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6. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal.

7. The first issue that came up for our consideration from Ground no.7 of the assessee's appeal is addition of Rs. 4,60,131/- towards ROC fee paid for increase in authorised capital.

Sri Rama Agri Genetics (India) Private Limited

8. During the course of assessment proceedings, it is seen from the Profit and Loss Account of the assessee, the assessee has debited a sum of Rs. 5,72,481/- towards the ROC charges. The A.O. called upon the assessee to file relevant details, for which the assessee failed to furnish any details. The A.O. issued one more show-cause notice and asked the assessee to file its objections, if any, for the proposed disallowance of expenditure, for which the assessee vide letter dated 24.09.2021 submitted that, it has incurred expenditure towards payment of fee to ROC for increase in authorised capital and the same has been used for working capital requirement of the assessee company and the same is in the nature of revenue expenditure and it should be allowed. The A.O., after considering the submissions of the assessee and also by following the decision of Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited Vs. CIT, 225 ITR 792 and Brooke Bond India Limited Vs. CIT, 225 ITR 798, disallowed ROC charges paid of Rs. 5,72,481/- on the ground that, the expenditure incurred towards increase in authorised capital of the assessee company is capital in nature and the same Sri Rama Agri Genetics (India) Private Limited cannot be allowed under Section 37(1) of the Income-tax Act, 1961.

9. On appeal, the Ld. CIT(A) allowed partial relief to the assessee on the ground that, on perusal of the details submitted by the assessee, it is seen that, an amount of Rs. 4,60,131/- was incurred towards increase in authorised capital and the balance amount was towards filing charges. Therefore, the Ld. CIT(A) confirmed the disallowance towards ROC charges paid for increase in authorised capital and allowed the fee paid towards filing charges.

10. The learned counsel for the assessee, Shri S. Venkateswarlu, Tax Consultant, submitted that, the Ld. CIT(A) erred in sustaining ROC charges paid of Rs. 4,60,131/- for increase in authorised capital of the assessee company without appreciating the fact that the same is in the nature of revenue expenditure or in the alternative should be treated as preliminary or pre-operative expenses and 1/5th of the said expenditure should be allowed as deduction for the year under consideration. In this regard, reliance was placed on the decision of ITAT Hyderabad Bench in Sri Rama Agri Genetics (India) Private Limited the case of DCIT Vs. Mercury Projects Pvt. Ltd. in ITA No. 450/Hyd/2017 dated 18.07.2018.

11. The Ld. CIT-DR for the Revenue, Dr. Narendra Kumar Naik, on the other hand, supporting the order of the Ld. CIT(A), submitted that, the issue is covered against the assessee by the decision of Hon'ble Supreme Court, in the case of Brooke Bond India Ltd. Vs. CIT 225 ITR 798, wherein it has been held that, fee paid to ROC for increase in authorised capital, is capital in nature, and the same cannot be allowed as deduction under Section 37(1) of the Act.

12. We have heard both the parties, perused the material available on record and had gone through the orders of the authorities below. We have also carefully considered the decision relied upon by the assessee in case of ITAT, Hyderabad Bench in the case of DCIT Vs. Mercury Projects Pvt. Ltd. (ITA 450/Hyd/2017) and find that, the co-ordinate Bench of the Tribunal has decided the issue of ROC fee paid for increase in authorised capital in the light of the provisions of Section 35D of the Act and by following the decision of Hon'ble Supreme Court in Sri Rama Agri Genetics (India) Private Limited the case of Shasun Chemicals and Drugs India Limited Vs. CIT, Civil Appeal No. 9611 of 2016 arising out of SLP (C) No. 31962 of 2011, held that, the ROC fee paid for increase in authorised capital of the company falls under the provisions of Section 35D of the Act and therefore, the assessee is entitled to claim deduction towards 1/5th of the said expenditure for a period of five years. The relevant findings of the Tribunal are as under :

13. We further note that, the Hon'ble Supreme Court in the case of Shasun Chemicals and Drugs India Limited (supra) has also Sri Rama Agri Genetics (India) Private Limited considered its earlier decision in the case of Brooke Bond India Limited Vs. CIT (supra) and held that, those judgments were rendered when Section 35D was not on the statute book and the insertion of Section 35D has altered the legal position. In view of the above and by following the decision of the co-ordinate Bench of the Tribunal, ITAT Hyderabad, we direct the A.O. to allow 1/5th of the sum of Rs. 4,60,131/- as deduction for the year under consideration towards ROC fee paid for increase in authorised capital of the assessee company.