2011 (12) TMI 126 - HC - Income Tax

Waiver of penalty non-violation of provisions of Section 269T - repayment under the Golden Bonds Scheme Held that - Payment under the Golden Bonds Scheme was not repayment of any deposit, but was repayment of a loan and there was no violation of Section 269T, as it stood at that time (before 1st June, 2002). Further, no payment by way of cash was made but book adjustments were made.- Decided in favor of assessee.

Summary

Issues:
Delay in refiling of appeals, Penalty under Section 271E of the Income Tax Act, 1961, Interpretation of Section 269T, Nature of Golden Bonds Scheme, Definition of 'deposit' and 'debentures.'

Delay in Refiling of Appeals:
The judgment addresses applications for condonation of delay in refiling the appeals, which are allowed based on the reasons provided in the applications. The delay is condoned, and the applications are disposed of.

Penalty under Section 271E of the Income Tax Act, 1961:
The appeals filed by the Revenue challenge the order of the Income Tax Appellate Tribunal upholding the deletion of penalty under Section 271E. The Assessing Officer imposed the penalty for repayment under the Golden Bonds Scheme, alleging a violation of Section 269T. However, the Commissioner of Income Tax (Appeals) and the tribunal held that the repayment was a loan, not a deposit, and thus, there was no violation of Section 269T.

Interpretation of Section 269T:
The judgment discusses the interpretation of Section 269T before and after an amendment effective from June 1, 2002. It is established through various court decisions that Section 269T applied only to deposits, not loans, before the amendment. The amendment expanded the scope to cover repayment of loans, but it was not applicable to repayments made before June 1, 2002.

Nature of Golden Bonds Scheme:
The Golden Bonds Scheme involved optional fully convertible debentures where subscribers could redeem them or convert them into equity shares. The scheme's nature was crucial in determining whether the repayments constituted a loan or a deposit, impacting the application of Section 269T.

Definition of 'Deposit' and 'Debentures':
The judgment delves into the definitions of 'deposit' and 'debentures' under relevant laws. It is concluded that debentures or bonds do not fall under the term 'deposit' but are considered loans. This interpretation is crucial in the context of determining the applicability of Section 269T to the repayments made under the Golden Bonds Scheme.

In conclusion, the appeals are dismissed as the repayments under the Golden Bonds Scheme were considered loans, not deposits, and were made before the amendment expanding the scope of Section 269T to cover loan repayments. The judgment provides a detailed analysis of the legal provisions, court decisions, and the nature of the scheme to arrive at this decision, emphasizing the importance of accurate interpretation in tax matters.