9911796707
TMI Blog1986 (2) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... y to retain the status of the company and as such, such expenditure was to be allowed as a deduction while computing the total income of the company. The assessee is a company constituted for the purpose of manufacture of board and paper. The company is in the process of putting up its factory. During the year under consideration, the only source of income of the company was interest on deposits with banks. During the previous year ended 31st March, 1982, relevant to the asst. yr. 1982-83, the income by way of interest amount to Rs. 28,800. During the accounting period ended 31st March, 1983 relevant to the asst. yr. 1983-84 income by way of interest was for Rs. 30,565. During these years, the assessee-company was engaged in the constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to year. The assessee had claimed deduction of expenses of Rs. 11,295 for the asst. yr. 1969-70 and Rs. 10,613 for the asst. yr. 1970-71. The ITO disallowed the entire expenses for both the years on the ground that during the relevant years the assessee did not carry on any business. The Tribunal found that though the assessee company in the relevant years did not carry on any business, yet it had to exist as a company and satisfy certain requirements of company law and that it was sine qua non before the assessee-company could earn any income from any source that is, it should exist as a company. The Tribunal had held that the expenditure incurred towards that end was to be allowed as a deduction. The High Court affirmed the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of that assessment year. Before us, no reason has been advanced by the Department to say that the said expenditure on travelling and Director's remuneration was not to be regarded as expenditure being necessary for retaining the status of the company. The Departmental Representative had argued that the ratio of the decision in Calcutta High Court in the case of CIT vs. New Central Jute Mills Co. Ltd. (1979) 118 ITR 1005 (Cal) will apply to the facts of this case. The question to be decided in that case was whether the interest paid by the assessee to the Government on a loan obtained from the government was to be allowed as a deduction against the interest income from the amount of the loan which had been deposited by the assessee wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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