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TMI Blog1988 (4) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... the return and had completed the assessment by his order passed on 31st March, 1982. He had disallowed certain claims made by the assessee but the loss claimed was substantially accepted and directed to be carried forward. 3. According to the CIT, the acceptance of the loss returned was an Act prejudicial to revenue. In his order under s. 263 he pointed out that the loss return must be filed within the time limit given under s. 139(3) and since this return was not filed within the prescribed period, it should have been ignored. He held that the computation of loss must be held to be incorrect and against the provisions of law. 4. In our opinion, the issue raised by the CIT is now covered by the instructions issued by the CBDT in F. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows an opening balance of Rs. 14,96,04,368 in respect of the State Government's contribution. The Corporation has received a further contribution of Rs. 2,42,00,000. The opening balance of the contribution from the Central Government was Rs. 6,04,87,000. The further receipts during this year was Rs. 1,61,80,000. These four receipts totalled to Rs. 25,04,71,368. It appears, there is a notification by the State Government under which the Corporation is obliged to pay interest on these amounts. At the end of the accounting year concerned they had calculated the interest payable under s. 28 to be Rs. 1,40,29,601. This was claimed as a deduction and allowed by the ITO. 6. The CIT was of opinion that the deduction allowed was erroneous and prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not governed by the provisions of the Companies Act. It is a statutory Corporation governed by the provision of the Road Transport Corporation Act, Rules and Notification thereunder. These provisions expressly provide for payment of interest on the capital contribution. This payment of interest is not payment to the Corporation itself. It is a payment to those who contributed the capital of the Corporation. It is a payment made to third parties. It is, therefore, an outgo as far as the assessee is concerned. There is nothing invalid in the payments. On the other hand, it is expressly provided for in the Act itself. Therefore, it is a case of a payment of interest on monies received. It would be allowable under all normal circumstances. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1986) 52 CTR (SC) 75 : (1986) 159 ITR 1 (SC), it is well settled that Road Transport Corporation is exempt under s. 11. Therefore, the profits will not be subjected to taxation. This had been accepted by the Department also. For all subsequent years, he submitted, the assessee's claim for exemption under s. 11 has been accepted. For this assessment year there is a loss which has to be carried forward. The amount of interest to be disallowed will make no difference ultimately because the loss to be carried forward would still be a large figure and from the subsequent years onwards the income is held to be exempt under s. 11. Therefore, no prejudice at all is caused to revenue even though the order may be erroneous prima facie. We find cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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