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According to Clause 6, the parties intend that production of chain both as to volume and types of products, shall be such as to meet, as the first priority the needs for original equipment produced by TII and its present and future subsidiaries (TI Miller Private Ltd. is stated to be at the relevant time the only present subsidiary) in the designated area. According to Clause 7, the parties further intend that the aims of chain shall be first to raise the production of cycle chains to a point where TII shall be independent of other sources of supply therefor for original equipment and replacements therefor made by TII and its subsidiaries and then to expand operations into the field of automotive and other industrial chains and sprockets. Under Clause 8, the parties further intend to conserve (so far as it may be practicable to do so without rendering chain subject to additional tax liabilities in India) the financial resources of chain by retaining in said company a high proportion of profits earned until production is achieved for a wide range of cycle, automotive and other industrial chains and sprockets and to maintain ample liquidity to assure performance of chain's obligations. Clause 11 puts a ban on any change or modification in any manner of the agreement except by an instrument in writing signed by a duly authorised officer of each of the parties. It is also to be noted that the Exhibit C styled 'To promoters' agreement' seeks to amend the Articles of Association of the assessee-company to suit the requirements of Diamond. In other words, TII agreed with Diamond to allow the latter participation in the new venture of business to be carried on through the assessee subsidiary company to the extent of 27| per cent in return for the assignment of trademarks and in consideration of the obligations undertaken by Diamond in regard to supply of technical information, engineering data, etc., relating to the manufacture of subject products. It is in pursuance of this agreement that the further agreement between the assessee and Diamond of the same date has been entered into under which the assessee agreed to allot 6,000 equity shares in consideration for the assignment of trademarks and 600 equity shares for the supply of Diamond's existing engineering data and technical information. It may be noted in passing that there is no similar agreement between the assessee-company and TII in regard to allotment of equity snares of Rs. 2 lakhs as contemplated in the agreement between TII and Diamond. At least none has been pointed out before us or brought to our attention and the allotment seems to have been made to TII on the basis of the agreement between TII and Diamond. Thus, what is obvious from the facts stated above is that there is no payment of any sums or money contemplated, or carried out, in regard to the obligations of either TII or Diamond of supply of technical information or engineering data or other services by the two participant shareholders. The agreement and the allotment pursuant thereto of the shares of the assessee-eompany, relate, therefore, to , the very framework or capital structure of the assessee-eompany and its existence and there is no payment of any sum or equivalent thereof for acquiring the technical know-how, engineering data or information. Even assuming that an expenditure incurred need not be in cash in a stipulated sum of money, but can include payment in kind by way of transfer of any property or assets, the transaction in the present case does not involve release or transfer to Diamond or to TII in return for supply of technical know-how, data, information, etc., of any asset or property owned by the assessee because the shares it allotted never constituted its asset or property as understood according to business, commercial or accounting principles and any one with a fair knowledge of company law knows that ordinarily a company cannot acquire or own its shares. The transaction merely gives to the foreign company Diamond or TII a right to participate in the management or administration of the business of the assessee in accordance with and subject to the memorandum and articles of association or other statutory provisions in this connection. Prior to the allotment of the shares to Diamond, the entire share capital of the assessee-eompany was held by TII and, thus, the assessee was a 100 percent subsidiary of TII and by the allotment the TII agreed to allow Diamond to participate in the administration and running of the business of the assessee-eompany and the profits thereof by way of dividend, if necessary, to the extent of 27 1/2 per cent. A limited company, under the Companies Act, is, subject to statutory provisions, entitled to raise capital or increase its existing capital by issue of shares either for payment in cash or for consideration otherwise than in cash. For instance, it can allot shares for any property or asset other than cash to be transferred to it or for services rendered or to be rendered. In all such cases, it is a mode of the company acquiring capital for its business and does not involve release of any of its assets including cash. Such a transaction, according to us, does not, in any view of the matter, involve an expenditure incurred by the company in carrying on its business. It may be noted that as a holder of equity shares covered by the concerned allotment, each of the allottee companies is entitled to a repayment of the capital amount and pro rata surplus profit in the event of liquidation or winding up of the company after meeting all other outside liabilities. In the circumstances, in our view, the cases relied on either by the assessee or by the department are totally distinguishable on facts and the principles stated therein will have no application to the facts of the present case. As already stated, in our view, the transaction involving allotment of shares by the assessee-company is in pursuance of the agreement between TII and Diamond for carrying on the business in what may be called a partnership through the medium of the assessee-company and it relates to the very framework or the formation and existence of the assessee-company by way of its shareholding and does not involve any payment of any sum by the assessee-compajiy or transfer of any asset owned and possessed by it to the foreign company, Diamond or the Indian Company TII ; the question as to whether the assessee acquired any capital asset by any expenditure incurred by it or the expenditure was only of a revenue nature does not arise for consideration. In the circumstances, we rejected the assessee's claim and uphold the findings of the departmental authorities that the assessee is not entitled to any deduction of the amounts claimed by it.