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TMI Blog1980 (1) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... Spinning and Weaving Mills is an admissible deduction under rule 5(b) of the First Schedule to the I.T. Act, 1961 ? 2. Whether the Tribunal's view that the expression 'investment' contemplated in rule 5(b) would include the fixed deposit made by the assessee-company with Messrs. Calicut Modern Spinning and Weaving Mills is in accordance with the scheme of the Act and is sustainable in law ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest accrued on the deposit but not realised would also be an 'investment' under rule 5(b) and that the provision made to meet this amount should also be deducted under this rule ? " The assessee is a general insurance company which has sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of an unsecured creditor. The auditor of the assessee-company examined the financial position of the mills and gave his opinion that no part of the fixed deposit made with the mills or interest thereon was realisable. In these circumstances, the assessee made a provision of Rs. 2,68,056 to meet the depreciation or loss of this deposit. For the assessment year 1971-72, the company claimed that this sum of Rs. 2,68,056 should be allowed as a deduction under r. 5(b) of the First Schedule to the I.T. Act, 196l. The ITO disallowed the claim on the ground that all types of assets could not be included in the category of investments and that the present deposit did not fall within that category. The AAC on appeal accepted them assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance Act, 1938 (4 of 1938), to be furnished to the Controller of Insurance, subject to the following adjustments:--....... (b) any amount either written off or reserved in the accounts to meet depreciation of or loss on the realisation of investments shall be allowed as a deduction, and any sums taken credit for in the accounts on account of appreciation of or gains on the realisation of investments shall be treated as part of the profits and gains: Provided that the Income-tax Officer is satisfied about the reasonableness of the amount written off or reserved in the accounts, as the case may be, to meet depreciation of or loss on the realization of investments; ........" In the present case, the assessee made a provision of a sum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid expression. As the word "investment" has not been comprehensively defined in the Act, it should be understood in its ordinary and popular sense or in the sense in which it is understood in the business parlance. The meaning of the word "investment" has been given in the Chambers' Century Dictionary, as " an act of investing, any placing of money to secure income or profits, that in which money is invested ". In Concise Oxford Dictionary, the meaning of the word " investment " has been given as " investing of money; money invested; property in which money is invested". The dictionary meaning shows that so long as money is placed with someone in order to secure income or profits, it will be an "investment". There must be something, some p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess consisted wholly or mainly in the holding of or dealing in investments within the meaning of s. 23A of the Indian I.T. Act, 1922. The contention of the assessee was that the word " investment " had to be understood in a restrictive sense, viz., investments on shares, securities and stocks and not in immovable properties. This contention was not accepted by the Supreme Court. As the expression is understood in a wider sense, this decision in a way supports the view that we are taking and that we have indicated above. The other decision relied on by the learned counsel is CIT v. Aloo Investment Co. P. Ltd. [1980] 123 ITR 132 (Bom). The Bombay High Court has considered the scope of the expression " investment company " occurring in s. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be some acquisition of species of property as a result of laying out of the money. As pointed out earlier, we consider that there has been acquisition of a specie of property. We are not concerned with the question whether this deposit is a negotiable one or not. But it cannot be gainsaid that by reason of the deposit, the assessee has acquired property in the shape of the receipt, and he is the owner thereof. The existence or otherwise of the relationship of debtor and creditor between the person who lays out the money and the company which receives it is not the real criterion of an investment. There may be properties which give rise to that relationship, while there may be others which do not. The result is that the questions and are ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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