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TMI Blog2013 (11) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was paying interest on the loan regularly as reflected in his statement of affairs and profit and loss account in the financial years 1992-93 and 1993-94 - The repayment of loan was not made after sale of shares. The assessee appellant had debited the account being cost of shares. The transaction between Karta of HUF and the HUF could not be termed as deposits as provided under Section 269-T at the relevant time. The transactions were made between two taxable entities - The repayment was made, by debit entires - The provisions of Section 269-T providing for deposits to be made over and above Rs. 20, 000/- only by account payee cheque or account payee bank draft, were not attracted - Decided in favour of assessee. - Income Tax Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. The appellant thus sought part repayment of the loans by transferring the shares allotted to it by the companies M/s Trimurti Fertiliser Ltd and M/s Crown Leasing Finance Co. Ltd to the creditors, who agreed for repayment in that manner. In pursuance to the agreement some of the shares allotted to the assessee appellant by M/s Trimurti Fertiliser Ltd were transferred to M/s Arindam Nath Sushmita HUF, and some others were transferred to Mr. Anirban Nath (individual). Since these shares were transferred by way of repayment of loans taken from the transferees of the shares, there was no occasion or requirement to make any payment by cash or money. The transfer of shares was the mode of repayment of the loans in part. 5. The Deputy C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oans advanced by M/s Arindam Nath Sushmita HUF and Anirban Nath (individual), as these repayments clearly stand outside the mischief of provisions of Section 269T of the Act? (iv) Whether, the money advance dby M/s Arindam Nath Sushmita HUF and Mr. Anirban nath (individual) could be held to be "deposit" within the meaning of Section 269T of the Act? There being clear evidence on record to show that the money was advanced as loans at the instance of the appellant. The Tribunal has erred in law in holding otherwise and its order is perverse on that count." 9. Shri S.D. Singh has relied upon Commissioner of Income-Tax v. Vikramajit Singh (2007) 292 ITR 274 (Delhi); K. Rajendran Pillai and others v. Union of India and others (2007) 292 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the agreement. But in the case of a deposit, it is generally the duty of the depositor to make a demand for the repayment of the same. It is impermissible to expand the scope of the term 'deposit' under Section 269-T and to take in the concept of loan transaction within the meaning of Section 269-T. The Madras High Court relied upon Baidya Nath Plastic Industries (P) Ltd v. I.L. Anand (supra) in which the distinction was drawn between the loan and deposit, and was held that where the assessee had raised a loan and a payment was made in cash, there was no justification to invoke Section 269-T. 12.In Commissioner of Income-Tax v. Motilal Subhodh Kumar Jain (supra) the Madras High Court also drew a distinction between the repayment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit of any nature. The said section, which is intended to counteract tax evasion, is applicable only to deposits. It is proposed to substitute the existing section by a new section so as to extend its scope to loans also and delete provisions contained therein, which have become obsolete. These amendments will take effect from 1st June, 2002." 15. The fact as stated in the order under Section 271-E dated 31.7.1997 in the case of assessee-appellant for the assessment year 1994-95 shows that no repayment was made by either cash, cheque or demand draft; a debit entry was made because of sale of shares in the statement of affairs of the assessee as on 31.3.1994. It was argued that the Institute of Chartered Accountants of India had cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances, the provisions of Section 269-T providing for deposits to be made over and above Rs. 20, 000/- only by account payee cheque or account payee bank draft, were not attracted. 17. We are of the opinion relying upon the reasoning given in the judgments cited as above, that the transactions in question being that of repayment of loan by debit entry did not come within the mischief of Section 269-T. We are also of the view, that the Explanation (iii) explaining the terms "loan" or "deposit" would not make any difference and is as it does not change the method of the transaction in the present case. 18. The appeal is allowed. The questions of law are decided in favour of assessee-appellant and against the revenue. The department w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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