M/S BERGER PAINTS INDIA LTD. vs. COMMISSIONER OF INCOMET AX

ITA/799/2004HC DelhiDLHC01017284200415 May 2006Bench: HON'BLE MR. JUSTICE MUKUL MUDGAL,HON'BLE MR. JUSTICE P.K. BHASIN7 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that share premium collected by the company is not 'capital employed in the business of the company' as defined under Section 35D(3) of the Income Tax Act. The explanation to Section 35D(3) clearly defines capital employed as issued share capital, debentures, and long-term borrowings.

What were the facts?

The assessee claimed preliminary expenses under Section 35D based on 'capital employed in business'. The Assessing Officer disallowed a portion of the claim, excluding share premium from capital employed. The CIT allowed the appeal, including share premium, but the Tribunal reversed this decision.

What were the issues?

Whether share premium received on issue of shares is includible in 'capital employed in the business of the company' for the purpose of calculating deduction of preliminary expenses under Section 35D.

Which sections of the Income-tax Act were involved?

Section 35D

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IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: Mav 15.2006 M/S BERGER PAINTS INDIA LTD. Appellant Through: Mr.P.K. Sahu, Adv. versus CQMMR. OF INCOME TAX, DELHI-V...... Respondent Through: Ms.Prem Lata Bansal, Mr Aj ay Jha, Advocates CORAM: HON'BLE MR. lUSTICE T.S. THAKUR HON'BLE MR, JUSTICE SHIV NARAYAN DHINGRA

1.

Whether reporters of local papers may be allowed to see the| judgment?

2.

To be referred to the Reporter or not?

3.

Whether the judgment should be reported in the Digest? T.S. THAKUR. T. ! I I i The short question that falls for consideration in this appeal is whether premium collected by the appellant assessee on its subscribed share capital is 'capital employed in the n I ~ business of the company' within the meaning of Section 35D of the Income Tax Act. It arises in the following circumstances; P^Se 1 of ,7 O

2.

For the assessment year 1996-97, the assessee company declared an income of Rs.3,64,

The order continues below.

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