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TMI Blog1990 (8) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the rule states that, for the purpose of the rule, in arriving at the aggregate of the paid-up share capital and free reserves of a company, there shall be deducted from the aggregate of the paid-up share capital and free reserves as appearing in the latest audited balance-sheet of the company, the amount of accumulated balance of loss, balance of deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance-sheet. In other words, the Explanation provides the mode in which the aggregate of the paid-up share capital and free reserves of a company is to be arrived at. Rule 10 of the Rules requires every company to file with the Registrar of Companies on or before the 30th day of June of every year a return in the form annexed to the rules, furnishing the information required therein as on the 31st day of March of that year duly certified by the auditor of the company. The form appended contains a certificate to be attested by the manager of the company certifying, inter alia, that the aggregate of the paid-up capital and free reserves, etc., is arrived at on the lines indicated in the Explanation to rule 3. The controversy bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years ending December 31, 1979, and December 31, 1980, respectively. The matter rested there, and no objection was raised subsequently in relation to the returns as on March 31, 1982, and March 31, 1983, made, following the same pattern. But the matter was raked up again when the petitioner submitted its return in the same manner containing the information as on March 31, 1984. A large volume of correspondence passed between the parties, both sides sticking to their respective positions. The respondent was firmly of the view, as evident from his letters, exhibits P-4, P-6, P-8 and P-11, that the petitioner has to arrive at the aggregate of paid-up share capital and free reserves with reference to the balance-sheet as on December 31, 1982, since that was the last audited balance-sheet as on March 31, 1984. But the petitioner equally firmly stuck to its point that the return can reflect the state of affairs as on December 31, 1983, inasmuch as that was the latest audited balance-sheet as on the date on which the return was filed, namely, June 30, 1984. This is the controversy to be resolved in these proceedings. The respondent relies on the Explanation to rule 3 to contend t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 3. What rule 10 and the form appended thereto require is only the aggregate to be arrived at on the lines indicated in the Explanation. In other words, what is to be done is to deduct the various items mentioned in the Explanation from the paid-up capital and free reserves in the latest audited balance-sheet which can be the one as on the date of filing of the return. The petitioner points out, in this connection that when once the accounts are audited, and they are approved by the general body, as in this case, the balance-sheet relates back to the last date of the year to which it pertains. Reliance is placed on the decisions in CIT v. Mysore Electrical Industries Ltd., [1971] 80 ITR 566 (SC) of the Supreme Court, CIT v. Aryodaya Ginning and Manufacturing Co. Ltd. [1957] 31 ITR 145 of the Bombay High Court and Southern Roadways Ltd. v. CIT [1981] 51 Comp. Cas. 513 , of a Full Bench of the Madras High Court. After hearing counsel on both sides, I am of the view that, having regard to the purpose and the scheme of section 58A and of the rules, the petitioner's contention has to be accepted. Section 58A empowered the Central Government to prescribe the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as possible, with reference to the latest available authentic figures. The availability of such figures as on a date nearest to the 31st of March, with reference to which the return is filed, will facilitate effective implementation of the statutory provisions and the supervision and control envisaged thereby. In other words, the availability of an audited balance-sheet with reference to a date nearest to the 31st of March concerned will better achieve the object of section 58A and the Rules. An ideal state of affairs will be where the latest audited balance-sheet available is as on the 31st day of March of the year to which the return itself relates. Since that is not practicable, the rules have relegated the position to the last of the audited balance-sheets available. I must state here that it is advisable to adopt a construction of a statute that will promote the general legislative purpose underlying the provision. A purposive approach which will advance the cause and the object of the legislation is called for. The interpretation canvassed by the respondent will, according to me, detract from the utility of section 58A as an effective check on the acceptance of deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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