The Commissioner Of Income Tax v. M/S. Aegis Chemicals Industries Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICGTION INCOME TAX REFERENCE NO. 128 of 1989 The Commissioner of Income Tax ... Applicant. vs. M/s. Aegis Chemicals Industries Ltd., .... Respondent Mr. Ashok Kotangale for Applicant. Mr. V. B. Patel for Respondent. CORAM: V. C. DAGA AND A. S. AGUIAR JJ. Date: 4[th] July, 2005. P. C.: 1. The question of law referred to this court for opinion under section 256(1) of the Income-tax Act, by the Tribunal at the instance of theassessee are as follows: 1) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holdingthat the expenditure of Rs.1,47,500/- incurred by M/s.Aegis Chemicals Industries Ltd., in connection with theamalgamation of Everest Refrigerats Ltd., with the 2 assessee – company was not revenue expenditure? 2. Whether on the facts and in the circumstances of thecase, the Tribunal was right in law in holding that theexpenditure of Rs.82,339 incurred by the assessee, inconnection with the proceedings under sections 397 and398 of the of the Companies Act is expenditure whollyand exclusively laid out for the purpose of businesswithin the meaning of section 37(1) of the Income TaxAct , 1961? 2. The issue involved in this reference stands answered by the Apex Court in the case of Commissioner of Income Tax VS. Bombay Dyeing And Manufacturing Co., Ltd.,reported in [1996] 219 ITR p. 521 wherein the Apex Court waspleased to hold that the professional charges paid by the assessee –company to its solicitors in connection with the amalgamation of thecompany constituted revenue expenditure. In this view of thematter we hold that the expenditure of Rs. Rs.1,47,500/- incurred inconnection with the amalgamation as also the expenditure ofRs.82,339/- incurred by the assessee – company in connection withthe proceedings under sections 397 and 398 of the Companies Act isexpenditure wholly and exclusively laid for the purpose of business was a revenue expenditure within the meaning of section 37(1) of theIncome Tax Act , 1961. Accordingly, the first question is answer inthe negative, that is, in favour of the assessee and against theRevenue and th second questions answered in the affirmative, thatis, in favour of the assessee and against the Revenue. (V. C. DAGA J. ) -x- (A. S. AGUIAR J.)