CIT Vs Onmobile Gobal Ltd. (Karnataka High Court)
Whether, the Tribunal was justified in law in holding that the expenditure incurred in connection with the issue of IPO inter alia stamp duty is an allowable expenditure under section 35D of the I.T. Act despite the ruling of Apex Court in the case of General Insurance Corporation V/s. CIT (reported in 286 ITR page 232)?
Question of law pertains to the claim of the assessee with regard to stamp duty for an amount of Rs.6,87,770/-. The Assessing Officer has disallowed the aforesaid claim on the ground that the expenditure is capital in nature and not revenue expenditure. Even the Commissioner of Income Tax (Appeals) has accepted the aforesaid finding of the Assessing Officer. However, the benefit of deduction of stamp duty has been granted in view of Section 35D(3)(c) of the Act. The Tribunal has affirmed the aforesaid finding.
The expression ‘in connection with issue for public subscription of shares in or debentures of the company’ is an expression of wide import. The Supreme Court in ‘INDIA CEMENTS LTD. Vs. CIT’ 60 ITR 52 has held that expenditure on account of stamp duty even after introduction of 35D, is an admissible expenditure in connection with issue of public subscription. The aforesaid decision was relied upon by High Court of Bombay in MAHINDRA UGINE AND STEEL CO. LTD, supra, and it was held that the aforesaid expression would improve stamp duty payable by the assessee on the debenture issue. In view of aforesaid enunciation of law, the expenses incurred by the assessee towards stamp duty in connection with issue for public subscription of shares in or debentures of the company is an allowable expenditure under Section 35D of the Act. Therefore, the first substantial question of law is answered against the revenue and in favour of the assessee.
