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TMI Blog2018 (11) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. M/s. Saga Township Pvt. Ltd. ('respondent-assessee' for short) is a company which had entered into a joint venture with M/s Saamag Construction Ltd. vide Memorandum of Understanding (MoU) dated 02.06.2006. 3. M/s. Saamag Construction Ltd. had paid total amount of Rs. 83,00,000/- on different dates to the respondent-assessee in cash. 4. The Assessing Officer had treated these payments as loan or deposit paid by M/s. Saamag Construction Ltd. to the respondent/assessee. The Penalty Order dated 25.02.2013 observes that the respondent-assessee and M/s Saamag Construction Ltd. were sister companies and both had in the books recorded the relevant transactions under the head of unsecured loans and advances respectively. Further transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the MOU, the assessee received payment and made payment in cash for token money as well as for a stamp duty. The only argument of the Ld DR is that those transactions have been recorded in balance sheets of the companies as unsecured loans. In our opinion, when payments have been received in cash in terms of MoU in relation to business purpose, the purpose of transaction is business transaction and same cannot be treated as loan/deposit irrespective of the manner in which accounting entries have been made in the books of accounts. In substance, the transactions are business transactions. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned. Further, the amounts are been received in cash for payment to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the MoU. These payments were not to be refunded. Essential attributes of a loan or deposit, is the right to claim payment and obligation to re-pay. This was missing. On completion of project, the net profit was to be distributed between the respondent-assessee and M/s Saamag Construction Ltd. It is a well settled principle applicable to income tax that entry in the books of account on description and treatment is not decisive as to the nature of the transaction as held by the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. Vs. CIT [1971]82 ITR 363 (SC). 10. Clearly Section 269SS of the Act does not apply to every transaction. Therefore Section 269ST of the Act was enacted by Finance Act, 2017 w.e.f. 01.04.2017. This section postu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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