- (1.) The Tribunal, Delhi, has referred the following question of law under Section 256(1) of the IT Act, hereinafter referred to as Act, for opinion of this Court: "Whether, on the facts and in the circumstances of the case, the deposits received by the assessee-company from its directors and shareholders are outside the purview of Section 40A(8) of the IT Act, 1961 ?"
(2.) The assessee, M/s Nath Roller Flour Mills (P) Ltd., Muzaffarnagar, is a company incorporated under the Companies Act. The assessment year involved is 1978-79 for which the previous year ended on 30th Sept., 1977.
(3.) During the course of the assessment proceedings for the asst. yr. 1978-79, the ITO found that the assessee paid interest of Rs. 64,600 to its directors on their deposits totalling Rs. 3,40,000. The ITO invoked the prqyisions of Section 40A(8) of the Act and disallowed 15 per cent of the interest paid to the directors, i.e., a sum of Rs. 9,690.;