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An appeal filed under Berger Paints India Ltd. v. CIT  292 ITR 658/ 154 Taxman 293 (Delhi) case has been dismissed by the order of Delhi High Court stating that 'premium collected by company on its subscribed issued share capital is not and cannot be said to be part of 'capital employed in business of the company'.
The facts of case are that the appellant issued shares on a premium which, according to them, was a part of the capital employed in their business. While filing IT return, they claimed deduction under section 35D under the head "preliminary expenses" amounting to Rs.7,03,306/- being 2.5% of "capital employed in the business of the company". The sole grievance of appellant was that their claim for deduction under section 35D of Income Tax Act was disallowed by AO by holding that the expression "capital employed in the business of the company" did not include the "premium amount" received by the appellant on share capital.
As per the provisions of Companies Act and Income Tax Act, 1961, the appeal by assessee has been aptly dismissed by the Delhi High Court.