9911796707
TMI Blog1981 (8) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 42,427 and Rs. 43,355 out of which Rs. 24,300 was paid to the three Directors of the assessee company which is a private limited company. In the asst. yr. 1976-77, the ITO has pointed out that he asked the Directors to be present vide order sheet note dt. 15th July, 1977 so that the genuineness of the payment could be verified but the Directors never appeared before the ITO although several adjournments were allowed. The ITO took the view that when the company is running under loss the payment of such large sums to the Directors as remunerations is unreasonable. He also held that it was not clear what services the Directors had rendered to the company as they avoided to be present and examined. The ITO therefore, allowed remuneration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the asst. yrs. 1976-77 and 1977-78 relating to the salary paid to the three Directors. 5. Grounds 3, 4 and 5 relate to disallowance under the head interest. In the asst. yr. 1976-77 the assessee claimed payment of interest of Rs. 53,211. The ITO found that although the authorised capital of the company is of Rs. 10,000 equity shares of Rs. 10 each, only 1,000 equity shares of Rs. 10 were called for subscription paid up and the assessee company took loan of Rs. 2,85,191 from the directors and firm in which the Directors are interested and further loan of Rs. 2,25,527 was taken from the relatives of the Directors who were substantially interested in the company. The assessee company was asked to show cause why interest should not be disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -77 and 1977-78. He has also filed a statement which shows that on the same loans interest of Rs. 45,701.01 and Rs. 47,786.24 were paid in the asst. yrs. 1974-75 and 1975-76 and the entire interest was allowed. This goes to show that the loans were treated as for business purposes in the asst. yrs. 1974-75 and 1975-76. The ld. counsel for the assessee has claimed that no fresh loans were taken in the asst. yrs. 1976-77 and 1977-78. Under such circumstances, the interest payment in the asst. yrs. 1976-77 and 1977-78 should have been allowed in full. 8. We have heard both sides on the matter. By allowing interest on these very loans which are coming from earlier years the department has accepted that the loans were taken for business purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ITO will calculate necessary relief to the assessee. 12. In the asst. yr. 1976-77 one more ground has been raised that loss of the earlier year should have been allowed. The ld. counsel for the assessee has filed a copy of the petition before the CIT (Appeals) dt. 10th Oct, 1980. This petition shows that the assessee raised the additional ground to the effect that the ITO had erred in not carrying forward the loss of the earlier year and adjust the same by profit of the year. But the CIT (Appeals) had not discussed this. The ld. counsel for the assessee has also filed a copy of the order of the CIT (Appeals) which shows that the assessee company had withdrawn the petition under s. 154 and so the CIT (A) allowed the assessee to withdra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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