Law:

Section:

Section 56, read with section 57 of the Income-tax Act, 1961 - Income from other sources - Chargeable as - Assessment year 1962-63 - Assessee-company having objects inter alia manufacture and sale of electric wires, cables etc. obtained certificate of commencement of business on 30-7-1961 - It collected share capital and amount was deposited with banks - In relevant assessment year it earned a sum as interest on deposits and a sum on account of share transfer and splitting fees - Assessee incurred certain expenditure during said period by way of salary and wages to its employees, printing etc. - Assessee claimed that deposit of share capital by it in banks was a business as per clause (v) of article 3 of its memorandum and that interest earned thereby was income from business - This claim was rejected by ITO holding that said amounts were income from other sources - Whether finding of Tribunal that deposit of share capital by assessee in bank was not a business carried on by assessee was perfectly right - Held, yes - Whether, basides, assessee was also not entitled to deduction of expenses on account of salary and wages, printing, etc. - Held, yes FACTS The assessee-company which was incorporated on 5-2-1960. The objects of the company were, inter alia, manufacture and sale of all types of electric wires, cables, etc. The company obtained the certificate of commencement of business on 30-7-1961. It had a collaboration arrangement with a Canadian company. On 24-9-1962, there was a meeting of the shareholders of the assessee-company in which the directors submitted their report for the year ended 31-3-1962. It was stated in that report, among other things, that the Kerala Government had issued orders for the acquisition of 46 acres of land for the use of the company, that the collaborating company had commenced preliminary work on the project, that it was expected that the plans and specifications for the building would be read soon, that the preparation of the design and blueprint for the machinery had been taken on hand, that it was expected that the machinery could be obtained within a year and that the company would go into production before the end of 1963.…

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