1997 (2) TMI 94

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ce of interest on deposits received from shareholders and directors under section 40A(8) of the Act ? (2) Whether the Appellate Tribunal was correct in invoking section 40A(8) of the Income-tax Act, 1961, to deposits from directors and share holders, especially in view of the legislative background and the provisions of the Companies (Acceptance of Deposits) Rules, 1975 ? (3) Was the Appellate Tribunal right in ignoring the principle of 'pari materia' while interpreting the word 'deposits' in section 40A(8) of the Income-tax Act, with reference to that word in the Companies (Acceptance of Deposits) Rules, 1975 ? (4) Whether the Tribunal was justified in not applying the notification G.S.R. No. 50E, dated February 1, 1977, which exe....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ain reading of the section it cannot be taken that the provisions of sub-section (8) would not be applicable to loans from the directors and shareholders. But learned counsel invited us to look into the provisions contained under the Companies (Acceptance of Deposits) Rules, 1975, which came into force on February 3, 1975, along with its amendment by adding clause (ix) in the definition of the term "deposit" in the said Rules with effect from September 18, 1975. Clause (ix) excluded deposits by the directors from the term "deposit". The provisions under sub-section (8) of section 40A of the Income-tax Act were brought into the statute under the Finance Bill, 1975, with effect from April 1, 1976, following the amendment to the Companies Act ....