Law:

Section:

I - Section 80IA, read with section 32, of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings - Assessment year 1997-98 - Whether for purpose of availing of deduction under section 80-IA total income of assessee is required to be computed by deducting allowable depreciation under section 32 even if assessee has not claimed it - Held, yes II - Section 2(22) of the Income-tax Act, 1961 - Deemed dividend - Assessment year 1997-98 - Assessee-company had taken an unsecured loan from its sister concern, namely, AMPL - In view of facts that AMPL was a company in which public was not substantially interested and that same two persons held majority of share capital in assessee-company as well as in AMPL, Assessing Officer held that entire amount of loan advanced by AMPL to assessee would be treated as deemed dividend under section 2(22)(e) - Whether only that amount of loans and advances, which was actually received by assessee during relevant assessment year, would fall within inclusive sub-clause (e) of definition of 'dividend' appearing in section 2(22)(e) - Held, yes - Whether opening words 'any payment' occurring in sub-clause (e) of section 2(22) contemplated actual payment made by company to assessee for being treated as a dividend in computing income of assessee and, therefore, amount of provision made for interest which assessee was liable to pay to AMPL by way of an interest on outstanding amount could not be regarded as payment made by AMPL within meaning of sub-clause (e) of section 2(22) - Held, yes - Whether further since lending of money was a substantial part of business of AMPL, money given by it by way of advance or loan to assessee, even during relevant assessment year, could not be treated as 'deemed dividend' by virtue of sub-clause (ii) of section 2(22) - Held, yes FACTS - I The assessee-company was engaged in the business of manufacture of plastic caps for mineral water bottles. During the relevant assessment year, it declared certain income the whole of which was claimed as a deduction under section 80-IA. The Assessing Officer noticed that the company had claimed depreciation under the Companies Act, 1956,…

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