COMMISSIONER OF INCOME TAX Vs. RAJAKATRA P LTD

JUDGEMENT

(1.) THE Tribunal has referred the following question of law to this Court under s. 256(1): of the IT Act, 1961 (the Act) :

(2.) IN this reference the assessment year involved is 1977-78 for which the corresponding relevant accounting year is the year ending on 31st Dec., 1976.

(3.) WE have held in the case of Daga and Co. (P) Ltd. vs. CIT (IT Ref. No. 148 of 1988 dt. 14th Feb., 1990 that the deposits made by the directors, share-holders and/or the other persons closely connected with the company will come within the mischief of s. 40A(8) if the conditions laid down in the section were fulfilled. Sec. 40A(8) provides: