Brisk Ltd. incurred ₹52.75 lakh during the period April, 2015 to June, 2015 on advertisement, professional fees, administration cost, etc. for the purpose of public issue of ₹555 crore in July, 2015 and had, therefore, a

The assessee company (Brisk Ltd.) had claimed expenditure of ₹52.75 lakhs as "share issue expenses" being incurred "wholly & exclusively for business purposes". It further contends that incurring of such expenses did not result in increase in the share capital of Company for the reasons beyond their control and therefore claimed as revenue expenditure. The contention of the assessing officer is that such expenses are capital expenditure because the company had taken steps to go in for a public issue and consequently incurred such expenses. Despite the fact that the proposed issue could not materialize due to restrictive order by SEBI does not make such expense as revenue expense. The important issue is that such expenses were incurred wholly and exclusively for the purpose of expansion of Capital base of the company and thus the expenditure incurred would not lose its character as capital expenditure as the assessee had admittedly took steps to go for public issue and after incurring expenditure, just before the public issue, by reason of the orders from the SEBI, the assessee could not go in for public issue. Therefore the expenses of ₹52.75 lakhs incurred by Brisk Ltd. hence be disallowed being "capital expenses" and action taken by the Assessing Officer is lawful and correct. [This view was upheld by Madras High Court in the case of Mascon Technical Services Ltd. v/s CIT (2013) 358 ITR 545 ]