Case Law Details
Optionally Fully Convertible Debentures (OFCDs) do not fall under and cannot be equated with receipt of ‘loan’ or ‘deposit’ under the provisions of Section 269SS of the IT Act, evidently, no violation of the said Section can be said to have been committed by the assessee to attract penalty u/s 271D.
The Company has received subscription through private placement in respect of Optionally Fully Convertible Debentures and the same shown in the balance sheet under the head “loan & advances”,
The Hon’ble Supreme Court in the cases of CIT Vs Bhaskar Meter 202 ITR 612 (Col.) Shankar Const. Co. Vs CIT 189 ITR 463 (Kar) was of the view that debenture issued by a company is a “Security” and not a “Loan” or “Deposit” and, therefore, the subscription received for issue of debenture cannot be equated with receipt of “Loan” or “Deposit” within the meaning of section 269SS of the I. T. Act.
Therefore, the Hon’ble Appellate Tribunal held that OFCDs do not fall under and cannot be equated with receipt of ‘loan’ or ‘deposit’ under the provisions of Section 269SS of the IT Act, evidently, no violation of the said Section can be said to have been committed by the assessee. Hence, penalty u/s 271D of the act is entirely not attracted. As such, the order of the Ld. CIT (A) does not contain any error or infirmity in this regard. So, the order of the Ld. CIT (A) is upheld.
INCOME TAX APPELLATE TRIBUNAL, DELHI
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