Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 3725 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 10 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
29-06-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2007-2008
Appeal Filed On
21-08-2019
Judgement Text
Miscellaneous Application No.214/Chny/2019 (in ITA No.1342/Chny/2013) िनधा रण वष /Assessment Year: 2007-08 M/s.The Karur Vysya Bank Ltd., Erode Road, Karur-639 001. v. The Asst. Commissioner of Income Tax, Circle-1(1), Trichy. [PAN: AAACT 3373 J] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr.Anandhan, CA यथ क ओर से /Respondent by : Mr.Sajit Kumar, JCIT सुनवाई क तारीख/Date of Hearing : 24.06.2022 घोषणा क तारीख /Date of Pronouncement : 30.06.2022 आदेश / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: The assessee has filed present Miscellaneous Application u/s.254(2) of the Income Tax Act, 1961, against the order of the Tribunal in ITA No.1342/Chny/2013 dated 28.02.2019 and relevant assessment year 2007-08. 2. The Ld.Counsel for the assessee referring to Miscellaneous Application, narrated the facts and mistakes stated to be apparent on record from the order of the Tribunal and relevant contents of the Miscellaneous Application filed by the assessee are reproduced as under: आयकर अपीलीय अिधकरण, ‘बी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI ी वी. दुगा राव, माननीय ाियक सद एवं ी जी. मंजूनाथा, माननीय लेखा सद के सम BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER MA No.214/Chny/2019 (in ITA No.1342/Chny/2013) :: 2 :: For the above assessment year an appeal was preferred by the Petitioner against the order of the First Appellate Authority before the Hon'ble Tribunal. The Hon'ble Tribunal while passing the order in ITA No- 1342/Chny/2013 dated 28.02.2019 in para 7.3 have held as under: 7.3. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the allowance of expenditure incurred on right issue of shares. Undoubtedly, on account of right issue shares, there would be change in the capital structure of the company. Any expenditure incurred in increasing the capital structure of the company is a capital expenditure as held by the hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. v. CIT [1997] 225 ITR 792 (SC) and in the case of Brooke Bond India Ltd. v. CIT [1997] 225 ITR 798 (SC). The case law relied upon by the learned counsel cannot be applied to the facts of the present case, wherein the hon'ble Supreme Court held that the expenditure incurred on issue of bonus shares is revenue expenditure, whereas in the present case, we were concerned With the issue of right shares. Thus, this ground of appeal filed by the assessee is dismissed." It is respectfully submitted that the Appellant bank had incurred a total expenditure of Rs.67,00,934/- on, the rights and bonus issue, out of Which a sum of Rs.22,62,934/- was pertaining to bonus issue and Rs.44,38,000/-pertains to rights issue. The Appellant bank had disallowed the amount of Rs.44,38,000 being the expenditure pertaining to rights issue. It had claimed only the amount relating to bonus issue. This fact can be seen from Ground 11 as extracted in Para 4 of the Order. It is submitted that the expenditure or, issue of bonus shares is settled in favour of the assessee by the Hon'ble Supreme Court in the case of CIT v. General Insurance Corporation [2006] 286 ITR 232(SC). In these circumstances, it is prayed that this Hon'ble Tribunal may be pleased to rectify the above mistake apparent from record by affording another opportunity to the assessee's representative to put forth their case and thereby render justice. 3. The Ld.Counsel for the assessee referring to the order of the Tribunal dated 28.02.2019 submitted that there is an error in the order of the Tribunal in as much as, the Tribunal by an inadvertent error failed to give any finding on Ground Nos.9 to 12 of grounds of appeal filed by the assessee, even though, there was a specific pleading on allowability of expenditure relating to issue of bonus shares amounting to Rs.22,62,934/- . Further, although, the Tribunal made an observation that expenditure incurred on issue of bonus shares is Revenue expenditure, but while concluding the issue it has upheld the additions made by the AO towards disallowance of share issue expenses, even though, the assessee has filed a break-up of expenditure incurred in relation to issue of right shares and MA No.214/Chny/2019 (in ITA No.1342/Chny/2013) :: 3 :: bonus issue. He, further submitted that there is no dispute with regard to the fact that the expenditure incurred related to bonus issue is allowable as Revenue expenditure. However, the Tribunal gave a finding that total expenditure incurred by the assessee is on account of right issue and thus, said mistake constitutes a mistake apparent on record, which needs to be rectified u/s.254(2) of the Act. 4. The ld.DR, on the other hand, fairly agreed that if expenditure incurred relatable to bonus issue, then the same needs to be allowed as Revenue expenditure. However, the AO as well as the First Appellate Authority have recorded a finding that total expenditure incurred by the assessee is on account of right issue and thus, the matter needs further examination from the AO and accordingly, the issue may be set aside to the file of the AO to ascertain the nature of expenditure. 5. We have heard both the parties and considered the contents of Miscellaneous Application filed by the assessee. We find that the assessee has taken a specific ground vide Ground Nos.9 to 12 and argued that out of total expenditure disallowed by the AO towards share capital issue expenses, a sum of Rs.22,62,934/- pertains to expenditure incurred for bonus shares issue. However, although there is a specific ground raised by the assessee, the Tribunal had not given any finding on Ground Nos.9 to 12 taken by the assessee, but went on to decide the issue on the sole basis that total expenditure incurred by the assessee is on account of right share. MA No.214/Chny/2019 (in ITA No.1342/Chny/2013) :: 4 :: Therefore, we are of the considered view that said findings of the Tribunal constitute a mistake apparent on record, which needs to be rectified u/s.254(2) of the Act and thus, we recall the order of the Tribunal dated 28.02.2019 qua Ground Nos.9 to 12 only. Further, it was the argument of the Ld.Counsel for the assessee that the assessee has filed necessary details of breakup of right issue expenses and bonus issue expenses, but on perusal of assessment order and the order of the Ld.CIT(A), we find that there is no clarity on the issue whether total expenditure incurred by the assessee is for right issue or bonus issue only. If at all, the assessee has incurred expenditure towards issue of bonus shares, such expenditure needs to be allowed as deduction in light of decision of the Hon’ble Supreme Court in the case of CIT v. General Insurance Corporation reported in [2006] 286 ITR 232 (SC). If at all, the expenditure pertains to right issue, then same comes under capital expenditure and same cannot be allowed as deduction in light of decision of the Hon’ble Supreme Court in the case of Booke Bond India Ltd. v. CIT reported in [1997] 225 ITR 798 (SC). In this case, the assessee claims that it has incurred a sum of Rs.22,62,934/- towards issue of bonus shares. However, the facts with regard to the nature of expenditure is not forthcoming from the orders of the lower authorities and thus, we are of the considered view that the issue needs to be set aside to the file of the AO and direct the AO to re-examine the claim of the assessee in light of details of expenditure furnished to prove their claim. In case, the AO finds that expenditure incurred pertains to issue of MA No.214/Chny/2019 (in ITA No.1342/Chny/2013) :: 5 :: bonus shares, then the AO is directed to delete the additions made towards disallowance of a sum of Rs.22,62,934/-. 6. In the result, the Miscellaneous Application filed by the assessee is allowed in terms of our observations hereinabove. Order pronounced on the 30 th day of June, 2022, in Chennai. Sd/- (वी. दुगा राव) (V. DURGA RAO) याियक सद य/JUDICIAL MEMBER Sd/- (जी. मंजूनाथा) (G. MANJUNATHA) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 30 th June, 2022. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु"/CIT 2. यथ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु" (अपील)/CIT(A) 6. गाड फाईल/GF
