LexM/S. BERGER PAINTS INDIA LTD. versus C. I. T. DELHI-V
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[2017) 4 S.C.R. 735 M/S. BERGER PAINTS INDIA LTD. A v. C. I. T. DELHI-V (Civil Appeal No. 2162 of2007) MARCH 28, 2017 B (R. K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.] Income Tax Act, 1961 - s.35D and ss.(l), 143(JB), 143(2) - Whether "premium" collected on subscribed share capital of a company is "capital employed in the business of the Company" C within the meaning of s.35D for claiming deduction of the said · amount u/s.35D - Held: The "premium amount" collected by Company on its subscribed issued share capital is not and cannot be said to be the part of "capital employed in the business of the Company" for the purpose of s.35D(3)(b) - If the intention of the Legislature were to treat the amount of "premium" collecte:l by D Company from its shareholders while issuing shares to be part of "capital employed in the business of the company", then it would have been specifically said so in the Explanation (b) of sub-sec. (3) of s.35D - However, it was not said - Appellant-Company not entitled to claim any deduction in relation to amount received towards E premium from its shareholders on the issued shares of the Company. Dismissing the appeals, the Court HELD: 1.1. The "premium amount" collected by the Company on its subscribed issued share capital is not and cannot be said to be the part of "capital employed in the business of the Company" for the purpose of Section 35D(3)(b), Income Tax Act, 1961 and hence the appellant-Company was rightly held not entitled to claim any deduction in relation to the amount received towards premium from its various shareholders on the issued shares of the Company. (Para 18] (741-E] 1.2. This is for more than one reason. First, if the intention of the Legislature were to treat the amount of "premium" collected by the Company from its shareholders while issuing the shares to be the part of "capital employed in the business of the company", then it would have been specifically said so in the Explanation(b) 735 F G H 736 SUPREME COURT REPORTS [2017] 4 S.C.R. • A of sub-section(3) of Section 35D of the Act. It was, however, not B said. [Para 19) (741-F-G] 1.3. Second, non-mentioning of the words does indicate the legislative intent that the Legislature did not intend to extend the benefit of Section 35D to such sum. [Para 20) [741-G-H] Commissioner of Income Tax, West Bengal v. Allahabad Bank Ltd. (1969) 2 sec 143 : [1969) 3 SCR 722 '-- relied on. c [1969) 3 SCR 722 Case Law Reference relied on Para 20 D CNIL APPELLATE JURISDICTION: Civil Appeal No. 2162 of2007. From the Judgment and Order dated 15.05.2006 of the High Court of Delhi at New Delhi, in Appeal No. ITA/799/2004 WITH C.A. No. 2163 of2007. Radha Shyam Jena, Adv. for the Appellant. Mukul Rohatgi, Ld. AG., Pritish Kapoor, Ms. Niranjana Singh, E Ms. Sadhana Sandhu, Mrs. Anil Katiyar, Ad vs. for the Respondent. The Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J. 1. These appeals are filed against the final judgment and orders F dated 15.05.2006 passed by the High Court of Delhi at New Delhi in Appeal Nos. ITA No. 799 of 2004 and 797 of 2004 whereby the High Court dismissed the appeals filed by the appellant herein arising out of the order dated 26.04.2004 and 25.08.2004 passed by the Income Tax Appellate Tribunal, New Delhi(hereinafter referred to as "the Tribunal) G in LT.A. No.2307/Del/2000(Assessment Year 1996-97) and I.T.A. No.1434/Del/200 l (Assessment Year 1997-98) respectively. 2. In order to appreciate the issue involved in these appeals, it is nec~_ss.ary to state few relevant facts infra. 3. The appellant is a Limited Company engaged in the business of H manufacture and sale of various kinds of paints. For the Assessment M/S. BERGER PAINTS INDIA LTD. v. C. I. T. DELHI-V 737 [ABHAY MANOHAR SAPRE, J.] Year 1996-97, the appellant (assessee) filed their income tax return and A declared the total income at Rs.3,64,64,527/-. It was, however, revised to Rs.3,58,92,771/- and then again revised to Rs. 3,57,26,644/-. The return was then processed by the Assessing Officer(in short "A.O.") under Section 143 (lB) of the Income Tax Act (hereinafter referred to as "the Act") at an amount ofRs.3,63,03,128/-. B 4. A notice was issued by the A.O. to the appellant (assessee) under Section 143(2) of the Act which called upon the appellant to explain as to on what basis the appellant had claimed in the return a deduction under the head "pr
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