TMI Blog1991 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed." 3. The assessee is an investment company. For assessment year 1983-84 the assessee's accounting period ended on 31-10-1982. The assessee claimed interest of Rs. 9,452 and preliminary expenses amounting to Rs. 1,000 as a deduction. The Assessing Officer held that since no business was done loss claimed was ignored. He accordingly made the assessment at NIL income. Before the learned Commissioner of Income-tax (Appeals) it was contended on behalf of the assessee that the company had taken a loan of Rs. 1,50,000 from Ws. Sri Ram Fibres Ltd. on 26-6-1982 on interest @ 20 per cent per annum. On 18-10-1982 the loan was converted into share capital and the assessee company became a subsidiary of Sri Ram Fibres. The assessee-company pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into share capital took place only on 18-10-1982 on which date the assessee could be said to have set up its business of an investment company. It was emphasized that prior to that the amounts raised as loans were lying on interest in the bank account of the assessee. 5. Shri V.S. Rastogi, the learned counsel for the assessee, strongly relied on the case of Saurashtra Cement Chemical Industries Ltd. and forcefully submitted that the business would commence when the activity which is first in point of time and which must necessarily precede the other activities is started. It was submitted that the assessee-company was incorporated to carry on the business of an investment company and to attain this object the company had borrowed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly supported the order of the first appellate authority. 6. We have carefully considered the rival submissions as also the facts on record. The assessee is an investment company. Its aim is to raise funds of its own or from others and to invest the same for the purpose of earning income. The short question to be decided is whether the assessee's business was set up when it raised the loan for the first time on 25-6-1982. In our opinion, the assessee had taken the first necessary step to do business as an investment company when it raised a commercial loan of Rs. 1,50,000 on 26-6-1982. It is true that the aforesaid loan was not immediately invested in shares or debentures. The aforesaid loan was kept in the assessee's own bank account fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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