1953 (6) TMI 10

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..... ich is the assessee. It appears that this company was floated in 1928, but existed in moribund condition up to the accounting year 1943-44. Indeed, although purported to be a Steamship Company, its subscribed share capital did not exceed ₹ 3,000 during that period. In the accounting year 1944-45, the company appears to have thought of launching upon real business and wanted to issue shares of the value of the ₹ 75,00,000 and debentures of the value of ₹ 25,00,000 in order to procure the necessary money for the purchase of ships. Under the Defence of India Rules, as then obtaining, it was necessary to obtain the permission of the Controller of Capital Issues for the issue of both the shares and the debentures as contemplate .....

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..... condition imposed by the Controller of Capital Issues, it ought to be taken as money borrowed for the purpose of investment in securities. The authorities below repelled that claim on the ground that the object of issuing the debentures was certainly not to invest the money, coming there from in Government securities but to employ it in the assessees business and that the condition imposed by the Controller of Capital Issues made no difference. The assessee thereupon required Tribunal to refer the matter to this Court and a question has been framed and referred in the following forms :- Whether on the above facts and circumstances of this case, the sum of ₹ 1,06,666 in the year 1945-46 and ₹ 1,43,473 in the year 1946-47 .....

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..... fore the authorities below that the debentures had been issued for the purpose of exercising the authority of borrowing and investing, conferred by the memorandum of association. The assessee made one case and one case only and that case was that since the condition imposed by the Controller of Capital Issues necessitated the investment in securities, the borrowing must be regarded as having been made for the purpose of the investment. If that case fails or is given up, there is no other case upon which the claim can be supported at the present stage. As a matter of fact also the assessee did not issue the debentures or raise the share capital for the purpose of the investing the money in Government securities, for, as the authorities below .....

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