1968 (10) TMI 11

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... se, the assessee was entitled to the deduction of the expenses amounting to Rs. 34,139 ? " This reference relates to the assessment year 1962-63 for which the previous year is the financial year 1961-62. The assessee is a public limited company which was incorporated on February 5, 1960. The objects of the company were, inter alia, manufacture and sale of all types of electric wires, cables, etc. The company obtained the certificate of commencement of business on July 30, 1961. It had a collaboration arrangement with a Canadian company, called Wireco Engineering Ltd. On September 24, 1962, there was a meeting of the shareholders of the assessee-company in which the directors submitted their report for the year ended March 31, 1962. It was .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s carried on by the company, as empowered by the aforesaid clause in its memorandum of association, and that the interest earned thereby was income from business. This claim was rejected by the Income-tax Officer who held that the amounts received by the company as interest and by share transfer and splitting fees were income from other sources. There was no dispute that, if this was income from business, the expenditure of Rs. 34,139 was an allowable deduction. The assessee-company contended that, even otherwise, it was entitled to deduct the said expenditure under section 57 of the Income-tax Act. This claim was also rejected by the Income-tax Officer. The order of the Income-tax Officer was upheld by the Appellate Assistant Commissioner .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... on any business other than a business of banking or dealing in money, deposits his surplus funds in a bank and receives interest thereon, the interest thus received would be income from business. The position cannot at all be different, if the assessee happens to be an incorporated company instead of an individual. On the facts of this case, the finding of the Tribunal that the deposit of the share capital by the company in banks was not a business carried on by the company is perfectly right. The learned counsel for the revenue, brought to our notice a decision of the Madhya Pradesh High Court in Madhya Pradesh State Industries Corporation Ltd. v. Commissioner of Income-tax. This decision fully supports the view we have expressed above. T .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X