TaxTMI 
TaxTMI 
1997 (11) TMI 7
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....e capital base in terms of clause (v) of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964?" The tax case arises under the provisions of the Companies (Profits) Surtax Act, 1964, and it relates to the assessment year 1973-74. It involves interpretation of clause (v) of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 (hereinafter referred to as 'the Act"), which reads as under: "any moneys borrowed by it from Government or the Industrial Finance Corporation of India or the Industrial Credit and Investment Corporation of India or any other financial institution which the Central Government may notify in this behalf in the Official Gazette or any banking institution (not being a financial institution notified as aforesaid) or any person in a Country outside India: Provided that such moneys are borrowed for the creation of a capital asset in India and the agreement under which such moneys are borrowed provides for the repayment thereof during a period of not less than seven years." The assessee-company had approached the Madras Industrial Investment Corporation Limited later known as Tamil Nadu Industrial Investment Corporat....
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....action and if it is taken as a part of a single transaction the loan was outstanding for a period of more than seven years and the loan amount has to be taken into account in the capital computation of the company. Challenging the finding of the Appellate Tribunal the Revenue sought for and obtained a reference and the first question of law set out above has been referred. In so far as the facts relating to the second question of law are as under: The Syndicate Bank by a mortgage deed dated September 10, 1969, advanced a sum of Rs. 50 lakhs to the assessee on condition that the assessee should repay the loan in full by the end of five years from the date of the loan. The assessee subsequently approached the bank for extension of time for the repayment of the loan. The bank by their letters dated April 14, 1976, and December 2, 1977, extended the time for repayment up to June 30, 1979, and if the extended period is taken into account the loan outstanding would certainly qualify for inclusion in the capital. However, the Income-tax Officer was of the view that the subsequent modification in the repayment of the loan cannot be taken into consideration and accordingly, he held th....
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....old that both the transactions should be treated as a single transaction. Mr. P.P.S. Janarthana Raja, learned counsel for the assessee, on the other hand, submitted that the entire transaction has to be seen and the Tribunal has come to the correct conclusion that both the loans should be treated as part of a single transaction. We have carefully considered the rival submissions of learned counsel for the parties. The fact remains that the assessee initially approached the Corporation for extending credit facilities to the extent of Rs. 70 lakhs. The Corporation was unable to extend the credit facilities to the extent needed by the assessee. Therefore, the Punjab National Bank was approached for extending credit facilities. The Punjab National Bank has agreed to lend a sum of Rs. 70 lakhs to the assessee on condition that the Corporation should execute a collateral security and under the terms of the loan, the assessee has repaid to the bank by December, 1969, a sum of Rs. 45 lakhs and the balance amount as on December 31, 1969, was taken over from the bank by the Corporation. The assessee had adhered to the terms of the loan and repaid the sum of Rs. 45 lakhs by December, 19....
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.... base as provided in clause (v) of rule I of the Second Schedule to the Act. Accordingly, we answer the first question of law referred to us in the affirmative and against the Department. So far as the second question is concerned, we will first take up the case of the Syndicate Bank and the reasoning given in the Syndicate Bank case will also equally apply to the loan due to the Punjab National Bank. The Syndicate Bank advanced a loan of Rs. 50 lakhs to the assessee on September 10, 1969. It is stated that it was a mortgage loan. Under the terms of the loan, the assessee has to repay the loan by the end of the fifth year from the date of the loan. The assessee has approached the Syndicate Bank for extension of time to repay the loan. The bank decided the matter and communicated the decision by their letters dated April 14, 1976, and December 2, 1977, extending the time up to June 30, 1979. The extension of the time granted by the bank is with reference to the same loan that was granted on September 10, 1969. The case of the department is that the extension should be ignored as the original loan was granted by a registered deed and hence, the subsequent extension by the bank can....
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....plication to the facts of the case. In so far as the applicability of section 92 of the Indian Evidence Act is concerned, section 92 excludes the evidence of oral agreement. Proviso 4 to section 92 provides as under: "The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, may be proved, except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents" Under proviso 4 to section 92 of the Indian Evidence Act oral evidence is not admissible where by a subsequent oral agreement there is a modification of the original contract, where such a contract was by law required to be in writing. In this case it is not by virtue of an oral agreement the original mortgage deed was modified. It was only on exchange of letters between the assessee and the bank, the bank has deliberated and after due deliberation the bank has extended the period of time for the repayment of the loan by their two letters. It is not a case of oral agreement but by written agreement the or....