9911796707
TMI Blog1989 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... cts leading to this reference are that the assessee carries on the business of manufacture of industrial gases. During the said two years, the assessee earned interest on unpaid call money from its shareholders amounting to Rs. 1,48,841 and Rs. 148, respectively. In the previous year relevant to the assessment year 1968-69, the assessee-company had initially offered for taxation the entire sum of Rs. 1,48,841. However, by way of an additional ground sought to be taken in appeal before the Commissioner of Income-tax (Appeals), such interest was claimed to be not taxable on the ground that it was a casual or a windfall gain. In the assessment for the assessment year 1969-70, the interest of Rs. 148 was claimed to be not taxable on the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be disposed of in relation to the assessment year 1969-70. The Tribunal found that the interest was charged from the shareholders pursuant to article 17 of the articles of association, which provided the machinery by which the assessee could earn a definite amount in the event of delay in payment of call money by the shareholders. The Tribunal also noted that it could not be denied that there was some concerted activity in determining the interest on unpaid calls from the defaulting shareholders. The receipt of interest according to the Tribunal was, therefore, neither casual nor in the nature of a windfall gain to the assessee-company. In the course of hearing before us, Sri C. M. Chopra, learned counsel appearing for the assessee, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Divecha (Decd.) v. CIT [1963] 48 ITR 222 (SC) ; Narain Swadeshi Wvg. Mills v. CEPT [1954] 26 ITR 765 (SC) and Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429 (SC). Sri A. C. Moitra, learned counsel appearing on behalf of the Revenue, on the other hand, sought to distinguish the cases cited on behalf of the assessee and submitted that the interest has been received by the assesseecompany from its shareholders pursuant to clause 17 of the articles of association and, therefore, it could not be said to be a receipt of a casual or windfall nature. In support of his contention, he relied on the decision of the Gauhati High Court in India Carbon Ltd. v. CIT [1976] 102 ITR 797. We have considered the rival contentions. At the outset, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany pursuant of article 17 which is a part of the contract between the company and its shareholders, was fortuitous, accidental, unforeseen and/or casual. When the shareholders delayed the payment of call moneys, it was well known both to the shareholders as well as to the company that the defaulting shareholders are liable to pay interest and the company would be entitled to charge such interest from the shareholders concerned. As such, the receipt of interest in case of default was clearly foreseen, known, anticipated and also provided for in article 17 of the articles of association which constituted an agreement between the company and its shareholders. In these circumstances, the receipt of such interest cannot, in our view, be said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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