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2006 (5) TMI 80 - HC - Income TaxDeduction u/s 35D - Amortisation of certain preliminary expenses - Whether premium collected by the appellant assessee on its subscribed share capital is "capital employed in the business of the company"? - HELD THAT:- The Tribunal has pointed out that the share capital of the company as borne out by its audited accounts is limited to Rs. 7,88,19,679. The company's accounts do not show the reserve and surplus of Rs. 19,66,36,734 as a part of its issued, subscribed and paid-up capital. It is true that the surplus amount of Rs. 19,66,36,734 is taken as part of shareholders' fund but the same was not a part of the issued, subscribed and paid up capital of the company. The Explanation to section 35D(3) of the Act does not include the reserve and surplus of the company as a part of the capital employed in the business of the company. If the intention was that any amount other than the share capital, debentures and long-term borrowings of the company ought to be treated as part of the capital employed in the business of the company, Parliament would have suitably provided for the same. So long as that has not been done and so long as the capital employed in the business of the company is restricted to the issued share capital, debentures and long-term borrowings, there is no room for holding that the premium, if any, collected by the company on the issue of its share capital would also constitute a part of the capital employed in the business of the company for purposes of deduction u/s 35D. The Tribunal was, in that view of the matter, perfectly justified in allowing the appeal filed by the Revenue and restoring the order passed by the Assessing Officer. This appeal accordingly fails and is hereby dismissed but in the circumstances without any order as to costs.
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