2014 (5) TMI 200 - HC - Income Tax

Violation of section 13(2)(a) of the Act Lending of money Held that - The conclusion arrived at concurrently that there was no material on record, or that the transaction is nothing but a loan, has been rightly interfered with - it was impossible to reach a conclusion that the amount of Rs.5,46,00,000/was a loan given by the Trust to this Private Limited Company - it was an advance so as to enable the Trust to acquire an asset - in the event the construction is not ready and complete and the building is not ready, the amount would be returned back to the Trust no substantial question of law arises for consideration Decided against Revenue.

Summary

Issues: Interpretation of Section 13(2)(a) of the Income Tax Act for Assessment Year 2001-02.

Analysis:
1. The High Court examined the Appeal challenging the Tribunal's decision to reverse the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals) regarding a transaction involving a Trust and a Private Limited Company.

2. The Tribunal found that the transaction in question was not a loan but an advance to facilitate the Trust in acquiring an asset, with the understanding that the amount would be returned if the construction was not completed. The High Court held that the Tribunal's conclusion was based on a proper analysis of the facts and circumstances, and was not erroneous or legally flawed.

3. The Court specifically focused on the application of section 13(2)(a) of the Income Tax Act, which deals with transactions between a Trust and a related entity. It concluded that the provision was not violated in this case as the transaction was not a loan but an advance for asset acquisition, thereby dismissing the Appeal for lack of merit and without costs.