INCOME TAX ACT, 1961

Section 37(1)

Capital or revenue expenditure - Expenditure for cost of adhesive stamp in connection with preparation of deed of transfer and assignment of receivables - -

Assessee-company acquired certain business and incurred expenditure for cost of adhesive stamp in connection with preparation of deed of transfer and assignment of receivables. AO denied deduction thereof on the ground that expenditure was in capital field for the purpose of acquisition of business. Held: As evident from conveyance deed submitted by assessee, conveyance deed involving duty of Rs. 59,17,000 was for the purpose of assignment of receivables. This assignment was admittedly for facilitating of business assessee by assigning receivables as assessee had acquired industrial unit for a lump sum consideration. As stamp fee was in connection with conveyance deed for acquisition of industrial steam turbine, AO wrongly inferred that it was for acquiring an industrial unit. The expenditure was in connection with facilitating recovery of receivables which was a part of current asset and therefore, expenditure could not be said to be in capital field of acquiring business.

Relied:India Cements Limited v. CIT (1966) 60 ITR 52 (SC) : 1966 TaxPub(DT) 278 (SC) and CIT v. Bombay Dyeing and Manufacturing Co. Ltd. (1996) 219 ITR 521 (SC) : 1996 TaxPub(DT) 993 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2004-05 to 2005-06

INCOME TAX ACT, 1961

Section 37(1)

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