Receipt of share application monies in cash did not amount to acceptance of loan or deposit by the company

CIT Vs. I.P. India Pvt. Ltd. (Delhi High Court) – Tt was held that a loan grants temporary use of money, or temporary accommodation, and that the essence of a deposit is that there must be a liability to return it to the party by whom or on whose behalf it has been made, on fulfilment of certain conditions. If these tests are applied to the facts of the case before us, it may be seen that the receipt of share application monies from the three private limited companies for allotment of shares in the assessee-company cannot be treated as receipt of loan or deposit.

In any case, the Tribunal has rightly noticed the cleavage of judicial opinion on the point and held that in that situation there was reasonable cause u/S.273B, therefore no substantial question of law arises from the order of the Tribunal.

HIGH COURT OF DELHI

ITA NO. 1192/2011

Date of Decision:  21^st November, 2011.

The Commissioner of Income Tax Delhi IV

Versus

I.P. India Pvt. Ltd.

ORDER

R.V. EASWAR, J.:

This is an appeal filed by the Revenue under Section 260A of the Income Tax Act (Act, for short) against the order dated 31^st March, 2011 of the Income Tax Appellate Tribunal (Tribunal, for short) in ITA 226/Del./2011 relating to the assessment year 2005-06. The following questions of law, stated to be substantial questions of law have been raised in the appeal :