ORDER
T. Venkatappa, Judicial Member
1. The assessee claimed deduction of Rs. 5,000 under Section 80CC representing investment in shares in V.B.O. Ferro Alloys. The assessee invested Rs. 11,000 in the shares which were purchased out of promoters quota and not from the issue offered to the public. The Income-tax Officer disallowed the claim on the ground that the company has not come out with any public issue during the year of account. On appeal, the Appellate Assistant Commissioner held that the shares were from the promoters quota and not from the issue offered to the public and so the assessee is not entitled to deduction under Section 80CC. Against the same the assessee has preferred this appeal.
2. The learned counsel for the assessee submitted that the Controller of Capital Issues has granted necessary permission for the public issue of the shares. The shares purchased from the promoters’ quota would be eligible for deduction under Section 80CC. The learned departmental representative justified the disallowance.
3. We have considered the rival submissions. The Controller of Capital Issues gave consent by letter dated 28-3-1984 to the assessee for issuing 18,50,000 equity shares which include shares reserved for promoters. Accordingly shares were issued. The assessee invested Rs. 11,000 in equity shares reserved for promoters quota. In our view the investment in equity shares reserved for promoters quota would be entitled to deduction under Section 80CC. Sub-section (4)(i) of Section 80CC reads as under :
80CC(4). The deduction under Sub-section (1) shall not be allowed unless the assessee has-
(i) subscribed to the shares in pursuance of an offer for subscription to the public made by the public company or in pursuance of a reservation or an option in his favour by reason of his being a promoter of the company ; or
Under the above provisions even the shares subscribed to out of the reserve quota for the promoters would be eligible for deduction. Thus deduction under Section 80CC is allowable not only to shares issued to the public but even to shares reserved for promoters’ quota. Since the shares purchased by the assessee are from the promoters’ quota, deduction under Section 80CC would be allowable.