JUDGMENT

Bhan, J.—The question which arises for consideration in this appeal is, as to whether the expenditure incurred in connection with the issuance of bonus shares is a capital expenditure or revenue expenditure. The question of law framed in the High Court was:

(i)Whether on the facts and in the circumstances of the case and in law the Tribunal was right in holding that the expenditure incurred on account of share issue is allowable expenditure?

2. The Assessee is an Insurance Company which has four subsidiaries. For the assessment year 1991-92 the assessee filed a return of income of Rs. 58,52,80,850/- along with the audit report. The assessing Officer disallowed a few expenses incurred as revenue expenditure, one of them being in the sum of Rs. 1,04,28,500/- incurred towards the stamp duty and registration fees paid in connection with the increase in authorized share capital. The respondent-assessee had during the accounting year, incurred expenditure separately for:

(i) The increase of its authorized share capital and

(ii)The issue of bonus shares.

3. The Assessing Officer disallowed both the items of expenditure as revenue expenditure. According to him, the expenses incurred wer