1984 (8) TMI 100

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....e IT Act, 1961. The relevant facts are that during the year 1980-81, the assessee has done only one solitary transaction, i.e., it obtained a loan of Rs. 2 lakhs from a Director and advanced the same to company under the same management and earned interest of Rs. 10,667. It is claimed before the ITO that the object of the company included financing business besides construction activity as per Art. 2 of its Memorandum and Articles of Association. The interest so earned should be exempt under s. 40A(8)(c). The ITO did not agree with the claim of the assessee. He added the interest of Rs. 10,667 to the total income. In appeal before the CIT(A), the view taken by the ITO was confirmed. 3. Being aggrieved, the assessee came in second appeal ....

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.... movable or immovable or without any security and in particular to advance moneys for the purpose of enabling the person or Corporation borrowing the same to acquire or purchase or erect or enlarge or repair or develop lands, buildings, house or to take a demise for any terms or terms of years of any land or building in India or elsewhere upon such terms and conditions as the Company may deem fit." Shri Patil, ld. Representative for the assessee has relied on the above para. According to him, this is one of the main objects of the company and the advance made by the assessee-company to the other company is covered by his main object and when this is one of the main object, the interest so earned, cannot be added under s. 40A(8)(c). Sub-s....