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7. Against the decision of the Income-tax Officer, the assessee went up in appeal and before the Appellate Assistant Commissioner, it was contended that all the above items of expenses were clearly covered by Sub-clause (iv) of Clause (c) of Sub-section (2) of Section 35D of the Income-tax Act, 1961, and hence the Income-tax Officer was not justified in disallowing the same. It was contended that the said Sub-clause (iv) covered the expenses which are incurred in connection with the issue of shares for public subscription. However; the Appellate Assistant Commissioner felt that only such expenses being in the nature of underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of prospectus are allowable as per the provisions of Section 35D of the Income-tax Act. Therefore, he upheld the disallowance of expenses to the extent of Rs. 6,03,410.

(b) legal charges for drafting any agreement between the assessee and any other person for any purpose relating to the setting up or conduct of the business of the assessee ;
(c) where the assessee is a company, also expenditure-
(i) by way of legal charges for drafting the memorandum and articles of association of the company ;
(ii) or printing of the memorandum and articles of Association;
(iii) by way of fees for registering the company under the provisions of the Companies Act, 1956 (1 of 1956);
(iv) in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus;
(d) such other items of expenditure (not being expenditure eligible for any allowance or deduction under any other provision of this Act) as may be prescribed."

14. Learned counsel for the assessee submitted that the words " in connection with the issue, for public subscription, of shares " have been used in a much wider sense so as to include within its ambit all such expenses which are necessarily incurred in connection with the issue of shares and that the above words should not be given a narrower meaning so as to include only those items of expenses which are specifically mentioned such as underwriting commission, brokerage and charges for printing, typing, drafting and advertisement of prospectus. It was submitted that Clause (d) of Sub-section (2) of Section 35D permits such other items of expenditure (not being expenditure eligible for any allowance or deduction under any other provisions of this Act) as may be prescribed and the mere fact that no such notification has been issued by the Government does not mean that the expenses incurred in connection with the issue of share capital should only be confined to those expenses which are specifically mentioned in Sub-clause (iv) of Clause (c) of Sub-section (2) of Section 35D.

16. Clause (c) of Sub-section (2) of Section 35D starts with the words " where the assessee is a company, also expenditure ", which if read with Sub-clause (iv) " in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus" would indicate that the word " being " used here is " illustrative and not restrictive ". On the contrary, if after the words " also expenditure", Sub-clause (iv) would have started with the words " being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus, in connection with the issue, for public subscription, of shares in or debentures of the company ", the submission of learned counsel for the Revenue would have some force because this word " being " as it stands today in the section cannot be read backwards, but has to be read as a whole. Therefore, we are of the opinion that the word " being " has been used here by way of illustration and is not restricted only to the words " underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus. Thus questions Nos. (1) and (2) have to be answered in favour of the assessee and against the Department.