COMMISSIONER OF Income Tax vs FERTILISERS and CHEMICALS TRAVANCORE LTD.

V. V. KAMAT, J. :

Only because this Court in Federal Bank Ltd. Vs. Commissioner of Income Tax, has considered the similar question of law against the Revenue it cannot be said that such question of law arising in a later case cease to be a referable one. This is the proposition declared by the apex Court in D.B. Madan Vs. Commissioner of Income Tax, and the said declaration of law would govern the proceedings of the present original petition.

The question is as to whether the registration fee paid by the assessee for increasing the authorised capital of the company is a capital expenditure. The Tribunal has relied on the decision of this Court in Federal Bank Ltd. Vs. Commissioner of Income Tax, allowing the expenditure on the ground that it is only for the purpose of improving an established business and, therefore, cannot be considered to be for the purpose of a new business. It is submitted in this petition that the view requires reconsideration because it has not been accepted by the Department in principle and also because there are decisions of some other High Courts in favour of the Revenue. It is submitted that if the initial registration fee is a capital expenditure, the additional registration or filing fee for enhancing the authorised capital should also carry the same characteristic by reason of addition. It is stated in the petition that with regard to this contention raising the question, the apex Court has granted special leave in the matter of J. K. Synthetics Ltd. (1992) 197 ITR 2 as follows :

"20.7.1992 : Their Lordships S. Ranganathan, V. Ramaswami and R. M. Sahai, JJ. granted special leave to the assessee to appeal against the judgment dt. 17th December, 1991 of the Delhi High Court in ITC No. 18 of 1991, rejecting a reference application, following Bharat Carbon and Ribbon Manufacturing Co., Ltd. Vs. Commissioner of Income Tax, New Delhi, , on the question whether fees paid to the Registrar of Companies for increasing the authorised capital of the company were allowable as an item of business expenditure, as claimed by the assessee, or were an item of capital expenditure, as held by the Department : J. K. Synthetics Ltd. vs. CIT : SLP (Civil) No. 4475 of 1992."

We have already referred to the proposition that the question would be a referable one and not one where a petition asking for a reference is to be rejected.

For the above reasons we direct the Tribunal to refer the following question :

"Whether, on the facts and in the circumstances of the case, the registration fee paid by the assessee for increasing the authorised capital of the company is a capital expenditure or revenue expenditure ?"

The Tribunal shall prepare the necessary statement of case accompanied by all necessary documents and remit the same to this Court.