TMI Blog1993 (9) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 256(1) of the Income-tax Act, 1961, raises the following questions for our opinion: "1. Whether, on the facts and circumstances of the case, the Tribunal was right in upholding the order of the Commissioner of Income-tax (Appeals) that 15% of the interest on Rs. 5,01,290 under section 40A(8) of the Income-tax Act requires to be disallowed ? 2. Whether, on the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d provision indicates that 15 per cent. of the expenditure incurred by an assessee-company (other than a banking company or a financial company) incurred by way of interest in respect of any deposit received by it is to be disallowed. Explanation (b) defines the word "deposit" in the context of this section and sub-section. It is clear and an admitted fact that the amounts received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to rely upon a decision of the High Court of Madhya Pradesh in the case of CIT v. Kalani Asbestos (P.) Ltd. [1989] 180 ITR 55. On a perusal of this decision we find that the facts upon which that case was decided were entirely different, and the facts in the present case would not justify the same conclusion. In the cited case, we find that the assessee-company was holding the amount in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r current accounts cannot be excluded. Thus, on a correct interpretation of the provisions of section 40A(8), when the company pays interest on the amount held by a director in the current account with the said company, such amount will be considered as a deposit within the meaning of the said provision. A similar view has been taken by the Punjab and Haryana High Court in the case of CIT v. San ..... X X X X Extracts X X X X X X X X Extracts X X X X
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