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TMI Blog2011 (8) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... 994. As per this resolution, one of the directors of the assessee-company, Shri Champa Lal Pareek, informed the board of directors that Shri Pareek was taking intercorporate deposits to fund its existing programmes. He thus mooted an idea that even the assessee-company can approach SWC for giving intercorporate deposits. Accepting this proposal of Mr.Pareek, the board authorized Shri Pareek to negotiate and settle such terms and conditions as may be beneficial to the company for placing intercorporate deposits for a maximum amount of Rs. 22 crores. Armed with this resolution, Shri Pareek, on behalf of the company, wrote a letter dated November 1, 1994, to SWC setting out the terms and conditions, rate of interest and the time period. SWC accepted the same, vide letter dated November 4, 1994. Based on this, a binding agreement was arrived at between the parties and subsequent thereto the assessee-company placed intercorporate deposits at Rs. 22 crores at the disposal of SWC. 3. It is also recorded by the Tribunal in the impugned order that in order to stipulate the condition that the assessee-company had placed at the disposal of SWP, intercorporate deposits, the assessee al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itutions) accruing or arising to the credit institution in that previous year :" 6. According to Ms. Suruchi Aggarwal, learned counsel appearing for the Revenue, the chargeable interest is one which accrues or arises to the credit institution in the previous year and that is liable for tax. The only exception that carved out is when the interest is earned on loan or advance made to other credit institutions or to any co-operative society engaged in carrying out the business of bank. In the present case, the assessee had taken monies from M/s. SWC and had shown interest earned/accrued thereupon in its profit and loss account, M/s. SWC had even deducted tax at source on this interest income which had been taken by the assessee in the income-tax return. Therefore, following the mercantile principle of accounting the assessee itself had on accrual basis shown the said interest income in the profit and loss account and thus the assessee was liable to interest-tax as well. She also submitted that in the appeal preferred by the assessee before the Commissioner of Income-tax (Appeals) the only basis for seeking commission from interest-tax was loans and advances were made by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/s. Shaw Wallace and Co. Ltd. is not deposit but a loan. 7. Mrs. Aggarwal strongly relied upon the aforesaid reasoning of the Commissioner of Income-tax (Appeals). She also referred to the decision of the Tribunal in Bajaj Auto Holdings Ltd. v. Deputy CIT [2006] 281 ITR (AT) 154 (Mumbai). 8. Mr. Vohra, learned counsel for the assessee, countered the aforesaid submissions. In addition to relying upon the impugned decision of the Income-tax Appellate Tribunal wherein it is held that the deposit is different from the loan or advance and the expression "loan" would not include deposit. He has also referred to various other judgments by which this very issue has been decided by various courts. 9. We find that the Tribunal, in support of its conclusion, has referred to the judgment of this court in Baidya Nath Plastic Industries (P) Ltd. v. K.L. Anand, ITO [1998] 230 ITR 522 (Delhi) and that of the High Court of judicature at Allahabad in CIT v. Sahara India Savings and Investment Corporation Ltd. [2003] 264 ITR 646 (All). 10. In addition, Mr. Vohra has referred to the following judgments : (i) CIT v. Vikramajit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof as per the directions of the lender, while a deposit has a term for repayment, which may be a fixed date or it may be as per the terms and conditions of the agreement ; (ii) the loan is obtained at the request of the borrower while a deposit is made at the instance of the depositor ; and (iii) The limitation period in the case of a loan starts from the date of the loan, while it starts from the date of repayment in the case of deposit. 16. These distinctions are brought out in a judgment rendered by this court in Baidya Nath Plastic Industries (P) Ltd. [1998] 230 ITR 522 (Delhi) in the following words (pages 527, 528) : "Now, the only question which remains to be determined is whether the repayment was towards 'deposit' or the same was towards 'loan'. In order to determine this question it will be necessary to consider whether the meaning of the term 'deposit' ascribed by the Explanation to section 269T includes the term 'loan' in its ambit. The distinction between a loan and a deposit is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the latter in a religious procession. There was no question of trust or quasi trust. It was a mere loan for the benefit of the borrower and, in my opinion, article 145 has no application'. It may also be noted that while articles 19 and 21 of the Limitation Act fix the period within which suits for recovery of loans can be filed, article 22 deals with the period of limitation for suits for money on account of deposit. The starting period of limitation under articles 19 and 21, on the one hand, and article 22, on the other, are different. Under articles 19 and 21, the cause of action in the case of money lent arises from the date of loan, whereas under article 22 the cause of action in the case of a deposit arises from the date of demand. There-fore, it is necessary to distinguish a deposit from a mere loan." 17. The aforesaid view was followed by this court in CIT v. Vikramajit Singh [2007] 292 ITR 274 (Delhi). The Madras High Court has taken the same as toed line following Baidya Nath Plastic Industries [1998] 230 ITR 522 (Delhi) and A. M. Shamsuddin v. Union of India [2000] 244 ITR 266 (Mad). 18. Once we find that monies given by the assessee to SWC d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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