1993 (4) TMI 87

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....ncome. This ground was not pressed by the learned counsel for the assessee at the time of hearing and hence this ground is rejected. 2. Ground No. 2 pertains to disallowance of Computation Charges of Rs. 12,01,782. 3. The assessee-company was wholly owned subsidiary company of Karamchand Premchand Pvt. Ltd. (KPPL).The issued capital was 1,11,000 shares of Rs. 100 each, of which 1,10,998 equity shares were held by KPPL and two shares were held by its nominees. The first and final call of Rs. 90 per share was due from KPPL on 27-7-1973 and the Board of Directors of assessee-company resolved to make this first and final can of Rs. 90 per share to be payable on or before 11-8-1973. KPPL had sold some of its industrial undertakings to its ....

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....came a division of Elscope Pvt. Ltd. The assessee proposed to Sarabhai Chemicals by letter dated 28-6-1977 to convert the amount receivable in annual instalments into an amount receivable on demand and it was decided to commute the instalments into an amount payable on demand at a discount of 12%. On this basis the assessee agreed to receive the commuted amount of Rs. 50,40,483 which was to remain with Sarabhai Chemicals a division of Elscope Pvt. Ltd., in current account and was to carry such rate of interest from time to time as was equivalent to the rate of interest chargeable by bankers on working capital to Sarabhai Chemicals from the date of such conversion on the balance outstanding from time to time. In this manner the amount due in....

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....ss loss admissible either under section 28 or under section 37 of the Act. The transaction of assignment to the assessee of the debt due and commutation thereof was not a business transaction but was transaction arising out of issue of capital by the company and hence loss arising in this transaction could not be regarded a business loss or business expenses. The articles of association indicated that the Directors had an absolute discretion to waive payment of any interest and when the Directors agreed to receive the call money through a debt receivable over a period of eight years, the Directors decided to waive right of the company to charge interest to the shareholders for not making the payment of the call on demand and also agreed to ....