1982 (1) TMI 42

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....ANDURKAR J.-The assessee-company, which is an investment company, had underwritten the subscription for the shares issued by the United Board and Paper Mills Ltd., and had, therefore, to take up 76,809 ordinary shares of Rs. 10 each on which Rs. 7.50 was paid up. The assessee had also purchased 2,380 preference shares of Rs. 100 each on which Rs. 75 was paid up. The paper mills was mismanaged and ....

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....ed did not bring in any new asset to the assessee nor did it add to the value of any existing asset and the expenses had been incurred only to preserve the existing asset which consisted of a fruitful investment. The expenses incurred by the assessee were held to be deductible. Arising out of this order of the Tribunal, the following question has been referred at the instance of the Revenue?. ....

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.... unpaid value of the shares, but the proper perspective, in which the proceedings taken by the company for the liquidation of the paper mills, must be considered. The object of the company in moving the court for liquidation of the paper mills was to safeguard its capital asset, viz., the moneys which it would have been required to pay to a company which was on the verge of liquidation on account ....