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TMI Blog1994 (12) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Jagdish Prasad, his wife Smt. Laxmi Devi, their sons S/Sri Ravindra Kumar and Sunil Kumar and some other members of the family. In the course of assessment proceedings in the case of the assessee-company for A.Y. 1990-91 the AO noticed the following receipts viz.--- 1 . From Smt. Laxmi Devi : On 21-11-1989 Rs. 75,000 On 9-12-1989 Rs. 26,450 Rs. 1,01,750 2. From Sri Ravindra Kumar : On 15-11-1989 Rs. 25,000 On 9-12-1989 Rs. 26,450 Rs. 51,450 3. From Sri Sunil Kumar : On 12-10-1989 Rs. 7,000 On 20-02-1990 Rs. 34,000 Rs. 41,000 ------------------------ Total : Rs. 1,94,200 ------------------------- 3. The AO was of the opinion that since the assessee-company had taken or accepted the abovementioned receipts otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) held that the receipt of Rs. 7,000 would go to make the aggregate amount of Rs. 20,000 or more and that the receipt of application money of Rs. 34,000 amounted to "loan" or "deposit" within the meaning of the terms used in the language of sec. 269SS. He, therefore, confirmed the penalty of Rs. 41,000 referable to the amounts received from Sri Sunil Kumar. 4. Mr. C.L. Jhanwar, the learned counsel appearing for the assessee-company has advanced two-fold arguments. In the first place the learned counsel submitted that the acceptance of Rs. 7,000 on 12-10-1989 by the assessee-company from Sri Sunil Kumar did not result in violation of the provisions of section 269SS in as much as the subsequent acceptance of Rs. 34,000 on 20-2- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been taken or accepted in past and had remained unpaid but if at the time of taking or accepting further loan or deposit it is found that the unpaid amount of loan or deposit is Rs. 20,000 or more and even then further loan or deposit or any amount is taken or accepted this clause would stand attracted. Clause (c) takes into account the situations in clauses (a) and (b) and lays down that if the amount or aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b) amounts to or exceeds Rs. 20,000, then the default contemplated in this clause would be committed. 6. In the instant case no violation of clause (a) was committed as the taking or accepting the loan or deposit of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the evasion of tax by an assessee the position of mode of acceptance, payment or repayment of various receipts by him shall have to be seen in the course of the assessment proceedings for a particular assessment year. In that sense of the matter the provisions of section 269SS shall have relevance to the computation of assessee's income and shall also be deemed to be annually based for the provisions would become relevant in that assessment year in which the violation thereof is committed. 8. Now the pertinent question which arises for serious consideration in this case is whether the taking or accepting of the amount of Rs. 34, 000 by the assessee-company from Sri Sunil Kumar, admittedly byway of application money for purchase of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable on demand, the deposit would become payable when a demand is made. In the case of a loan, however, the obligation to repay the amount arises immediately on receipt of the loan. It is possible that in case of deposits which are for a fixed period or loans which are for a fixed period, the point of repayment may arise in a different manner. But by and large, the transaction of a loan and the transaction of making a deposit are not always considered identical. " 9. As explained by the Supreme Court in the case of CIT v. Bazpur Co-operative Sugar Factory Ltd. [1988] 172 ITR 321 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 is made on the fulfilment of certain condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. [1993] 48 ITD 210, Deccan Farms Distilleries Ltd. v. Velabai Laxmidas Bhanji [19791 49 Comp. Cas. 321 (Bom.) and Bazpur Cooperative Sugar Factory Ltd. 10. In the instant case it is the admitted position that the amount of Rs. 34,000 was taken in cash on 20-2-1990 by the assessee-company from Sri Sunil Kumar by way of application money for the purchase of shares of the assessee-company. The said amount was deposited in Bank on the same day and duly reflected in Share Application Money A/c and Cash Book of the assessee-company. Since allotment of the shares could not be possible or made the said amount was transferred to the Loan A/c of Sri Sunil Kumar. It may thus be noted that at the time of taking or accepting the amount of Rs. 34, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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