No Penalty U/s. 271E on conversion of the loan into equity

Arkit Vincom (P) Ltd. Vs ACIT (ITAT Kolkata) We find that the loan received by the assessee from Prakash Electronics System Ltd had been squared off by way of conversion of loan into equity in the sum of Rs 6,00,000/- was carried out by the assessee through book entries without any physical outflow of funds. It is usual business practice and is part of routine corporate debt restructuring exercise carried out by various banks and financial institutions, to give leeway to the borrowers / defaulters, to convert their existing loans advanced to the said borrowers into equity capital. This is do...