Court allows set off of interest income from share application money against share issue expenses. Disallowance under section 35D remanded for fresh consideration.

The Court allowed the set off of interest income from share application money against share issue expenses. The disallowance under section 35D was remanded for fresh consideration. The deduction under section 80IA was to be reconsidered with detailed discussion. The issue of disallowance of shares and debentures issue expenses was remanded for evaluation on its merits. The Tax Appeal was disposed with directions for the Tribunal to revisit and decide on the specified issues in accordance with the law.

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Issues:
1. Set off of interest income from share application money against public issue expenses
2. Disallowance u/s.35D of the Act
3. Deduction u/s 80IA of the Act on income on account of Exchange rate fluctuation, Excise credit, Kasar/vatav, and Excess provision written back of bonus
4. Disallowance out of shares and debentures issue expenses

Analysis:

1. The Tribunal allowed the set off of interest income from share application money, following a previous decision of the Court. The Court stated that the interest earned was linked to the company's need to raise share capital and could be adjusted towards share issue expenses. As the issue was covered by the previous decision, no legal question arose.

2. The Tribunal remanded the disallowance u/s.35D issue for fresh consideration, which the Revenue argued was erroneous as the issue had already undergone thorough consideration by the Assessing Officer and CIT(Appeals). The Court agreed with the Revenue, directing the Tribunal to reexamine the issue on merits.

3. Regarding the deduction u/s 80IA, the Court found that the Tribunal had granted benefits to the assessee without full discussion. These issues were to be reconsidered by the Tribunal for a detailed decision. Specific issues raised by the assessee in a rectification application were to be addressed by the Tribunal separately.

4. The Tribunal remanded the issue of disallowance out of shares and debentures issue expenses, which had already been decided by the Assessing Officer and CIT(Appeals). The Court instructed the Tribunal to evaluate this issue on its merits rather than remanding it again.

In conclusion, the Court disposed of the Tax Appeal, directing the Tribunal to reconsider the issues related to questions B, C, and D on their merits and issue a fresh decision in accordance with the law.

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