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SUPREME COURT OF INDIA

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CASE NO.:

Appeal (civil) 4422 of 2001

PETITIONER:

Commissioner of Income Tax, Mumbai

RESPONDENT:

M/s General Insurance Corporation

DATE OF JUDGMENT: 25/09/2006

BENCH:

ASHOK BHAN & Markandey Katju

JUDGMENT:

J U D G M E N T

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?

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 capi