In Brief
A public company claimed Rs. 65.47 lakh as revenue expenditure for advertisement and public issue costs in its income-tax return for 1994-95. The income tax officer disallowed most of the claim during processing of the return. The assessee and subsequent authorities held the issue was debatable and therefore could not be decided during processing. The Supreme Court reversed this, holding that preliminary expenses for raising share capital are capital expenditure, not revenue expenditure. The Court noted this was settled law by Supreme Court precedent and consistent Gujarat High Court rulings, making it binding and non-debatable for assessment purposes. The appeal was allowed.
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