Premium collected not tax-deductible

The Supreme Court (SC) ruled last week that the premium collected by a company on its subscribed issued share capital is not part of "capital employed in the business of the company" and it would not be entitled to claim income tax deduction on that amount received from shareholders. The SC said so while dismissing the appeals titled Berger Paints India Ltd vs CIT. Earlier, the Income Tax Appellate Tribunal and the Delhi High Court had held the same view, interpreting Section 35D of the I-T Act. The company had unsuccessfully argued that it hadissued shares on a premium which was a part of the capital employed in their business and therefore eligiblefor deduction under section 35D.

The Business Standard New Delhi, 03rd April,2017

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