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

ITA 523/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8230 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 02-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH G JIWADE
• Assessee Lawyers: FIROJ G BODLA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI P. K. KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 523/AHD/2017 (ASSESSMENT YEAR: 2013-014) ASTRON PAPER & BOARD MILL LTD. D-702, 7 TH FLOOR, GANESH MERIDIAN, OPP. GUJARAT HIGH COURT, S.G. HIGHWAY, AHMEDABAD- 380054 V/S INCOME TAX OFFICER, WARD- 1(1) (4), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAJCA0517E APPELLANT BY : SHRI FIROJ G. BODLA, , AR RESPONDENT BY : SHRI MAHESH G. JIWADE, SR. D .R. ( )/ ORDER DATE OF HEARING : 31 -05-201 8 DATE OF PRONOUNCEMENT : 31 -05-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-1, AHMEDABAD DATED 21.12.2016 PERTAINING TO A.Y. 2013- 14 AND FOLLOWING GROUNDS HAVE BEEN TAKEN:. ITA NO. 523/ AHD/2017 . A.Y. 2013-1 4 2 1) THE HO'NABLE CIT-A-1 WITHOUT CONSIDERING THE PROVIS IONS OF SECTION 35D, NATURE OF EXPENDITURE INCURRED, FACTS OF THE CASE A ND JUDICIAL PRONOUNCEMENT IN THIS REGARD WRONGLY CONFIRMED THE DISALLOWANCE OF RS. 3, 88,500/- BEING 1/5 TH OF EXPENSES INCURRED ON INCREASE OF AUTHORIZED SHARE C APITAL OF THE COMPANY AND HENCE THE SAME ADDITION TO TOTAL INCOME BE DELETED NOW. 2) THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER , DELETE, CHANGE OR MODIFY ANY OR ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF THE HEAR ING. 2. THE FACTS OF THE CASE ARE THE APPELLANT COMPANY INI TIALLY COMMENCED PRODUCTION AND ACTIVITIES FROM 11.12.2012 FROM ITS FACTORY AT VILLAGE SUKHPAR, DIST: SURENDRANAGAR ON COMPLETION OF REQUIRED & MAC HINERIES, CONSTRUCTION OF FACTORY BUILDING AND OTHER REQUIRED FACILITIES AND LEGAL AND OTHER FORMALITIES. SO, THE APPELLANT HAD COMMENCED BUSINESS FROM THE A.Y, 2013-14, UNTIL, THEN THE PLANT/PROJECT WAS UNDER CONSTRUCTION/ACQUISITION. 3. THE APPELLANT COMPANY WAS INCORPORATED WITH THE CAP ITAL OF RS. 5,00,000/-, AT THE TIME OF INCORPORATION, THE APPELLANT COMPANY HA D PAID RS. 39.500/- IN CONNECTION WITH REGISTRATION OF COMPANY, MOA & AOA DRAFTING & PRINTING ETC. 4. THE APPELLANT COMPANY HAD INVESTED RS, 67.55 CRORES IN OF THE PROJECT/PLANT UPTO 31ST MARCH, 2013. 5. IN ORDER TO MEET THE REQUIREMENT OF FUNDS FOR THE C OMPLETION OF THE PROJECT, THE APPELLANT HAD BESIDES BANK LOANS AND OTHER OF F INANCE, RAISED FUNDS BY WAY ITA NO. 523/ AHD/2017 . A.Y. 2013-1 4 3 OF EQUITY SHARE CAPITAL BY INCREASING AUTHORIZED UP CAPITAL FROM RS. 5.00 LACS TO RS. 27.00 CRORES. 6. FOR THAT PURPOSE, APPELLANT HAD HAD INCURRED EXPEN SES OF RS, 19,42,500/- BY WAY OF MCA(ROC) FILLING FEES AND STAMP DUTY AS PER THE APPLICABLE PROVISIONS OF THE IN CONNECTION WITH THE RAISING OF AUTHORIZED SHARE CAPITAL FROM RS. 5.00 LACS TO RS, 27.00 CRORES BEFORE THE C OMMENCEMENT OF THE BUSINESS. 7. THE FORM 5 IS THE FORM PRESCRIBED BY THE MINISTRY O F CORPORATE AFFAIRS AUTHORIZING THE COMPANY TO INCREASE THE AUTHORIZED CAPITAL OF THE COMPANY. THE STAMP DUTY IS TO BE PAID ON FORM 5 FILLING AS P ER THE APPLICABLE STAMP ACT. THE COMPANY HAD TO AMEND MOA ALTERING THE CLAUSE RE LATED TO INCREASE AUTHORIZED CAPITAL WITH FORM 5. 8. THE COMPANY HAD CLAIMED 1/5TH OF EXPENDITURE OF RS, 39,500/- PAID ON INCORPORATION AS SPECIFIED IN POINT NUMBER 3 ABOVE AND RS, 19,42,500/- AT THE TIME OF RAISING OF THE AUTHORIZED CAPITA! U/S. 35D AS SPECIFIED IN POINT NUMBER 6 ABOVE. AND LD. A.O TERMED THIS ABOVE EXPENDITURE ARE OF CAPITAL NATURE AND SAME CANNOT BE ALLOWED UNDER INCOME TAX ACT AND ACC ORDINGLY MADE ADDITION OF RS. 3,88,500/-. 9. AGAINST THE SAID ADDITION, APPELLANT PREFERRED FIRS T STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ADDITION MADE BY THE L D. A.O. 10. NOW APPELLANT IS BEFORE US. ITA NO. 523/ AHD/2017 . A.Y. 2013-1 4 4 11. TODAY AN APPLICATION WAS MOVED FOR ADJOURNMENT ON B EHALF OF THE APPELLANT STATING THAT THE DIRECTOR OF THE COMPANY HAS BEEN O UTSTATION SINCE LAST FEW DAYS, ADJOURNMENT MAY BE GRANTED. THIS APPLICATION HAS MO VED ON BEHALF OF THE CHARTERED ACCOUNTANTS, S. N. SHAH & ASSOCIATES AND DIRECTOR OF THE COMPANY HAS NOTHING TO DO WITH REGARD TO PROCEEDING OF THIS CASE IN THIS TRIBUNAL. THEREFORE, WE ARE INCLINE TO GIVE ADJOURNMENT. HENC E, APPLICATION FOR ADJOURNMENT IS DISMISSED. 12. WE HAVE GONE THROUGH THE RELEVANT RECORD IN THE IMP UGNED ORDER. THE APPELLANT HAD BEEN ENGAGED IN THE BUSINESS OF MANUF ACTURING OF KRAFT PAPER. AND APPELLANT BEFORE THE COMMENCEMENT OF BUSINESS H AD INCURRED EXPENSES OF RS. 39,500/- IN CONNECTION WITH REGISTRATION OF COM PANY, MO A & AOA DRAFTING & PRINTING ETC. AND RS. 19,42,500/- IN CON NECTION REGISTRATION AND STAMP DUTY CHARGES FOR INCREASE IN THE AUTHORISED C APITAL OF THE COMPANY FOR THE COMMENCEMENT OF THE PROJECT OF THE COMPANY. AND APPELLANT HAD CLAIMED RS. 3,96,400/- BEING 1/5 OF THE ABOVE EXPEN SES UNDER SECTION 35D OF THE INCOME TAX ACT. . 1. EXPENSES DEDUCTIBLE U/S. 35D ARE ANY EXPENDITURE IN CURRED 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 THE BUSINESS OF THE ASSESSEE. 2. LEGAL CHARGES FOR DRAFTING ANY AGREEMENT BETWEEN TH E ASSESSEE AND ANY OTHER PERSON RELATING TO THE OR CONDUCT OF THE BUSI NESS OF THE ASSESSEE. 3. WHERE THE ASSESSEE IS A COMPANY, ALSO, EXPENDITURE: ITA NO. 523/ AHD/2017 . A.Y. 2013-1 4 5 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 A ND 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 INCON SONANCE OF SECTION 35D NAD ARE ALLOWABLE AS PER INCOME TAX ACT. THEREFORE, WE DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 3,88,500/-. 14. IN THE RESULT, THE APPEAL FILED BY THE APPELLA NT IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 31 - 05- 2018 SD/- SD/- (P. K. KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 31/05/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD