9911796707
TMI Blog1998 (11) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner of Income-tax (Appeals) disallowed the claim of the assessee under section 40A(8) of the Income-tax Act, 1961 (for short, "the Act"), observing as under : "9. Addition under section 40A(8): The Commonwealth Trust Ltd. (London), became amalgamated with the Indian company Commonwealth Trust (India) Ltd., with effect from October 1, 1977, as a result of the scheme of amalgamation finally approved by the High Court of Kerala by their order dated June 5, 1980, with effect from October 1, 1977. As a result of this order all the assets and liabilities became vested in the appellant company, the Commonwealth Trust (India) Ltd. The consideration fixed for this transfer was Rs. 50,00,000. In the normal course, the appellant is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any 'money borrowed'. What the assessee paid is an interest on the mode of payment of consideration for the assets received by virtue of a scheme of amalgamation as approved by the High Court of Kerala. In view of the above facts, we are of the opinion that the order of the Revenue authorities, in making disallowance made under this, head is without merit. We, therefore, allow the appeal by the assessee on this ground." The only question for consideration is whether disallowance of Rs. 82,500 under section 40A(8) of the Act is legally sustainable. Sub-section (8) of section 40A, which has since been deleted with effect from April 1, 1986, was inserted by the Finance Act, 1975, with effect from April 1, 1976. Sub-section (8) of section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney which includes money borrowed by a company, no disallowance as envisaged by sub-section (8) could be made. From the above reproduced facts, as stated in the order of the Commissioner of Income-tax (Appeals), no deposit within the meaning, of Explanation (b) is established and, therefore, the Tribunal was right in holding that no interest was paid on deposit within the meaning of Explanation (b) to sub-section (8) of section 40A of the Act. We, therefore, agree with the view taken by the Appellate Tribunal that on the facts of this case, section 40A(8) of the Act would not attract. The objects and reasons for introducing sub-section (8) of section 40A can be taken into aid to test the correctness of the view we have taken. They are a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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