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TMI Blog2005 (2) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... l not over, there was no debt in existence owed by the assessee to any applicant on the first day of the computation period. - We, therefore, answer the question in the negative, i.e., in favour of the assessee and against the Revenue. - - - - - Dated:- 4-2-2005 - Judge(s) : N. K. SUD., SATISH KUMAR MITTAL. JUDGMENT The judgment of the court was delivered by N.K. Sud J.- In pursuance of the direction of this court, the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal"), has referred the following question of law arising out of its order dated April 30, 1985, for the opinion of this court: "Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax (Appeals) (for short "the CIT(A)"), who accepted the claim of the assessee that the share application money was neither a loan nor a borrowing by the company and as such could not be deducted from the total value of the assets in working out the capital employed in terms of section 80J of the Act. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Revenue preferred an appeal before the Tribunal which was allowed and the findings of the Commissioner of Income-tax (Appeals) were reversed in the following terms: "... In our opinion, the order of the Commissioner of Income-tax (Appeals) deserves to be reversed. Till the shares are allotted, the share application money is shown in the balance-sheet as such. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary 29, 1992 and February 3, 1992. However, the permission for issue of shares was granted from March to July, 1992. The Assessing Officer held that the amount of interest on the application money which had accrued prior to March 31, 1992 (the close of the financial year relevant to the assessment year), was liable to be taxed under the head "Income from the other sources," in the assessment year 1992-93. The assessee, on the other hand, claimed that the said interest had accrued in the subsequent year when the allotment process had been completed in all respects. It was only then that the application money kept in the separate bank account was capable of being regarded as belonging to the assessee. Thus, the issue involved in the said ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1A) of this section. As per clause (II) of that sub-section, first the total value of the assets is ascertained. There is no dispute in respect of the computation of value of the assets under this clause. From the value so determined, the amounts specified in clause (III) are to be excluded. This clause reads as under: "(III) From the aggregate of the amounts as ascertained under clause (II) shall be deducted, the aggregate of the amounts, as on the first day of the computation period, of borrowed money and debts owed by the assessee (including amounts due towards any liability in respect of tax)." It is, thus, clear that the amount of share application money can only be deducted out of the value of assets, if it were to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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