Delhi High Court: Share allotment funds as deposits under Income Tax Act

The High Court of Delhi ruled in favor of the Revenue in a case related to the assessment year 1978-79. The court held that money received for share allotment, remaining with the company without shares being allotted, constituted deposits under section 40A(8) of the Income-tax Act. Additionally, the court determined that the actual cost of depreciable assets, not just the written down values, should be included in the capital employed in the industrial undertaking under section 80J, citing the Supreme Court's decision in Lohia Machines Ltd. v. Union of India.

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The High Court of Delhi ruled in favor of the Revenue in a case concerning the assessment year 1978-79. The court held that sums of money received for share allotment, which remained with the company without shares being allotted, constituted deposits under section 40A(8) of the Income-tax Act. The court also determined that the actual cost of depreciable assets, not just the written down values, should be included in the capital employed in the industrial undertaking under section 80J. The judgment was based on the assessee's treatment of the amounts as deposits and the Supreme Court's decision in Lohia Machines Ltd. v. Union of India.

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