TMI Blog2004 (8) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... in disallowing the addition of 15 per cent. of the amount of interest paid by the respondent-assessee on the deposits made by the shareholders and directors of the company. - - - - - Dated:- 5-8-2004 - Judge(s) : R. K. AGARWAL., K. N. OJHA. JUDGMENT The Income-tax Appellate Tribunal, Delhi, has referred the following question of law under section 256(1) of the Income-tax Act, hereinafter referred to as "the Act", for opinion of this court: "Whether, on the facts and in the circumstances of the case, the deposits received by the assessee-company from its directors and shareholders are outside the purview of section 40A(8) of the Income-tax Act, 1961?" The assessee, M/s. Nath Roller Flour Mills (P.) Ltd., Muzaffarnagar, is a compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company other than a banking company or financial company in respect of any deposit is to be disallowed. The word "deposit" has not been qualified by any specific terms. It refers to all the deposits received by a company whether it is from public or shareholders or directors and only those deposits which are specified in sub-clauses (i) to (ix) of clause (b) of the Explanation are excluded from the purview of section 40A of the Act. He further submitted that the decision in the case of Bhandari Machinery Co. (P.) Ltd., Delhi, which has been relied upon by the Tribunal has been the subject-matter of reference before the Delhi High Court in the case of CIT v. Bhandari Machinery Co. P. Ltd. [1998] 231 ITR 294 and the Delhi High Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aranteed by the Central Government or a State Government: (ii) from the Government of a foreign State, or from a citizen of a foreign State, or from any institution, association or body (whether incorporated or not) established outside India; (iii) as a loan from a banking company or from a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); (iv) as a loan from any institution or body specified in the list in the Tenth Schedule or such other institution or body as the Central Government may, having regard to the nature and objects of the institution or body, by notification in the Official Gazette, specify in this behalf; (v) from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te deposits. The word "deposit" is in respect of any deposits received by it. Any deposits would definitely cover within its word all the deposits whether it is received from the public or shareholders or from the directors. The Delhi High Court in the case of CIT v. Bhandari Machinery Co. P. Ltd. [1998] 231 ITR 294 has held as follows: "What are relied on by learned counsel for the assessee for interpreting the provisions of section 40A(8)-(i) the speech of the Finance Minister, (ii) the Notes on Clauses, and (iii) a circular issued by the Company Law Board under the Companies Act, are all external aids to interpretation which cannot be resorted to when the language of enactment is plain and unambiguous just as the language of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Agew Steel Manufacturers Pvt. Ltd. v. CIT [1994] 209 ITR 77 and the Rajasthan High Court in the cases of CIT v. Gandhi Metals Mills Pvt. Ltd. [1993] 200 ITR 252 and CIT v. Jain Cables Pvt. Ltd. [1995] 214 ITR 190. We are in respectful agreement with the view taken in the aforementioned cases. In our considered opinion, the Tribunal was not justified in disallowing the addition of 15 per cent. of the amount of interest paid by the respondent-assessee on the deposits made by the shareholders and directors of the company. In view of the foregoing discussions, we answer the question referred to us in the negative, i.e., in favour of the Revenue and against the assessee. However, there shall be no order as to costs. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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