TMI Blog1981 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ther side of the money, as a loan. Thus, it is clear that an element of refund or repayment is inherent in the concept of borrowing. There is no provision in the Act which contemplates the repayment of the capital so provided u/s 23 of the Act. Apart from that, S. 23 of the Act provides that the Central Govt. and the State Govt. may provide any capital. In other words, it is not by virtue of any agreement, etc., between the parties, but because of the statutory provision that the Governments are obliged to provide the capital. It is u/s 26 of the Act that the corporation may borrow money in the open market for the purpose of raising its working capital. Thus, the distinction has been made in the Act itself between the capital provided u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Governments, any capital that may be required by the Corporation for the purpose of carrying on the undertaking or for purpose connected therewith on such terms and conditions not inconsistent with the provisions of this Act, as the State Government may, with the previous approval of the Central Government, determine. (2) Whether the capital of a Corporation is not provided under subsection (1), the Corporation may raise, by the issue of shares, such capital as may be authorised in this behalf by the State Government. (3) The authorised capital of the Corporation shall be divided into such number of shares as the State Government may determine; and the number of shares which shall be subscribed by the State Government, the Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est to both the Northern Railway as well as the Punjab Govt. as claimed by them. The only point raised before the Income-tax Appellate Tribunal was: Whether the assessee was entitled to the allowance of interest of Rs. 36,91,781/-? 6. The first question which the Tribunal considered was whether the said amount of Rs. 36,91,781/- was an admissible deduction under S. 36(1)(iii) of the I.T. Act. On this question, the Tribunal held that the assessee s claim for interest was not admissible under S. 36(1)(iii) and observed: Under this provision, the amount of interest paid in respect of capital borrowed for the purposes of the business only is admissible. Reading of the Road Transport Corporations Act, 1950, leaves no doubt that the interest in q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been borrowed as such. The assessee is thus not entitled to the deduction under section 36(1)(iii), Income-tax Act, 1961. 7. The Tribunal thereafter considered whether the interest of Rs. 36,91,781/- can be said to be expenditure laid out or expended wholly or exclusively for the purpose of the business as provided under S. 37 of the I.T. Act. As no finding had been recorded by the lower authorities on this point, the assessment order was set aside with a direction that a clear finding should be recorded whether the expenditure of Rs. 36,91,781/- was laid out or expended wholly and exclusively for the purposes of the assessee's business. However, we are not concerned with that aspect of the matter in this reference. 8. The learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and received or borrowed money . It was held that there has to be a positive act of lending coupled with acceptance by the other side of the money, as a loan. Thus, it is clear that an element of refund or repayment is inherent in the concept of borrowing. There is no provision in the Act which contemplates the repayment of the capital so provided under S. 23 of the Act. 11. Apart from that, S. 23 of the Act provides that the Central Govt. and the State Govt. may provide any capital. In other words, it is not by virtue of any agreement, etc., between the parties, but because of the statutory provision that the Governments are obliged to provide the capital. It is under s. 26 of the Act that the corporation may borrow money in the open mark ..... X X X X Extracts X X X X X X X X Extracts X X X X
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