Law:

Section:

Section 87(1) of the Income-tax Act, 1961 - Capital or revenue expenditure - Whether question of allowance of expenses incurred on listing of shares, as revenue expenditure was governed by Board's Circular F. No. 10/44/64-IT (A-I), dated 14-1-1965 - Held, yes Facts The assesses, a public limited company, engaged in the business of manufacturing automobile ancillaries incurred 'listing expenses' in respect of its shares on the Bombay Stock Exchange and claimed the same as revenue expenditure. The ITO, however, disallowed the same holding it to be capital expenditure. On appeals, both the AAC and the Tribunal upheld the ITO's order. On reference, the assessee contended that all the authorities under the Act were in error in not noticing the circular, viz., F. No. 10/44/64-IT (A-I), dated 14-1-1965 issued by the Board that squarely governed the claim of the assessee. Held The AAC and the ITO had decided the question placed before them without reference to the Board's Circular F. No. 10/44/64-IT (A-I), dated 14-1-1965. This circular, which at any rate, was binding on the AAC and the ITO, though not on the Tribunal, was relevant to the determination of the question that arose before them. If this circular had been brought to the notice of the Tribunal, it would have directed the ITO to examine the question afresh and redetermine the same in the light of that circular. Accordingly, the Court declined to answer the question referred to it. G. Sarangan for the Applicant. K. Srinivasan and H. Raghavendra Rao for the Respondent. Order Puttaswamy, J.- In this reference made under section 256 of the Income-tax Act, 1961 ('the Act'), the Tribunal, Bangalore Bench, at the instance of the assessee, has referred the following question of law for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the sum of Rs. 2,10,704 is an expenditure in the nature of capital or revenue ?" In order to appreciate the question referred to us, it is necessary to notice the facts that are not in dispute. 2. The assessee is a public limited company incorporated under the Companies Act, 1956 and is engaged in the business of manufacturing automobile…

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