Case Law Details
AO relied upon decision in M/s Bhalotia Engineering Works Pvt. Ltd. (supra) wherein it was held that receipt of share application monies in cash, in violation of provisions of section 269SS of the Act should be treated as “deposit” with the consequence that the assessee would be liable for penalty under Section 271D of the Act. The AO in the said case did not examine whether the share application money can be treated as “loan” or “deposit” within the meaning of provisions of sec. 269SS of the Act nor the Addl. CIT. The ld. CIT(A) found as a fact that the shares were subsequently allotted to the applicant-companies as shown by the form filed before the Registrar of Companies. Neither the AO nor the Additional CIT took the trouble to examine this aspect while imposing the penalty and merely relied on the judgment of the Hon’ble Jharkhand High Court (supra). Similar is the situation in the instant case. The AO did not even attempt to examine as to whether or not the share application money can be treated as “loan” or “advance” within the meaning of provisions of sec. 2(22)(e) of the Act. There is nothing on record to show that these transact ions were attached with certain conditions or stipulation as to period of repayment , rate of interest , manner of repayment , etc. so as to treat the said transact ions as loans or advances. Moreover, the Revenue have not placed before us any material, suggesting that the transact ions were actually in the nature of loans or advances. In these circumstances, the reliance on the decision in M/s Bhalotia Engineering Works Pvt. Ltd. (supra),in our opinion, is totally misplaced. Hon’ble Madras High Court in CIT Vs. Rugmini Ram Ragav Spinners Private Ltd. (2008), 304 ITR 417 held that the money in cash by a company towards allotment of shares, was neither a loan nor a deposit. In Baidya Nath Plastic Industries (P) Ltd. and Ors vs K.L. Anand (1998) 230 ITR 522, Hon’ble Delhi High Court pointed out the distinction between a loan and a deposit while observing that in the case of the former it is ordinarily the duty of the debtor to seek out the creditor and to repay the money according to the agreement while in the case of a deposit it is generally the duty of the depositor to go to the banker or to the depositee, as the case may be, and make a demand for it. This judgment was cited in Director of Income Tax (Exemption) vs ACME Educational Society (2010) 326 ITR 146 (Del) and it 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 fulfillment of certain conditions. In CIT vs. Sunil Chopra, Hon’ble jurisdictional High Court in their decision dated 27.4.2010 in ITA no.106 of 2011 held that share application money could not be construed as loan or advance within the meaning of sec. 2(22)(e) of the Act. In CIT vs. I.P. India Pvt. Ltd., Hon’ble jurisdictional High Court in their decision dated 21.11.2011 in ITA no. 1192/2011 concluded that the receipt of share application monies for allotment of shares in the assessee-company could not be treated as receipt of loan or deposit. In the light of view taken by the Hon’ble jurisdictional High Court in the aforesaid decisions, especially when the ld. CIT(A) found as a fact that the amount of Rs. 1 crore was indeed received by the assessee from KMPTL as share application money, we are not inclined to interfere with the findings of the ld. CIT(A).
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA No.2858/Del/2012 – Assessment year: 2008-09
Deputy CIT V/s. M/s Alpex Exports (P) Ltd.
Date of pronouncement 28-08-2012
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