Question

(9) Ankit Ltd is a manufacturing company. The company has issued equity and preference shares
to meet its requirements. Other sources of finance have

not been considered at all. This has
resulted in payment of la amount of taxes to government as dividend on shares is not
deducted from income of the company for the purpose of tax calculation.
(a) State source of finance which can give benefit of tax saving.
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Answer 1

Answer:

Debentures

Explanation:

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Answer 2

Explanation:

A) Public deposit can be the source of finance for the company which can give the benefit

of tax reduction.

B) Merits are:

1. No security: These deposits are unsecured so the assets of the company are free to be

used as mortgage in future

2. Reduction in tax liability: Interest paid on public deposits is deducted from the total

income of the company. Hence it helps in bringing down the yax liability.