INCOME TAX APPELLATE TRIBUNAL, MADRAS
ABDUL RAZACK, P.S. Kalsian, JJ.
Tatia Skyline & Health Farms Ltd. -Appellant
Versus
Assistant Commissioner of Income-tax -Respondent
IT Appeal No. 219 (Mad.) of 1998
Decided On : 31-08-1998
V. Ramachandran, R.P. Madhu,R. Suresh
Per Abdul Razack, Judicial Member - The assessee, a public limited company, filed the return declaring a loss of Rs. 59,63,119 worked out in the following manner :
| | | | Rs. |
| "Net profit as per P & L A/c. | | | 1,29,26,869 |
| Add : Items considered separately - Depreciation | | | 37,760 |
| | | | 1,29,64,629 |
| Add : Inadmissible expenses Donation | | | 1,29,601 |
| | | | 1,30,94,230 |
| Less : Depreciation under section 32 | 72,673 | | |
| Deferred Revenue expdr. | 1,89,84,676 | | |
| under section 37 | | | 1,90,57,349 |
| Assessable Loss | | | 59,63,119" |
As is evident from the details of the computation statement, the assessee claimed a sum of Rs. 1,89,84,676 as deferred revenue expenditure. The Assessing Officer has stated that when the details were called for by him, it was represented to him that they were all public issue expenses and formed part of the total deferred revenue expenditure of Rs. 2,20,11,231 shown in the balance-sheet under Miscellaneous Expenditure. The Assessing Officer informed the assessee-company that the said expendi- ture of Rs. 1,89,84,676 was not allowable as public issue expenses being of capital nature. The Assessing Officer informed about the decision of the Hon’ble Madras High Court in the case of Metro General Credits Ltd. v. CIT [1996]
2. The assessee-company being aggrieved knocked at the door of the Appellate Commissioner of Income-tax under section 246 of the Act for relief. It was contended that the expenditure of Rs. 1,89,84,676 claimed was not entirely relatable to the raising of capital and not public issue expenses, though it was termed as deferred revenue expenditure. According to the assessee-company it had plans to open a health club holiday project outside Tamilnadu, near Bangalore Highway road and in order to invite Membership for that club, huge expenditure was incurred on printing and stationery, travelling expenses, sending brochures to various persons for making Membership of the company’s holiday scheme, advertisement, conference expenses, project appraisal reports and so on and so forth. In order to establish the genuineness of the claim as revenue expenditure, the representative of the assessee-company gave some details before the Commissioner in the first appeal and discussed by the Commissioner in the impugned order. We, therefore, do not wish to incorporate all those in this order. The Commissioner after collecting the facts and analysing various expenditure with relation to certain evidences produced before him came to the conclusion that it was an after-thought on the part of the assessee-company that the sum of Rs. 1,89,84,676 was public issue expenses for raising further capital. While agreeing with the Assessing Officer in treating the said expenditure of capital nature, the Commissioner also relied upon the decision of the Hon’ble Supreme Court in the case of