TaxTMI 
TaxTMI 
1990 (2) TMI 3
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....77; 14,989 under section 40A(8) of the Act being 15 per cent. of ₹ 99,320. The assessee took up the matter in appeal before the Commissioner (Appeals). Its contention before the Commissioner (Appeals) was that out of ₹ 99,320, ₹ 93,247 was paid as interest to Amit Kumar Daga, Godavari Devi Daga, Lila Bhoopal, Sunil Kumar Daga and others, Bhagwandas Daga and others, Bhawandas Daga and Bansidhar Sitaram and Co., who were directors, their relatives and firms in which they were interested. The credits in their accounts, the assessee-company took a stand, could not be considered to be " deposits " within the meaning of section 40A(8) of the Act. The plea of the assessee found favour with the Commissioner (Appeals). He accordingly deleted the disallowance of interest paid to these persons. The Department came up in appeal before the Tribunal. The Tribunal, following its earlier order dated July 27, 1984, in the cross-objection Nos. 148 to 150 (Cal) of 1982 in I.T.A. Nos. 2124 to 2126 (Cal) of 1982 relating to the assessment years 1979-80 to 1981-82 filed by the assessee allowed the Department appeal by the order under reference. " The Tribunal's ord....
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....uary 19, 1982 in the case of Shivraj Motors Ltd. v. ITO [1983] 33 CTR (Trib.) 10 (Mad) and order dated February 2, 1980, of " B " Bench of the Tribunal at Bombay in Income-tax Appeal No. 691 (Bom) of 1979 in the case of M. E. (P.) Ltd. v. ITO [1981] 11 TEJ (Bom) 299. He also placed reliance upon the order of the Commissioner (appeals)-XI, Calcutta, dated March 3, 1983, in the case of this assessee-company itself for the assessment year 1982-83. The learned Departmental Representative, on the other hand, argued that the principal amounts on which interest was paid to different persons, were none the less deposits within the meaning of Explanation (b) to section 40A(8) of the Act and such deposit does not find place in the list of exemptions given in the said Explanation. He, therefore, vehemently opposed the cross-objections and supported the orders of the Income-tax Officer and the Commissioner (Appeals). A minute analysis of section 40A(8) and the meaning of " deposit " shows that interest paid on any deposit or loan except those enumerated in Explanation (b) comes within the restrictions placed by the section. " Deposit " has been defined as any de....
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.... credit entries of cash balance and the amount of interest accrued and also the amounts of dividends received from, other companies. On the debit side, only payment to certain persons on their behalf, viz., to the Life Insurance Corporation, the Municipal Corporation, etc., and tax deducted at source appeared. Such account by no stretch of imagination can be taken as current account. We have minutely gone through the copies of the accounts of the creditors filed in the paper book and we do not find that any of the accounts can be taken as current account. It is not known as to in what capacity Bansidhar Sitaram and Co. had transactions with the assessee-company. In the accounts of that company there are many items of withdrawals but they have not been proved as being out of the ambit of deposit. " Mr. Roy appearing on behalf of the assessee contended that the Tribunal has misunderstood the meaning of the word " deposit " employed in section 40A(8) of the Act. He has contended that it is not necessary specifically to go into the Explanation provided by the statute. The amounts standing to the credit of the shareholders and directors were nothing but accounts maintain....
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....institution or body as the Central Government may, having regard to the nature and objects of the 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 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 shares in the company, if such moneys are not repayable in accordance with the articles of association of the company; (ix) as a loan from any person where the loan is secured by the creation of a mortgage, charge or pledge of any assets of the company (such loan being hereafter in this sub-clause referred to as the relevant loan) and the amount of the relevant loa....
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....ccounts to discharge personal or statutory obligation of the depositors. One of the accounts annexed to the statement of case is the ledger account of Amit Kumar Daga, which is set out below : " IN ACCOUNT WITH DAGA AND CO. PVT. LTD. JALPAIGURI FROM 1-4-1981 To 31-3-1982 Date Particulars Dr. Cr. Balance 1981-82 April 1 By Balance 12,356.00 March 31 By Interest up to 31-3-1982 1,606.00 To Income-tax on interest 161.00 To Balance 13,801.00 Cr. 13,801.00 13,962.00 13,962.00 1982-83 April 1 By Balance 13,801.00 FOR DAGA AND CO. PRIVATE LTD. " The credit entry of ₹ 1,606 was on account of interest payable on the sum of ₹ 12,356 which was the opening balance of account on September 14, 1981. The only debit entry in the account is of a sum of ₹ 161 which has been deducted at source for payment of income-tax. There is an account of one Lila Pal of which the opening entry was ₹ 1,35,638.27. Dividend amount of ₹ 92.04 and interest of ₹ 16,340.62 were credited to this account. A sum of ₹ 1,634 has been deducted at source on account of income-tax payable on the amount of interest. The Tribunal is right in conclud....