Law:

Section:

Interest earned by company on application money deposited with collecting banks or bankers of company cannot be regarded as an amount which is fully available to company for its own use from time interest accrued Section 5 of the Income-tax Act, 1961, read with section 73 of the Companies Act, 1956 - Income - Accrual of - Assessment year 1992-93 - Whether interest earned by company on application money deposited with collecting banks or bankers of company cannot be regarded as an amount which is fully available to company for its own use from time interest accrued as that interest is an amount which accrues on a fund which itself is held in trust until allotment is completed and moneys are returned to those to whom shares are not allotted - Held, yes - Assessee, a public limited company, came out with a public issue of shares on 29-1-1992 and deposited application money so received with collecting banks or bankers of company - Assessee earned interest on such deposits - Assessing Officer disallowed assessee's claim and assessed amount of interest earned by assessee prior to 31-3-1992 in hands of assessee in relevant assessment year - Whether since allotment process was not completed in relevant assessment year, interest earned by assessee could not be said to accrue to it during relevant assessment year - Held, yes - Whether, therefore, said interest was not assessable in hands of assessee in relevant assessment year - Held, yes FACTS The assessee, a public limited company came out with a public issue of shares on 29-1-1992 and the issue was closed on 3-2-1992. The application money received by the company was deposited with collecting banks or the bankers of the company, to which the amounts were transferred, for 46 days. The assessee earned interest on such deposits. The assessee claimed that the application money, which had been received from the applicants for the allotment of shares, was required to be and was kept in a separate bank account as required by section 73(3) of the Companies Act, 1956 that the interest earned on those moneys could not have been treated as income accrued to the company even before the allotment process was completed, and that…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492