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Issues Involved: Assessment of interest on delay in payment of call money, inclusion of forfeited amount and premium in total income.
Assessment of Interest on Delay in Payment of Call Money: The appeal related to the assessment year 1984-85 where the assessee, a public limited company, received interest on delay in payment of call money from shareholders. The amount claimed as not taxable was brought to tax by the ITO and CIT(A) based on a previous Tribunal order. The Tribunal upheld the decision against the assessee citing the previous order. Inclusion of Forfeited Amount and Premium in Total Income: During assessment, the assessee claimed that the forfeited amount and premium received on re-issue of forfeited shares were capital receipts exempt from tax. The Assessing Officer and CIT(A) disagreed. However, the Tribunal found that the amounts were not taxable as they were related to the capital structure of the company, not arising from regular trading activities. The legal analysis delved into the Company Law provisions regarding forfeiture of shares, emphasizing that such actions are not business transactions but relate to the capital structure of the company. Citing various legal precedents, including decisions by the Lahore High Court and the Supreme Court, it was established that profits from forfeiture of shares and receipt of premium on re-issued shares are capital receipts not subject to tax. The judgment highlighted the treatment of share premium under the Companies Act and Surtax Act, indicating that share premium is considered part of the company's capital structure and not taxable as income. Relying on legal interpretations and precedents, the Tribunal concluded that the amounts in question should be excluded from the total income of the assessee-company, thereby partly allowing the appeal.
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