900/- BEING L/5 TH OF EXPENSES INCURRED ON INCREASE OF AUTHORIZED SHARE CAPITAL OF THE COMPANY AND HENCE T HE SAME ADDITION TO TOTAL INCOME BE DELETED NOW. ITA NO. 1657 /AHD/2018 ASSESSMENT YEAR 2015-16 I.T.A NO. 1657/AHD/2018 A.Y. 2015-16 PAGE NO ASTRON PAPER & BOARD MILL LTD. VS. ITO 2 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLA RING INCOME OF RS. NIL WAS FILED ON 30 TH MARCH, 2016. THE CASE WAS SUBJECT TO SCRUTINY ASS ESSMENT AND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 28 TH JULY, 2016. DURING THE COURSE OF ASSESSMENT ON EXAMINATION OF P & L A/C, T HE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED PRELIMINARY EXPEN SES AS WRITTEN OFF TO THE AMOUNT OF RS. 4,58,900/-. ON PERUSAL OF THE DETAIL OF EXPENDITURE, THE ASSESSING OFFICER OBSERVED THAT THE EXPENSES CLAIME D WERE IN RELATION TO INCREASE OF AUTHORIZED SHARE CAPITAL OF THE ASSESSS EES COMPANY AND HE WAS OF THE VIEW THAT EXPENSES INCURRED FOR INCREASE IN AUTHORIZED SHARE CAPITAL WAS NOT AN ALLOWABLE EXPENSES EVEN U/S. 35D OF THE ACT. THEREFORE, CLAIM OF EXPENSES AMOUNTING TO RS. 4,58,900/- CLAIMED AS PRE LIMINARY EXPENSES WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. 4. THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE LD . CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, THE LD. COUNSEL BROUGHT TO OUR NOTICE THAT CO-ORDINATE BENCH OF THE ITAT HAS ADJUDICATED THE SIMILAR ISSUE ON IDENTICAL FACTS IN FAVOUR OF T HE ASSESSEE VIDE ITA NO. 523/AHD/2017 FOR ASSESSMENT YEAR 2013-14 ON 31 ST MAY, 2018. THE LD. DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH NOT TO C ONTROVERT THESE UNDISPUTED FACT THAT THE ISSUE IN THE APPEAL IS CO VERED BY THE DECISION OF CO- ORDINATE BENCH OF THE ITAT AS CITED BY THE LD. COUN SEL. 6. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE H AVE GONE THROUGH THE DECISION OF THE CO-ORDINATE BENCH OF THE ITAT IN TH E CASE OF THE ASSESSEE I.T.A NO. 1657/AHD/2018 A.Y. 2015-16 PAGE NO ASTRON PAPER & BOARD MILL LTD. VS. ITO 3 ITSELF ADJUDICATED VIDE ITA NO. 523/AHD/2017 ON 31 ST MAY, 2018. THE RELEVANT PART OF THE DECISION DISCUSSED IN THE ABOV E CITED DECISION IS AS UNDER:- 12. WE HAVE GONE THROUGH THE RELEVANT RECORD IN TH E IMPUGNED ORDER. THE APPELLANT HAD BEEN ENGAGED IN THE BUSINESS OF MANUFACTURING OF KRAFT P APER. AND APPELLANT BEFORE DIE COMMENCEMENT OF BUSINESS HAD INCURRED EXPENSES OF R S. 39,500/- IN CONNECTION WITH REGISTRATION OF COMPANY, MO A & AOA DRAFTING & PRINTING ETC. AND RS. 19,42,500/- IN CONNECTION REGISTRATION AND STAMP DUTY CHARGES FOR INCREASE IN THE AUTHORISED CAPITAL OF THE COMPANY FOR THE COMMENCEMENT OF THE PROJECT OF DIE COMPANY. AND APPELLANT HAD CLAIMED RS. 3,96,400/- BEING 1/5 OF DIE ABOVE EXPENSES UNDER SECTION 35D OF DIE INCOME TAX ACT. . 1. EXPENSES DEDUCTIBLE U/S. 35D ARC ANY EXPENDITURE INCURRED IN CONNECTION WITH 1. PREPARATION OF A FEASIBILITY REPORT. 2. PREPARATION OF A PROJECT REPORT. 3. CONDUCTING A MARKET SURVEY OR ANY OTHER SURVEY NECESSARY FOR THE BUSINESS OF THE ASSESSEE. 4. ENGINEERING SERVICES RELATING TO DIE BUSINESS OF DIE ASSESSEE. 2. LEGAL CHARGES FOR DRAFTING ANY AGREEMENT BETWE EN THE ASSESSEE AND ANY OTHER PERSON RELATING TO THE OR CONDUCT OF THE BUSINESS OF THE ASSESSEE. 3. WHERE THE ASSESSEE IS A COMPANY, ALSO, EXPENDI TURE: 1. BY WAY OF LEGAL CHARGES FOR DRAFTING THE MOA / A OA OR PRINTING OF MOA/AOA. 2. INCORPORATION FEE. 3. FOR ISSUE, FOR PUBLIC SUBSCRIPTION, OF SHARES IN OR DEBENTURES OF THE COMPANY, BEING UNDERWRITING COMMISSION, BROKERAGE AND CHARGES FOR DRAFTING, TYPING, PRINTING AND ADVERTISEMENT OF THE PROSPE 4. OTHER EXPENSES AS NOTIFIED BY THE GOVERNMENT F ROM TIME TO TIME. 13. AS WE CAN SEE, ABOVE SAID EXPENDITURE ARE INCO NSONANCE OF SECTION 35D NAD ARE ALLOWABLE AS PER INCOME TAX ACT. THEREFORE, WE DIRECT THE A.O. T O DELETE THE ADDITION OF RS. 3,88,500/-. 14. IN THE RESULT, THE APPEAL FILED BY THE APPELLAN T IS ALLOWED. IT IS CLEAR FROM THE FINDING OF THE DECISION OF CO- ORDINATE BENCH AS CITED ABOVE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE, THEREFORE, FOLLOWING THE DECISION OF CO-ORDINATE BENCH AS ABOV E, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19-02-2021 SD/- SD/- (MADHUMITA ROY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T.A NO. 1657/AHD/2018 A.Y. 2015-16 PAGE NO ASTRON PAPER & BOARD MILL LTD. VS. ITO 4 AHMEDABAD : DATED 19/02/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,