TaxTMI 
TaxTMI 
2004 (8) TMI 31
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....61?" The assessee, M/s. Nath Roller Flour Mills (P.) Ltd., Muzaffarnagar, is a company incorporated under the Companies Act. The assessment year involved is 1978-79 for which the previous year ended on September 30, 1977. During the course of the assessment proceedings for the assessment year 1978-79, the Income-tax Officer found that the assessee paid interest of Rs. 64,600 to its directors on their deposits totaling Rs. 3,40,000. The Income-tax Officer invoked the provisions of section 40A(8) of the Act and disallowed 15 per cent, of the interest paid to the directors, i.e., a sum of Rs. 9,690. The assessee went in appeal and the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 9,690 made by the Income-tax Officer....
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....se of CIT v. Bhandari Machinery Co. P. Ltd. [1998] 231 ITR 294 and the Delhi High Court has held that the deposits received from the shareholders and directors are not exempted from the purview of section 40A(8) of the Act, and, therefore, the interest paid on such deposits is also covered by the said provision. Shri B. Dayal, learned counsel, however, submitted that the speech delivered by the Finance Minister in Parliament while moving the Bill introducing section 40A(8) of the Act is a relevant consideration for interpretation of the meaning where deposit is used in section 40A(8) of the Act and, therefore, the Tribunal had rightly applied the principles and disallowed the addition. Section 40A(8) of the Act provides as follows: "4....
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....he institution or body, by notification in the Official Gazette, specify in this behalf; (v) from any other company; (vi) from an employee of the company by way of security deposit; (vii) by way of security or as an advance from any purchasing agent, selling agent or other agent in the course of, or for the purpose of, the business of the company or as advance against orders for the supply of goods or for the rendering of any service; (viii) by way of subscription to any share, stock, bond or debenture (such bond or debenture being secured by a charge or a lien on the assets of the company) pending the allotment of the said share, stock, bond or debenture, or by way of advance payment of any moneys uncalled and unpaid upon any s....
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....t be resorted to when the language of enactment is plain and unambiguous just as the language of the provision under scrutiny is. The opening clause speaks of any deposit received by a company (other than a banking company or a financial company). The language used is wide and sweeping, so as to embrace within its ken any deposit without any reservation or qualification as to the source from which it originates. The term 'deposit' as defined by the Explanation to section 40A(8) also means any deposit of money and includes any money borrowed by the company. Here also, the phraseology used is wide and sweeping. Then there are nine exclusionary clauses. Had it been the intention of the Legislature to exclude deposits made by or money borrowed ....