ITO, New Delhi V. M/s. Homeland City Projects Ltd., New Delhi

ITA 2043/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65529 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 08-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `I: NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER I.T. A. NO.2043/DEL/2012 ASSESSMENT YEAR : 2005-06 INCOME-TAX OFFICER, M/S. HOMELAND CITY PROJECTS L TD., WARD-12(4), NEW DELHI. VS. 18, CHANDER LOK ENCLAV E, NEAR RANI BAGH, PITAMPURA, NEW DELHI. PAN: AABCH4362E (APPELLANT) (RESPONDEN T) APPELLANT BY: SMT. Y.S. KAKKAR, DR. RESPONDENT BY: SHRI GAUTAM JA IN, CA. O R D E R PER I.C. SUDHIR, JUDICIAL MEMBER: THE REVENUE HAS IMPUGNED FIRST APPELLATE ORDER DATE D 9 TH FEBRUARY, 2012 MAINLY ON THE ISSUE AS TO WHETHER THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN DELETING THE PENA LTY UNDER SECTION 271D OF THE INCOME-TAX ACT, 1961 (THE ACT) OF RS.4,67,00 0/- LEVIED BY THE ASSESSING OFFICER. 2, AT THE OUTSET OF HEARING THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN THE P RESENT APPEAL BY THE REVENUE IS FULLY COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH 2 COURT OF DELHI IN THE CASE OF CIT VS. I.P. INDIA (P ) LTD. (ITA NO.1192/2011) DATED 21 ST NOVEMBER 2011. HE POINTED OUT THAT FOLLOWING THIS DECISION OF THE HONBLE HIGH COURT OF DELHI ON AN IDENTICAL ISS UE THE LEARNED CIT(A) HAS DECIDED THE FIRST APPEAL IN FAVOUR OF THE ASSES SEE. 3. THE LEARNED DR ON THE OTHER HAND, SUBMITTED THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. RUGMINI RAM RAGAV SPINNERS P. LTD. (2008) 304 ITR 417 (MAD.) HAS BEEN PLEASED TO HOLD THAT SINCE SHARE APPLICATION MONEY CONTINUES TO EARN INTEREST TILL S HARE IS ALLOTTED, IT PARTAKES THE CHARACTER OF LOAN UNDER SEC. 68 OF THE ACT. 4. THE LEARNED AR SUBMITTED THAT THE ABOVE DECISION OF HONBLE MADRAS HIGH COURT RELIED UPON BY THE LEARNED DR IS HAVING DISTINGUISHABLE FACTS, HENCE, IT IS NOT HELPFUL TO THE REVENUE IN THE PRES ENT CASE. 5. CONSIDERING THE ABOVE SUBMISSIONS WE FIND THAT I N THE PRESENT CASE THE AO HELD THAT SHARE APPLICATION MONEY RECEIVED BY TH E ASSESSEE CONSTITUTES RECEIPT OF LOAN OR DEPOSIT OTHERWISE THAN BY CROSSE D CHEQUE OR CROSSED BANK DRAFT OF A LIMIT MENTIONED IN SECTION 269SS OF THE ACT. THE AO ACCORDINGLY LEVIED PENALTY UNDER SEC. 271D OF THE ACT. THE CON TENTION OF THE ASSESSEE REMAINED THAT THE SUMS RECEIVED NEITHER REPRESENTED LOAN NOR DEPOSITS RATHER THE SAME REPRESENTED SHARE CAPITAL AND THEREFORE, P ROVISIONS CONTAINED IN SEC. 269SS OF THE ACT WERE INAPPLICABLE. BEFORE THE LEA RNED CIT(A) THE ASSESSEE 3 PLACED RELIANCE ON THE DECISION OF HONBLE JURISDIC TIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. I.P. INDIA (P) LTD. (SUPRA). FOLLOWING THE SAID DECISION OF HONBLE HIGH COURT OF DELHI THE LEARNED CIT(A) H AS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH THE FINDING THAT NO PEN ALTY IS LEVIABLE U/S 271D OF THE ACT. HE HAS ACCORDINGLY DELETED THE PENALTY . HAVING GONE THROUGH THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. I.P. INDIA (P) LTD. (SUPRA) WE FIND THAT IN THAT CASE BEFORE T HE HONBLE HIGH COURT THE ASSESSEE COMPANY HAD RECEIVED SHARE APPLICATION MON EY IN CASH OF RS.18 LAKHS FROM THREE PRIVATE LIMITED COMPANIES. THE AO LEVIED PENALTY UNDER SEC. 271D WITH THIS FINDING THAT RECEIPT OF SHARE A PPLICATION MONEY IN CASH WAS IN VIOLATION OF SEC. 269SS OF THE ACT IN VIEW O F THE DECISION IN THE CASE OF BHALOTIA ENGINEERING PVT. LTD. (2005) 275 ITR 39 9 (JHARKHAND). THE LEARNED CIT(A) DELETED THE PENALTY WITH THIS FINDIN G THAT THERE WAS NO VIOLATION OF SEC. 269SS SINCE SHARE APPLICATION MON EY RECEIVED BY THE ASSESSEE COMPANY WOULD NOT AMOUNT EITHER TO A LOAN OR A DEPOSIT WITHIN THE MEANING OF SEC. 269SS OF THE ACT. THE TRIBUNAL ALS O DISMISSED THE APPEAL PREFERRED BY THE REVENUE HOLDING THAT THERE WAS CLE AVAGE OF JUDICIAL OPINION ON THE QUESTION WHETHER THE SHARE APPLICATION MONEY COULD BE TREATED AS A DEPOSIT OR A LOAN WITHIN THE MEANING OF SEC. 269SS AND HENCE IN VIEW OF THE DIVERGENCE OF JUDICIAL OPINION, THE PLEA OF THE ASS ESSEE TO THIS EFFECT THAT 4 RECEIPT OF MONEY IN CASH AGAINST ALLOTMENT OF SHARE CAPITAL CANNOT BE TERMED AS LOANS OR DEPOSITS WOULD BE SUFFICIENT TO DROP TH E PENALTY. AGAINST THAT ORDER OF THE TRIBUNAL THE REVENUE WENT IN APPEAL BE FORE THE HONBLE DELHI HIGH COURT AND HONBLE DELHI HIGH COURT HAS BEEN PL EASED TO DECLINE TO ADMIT THE APPEAL PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE TRIBUNAL. WE THUS DO NOT FIND INFIRMITY IN THE FIRST APPELLAT E ORDER AND RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURT OF DEL HI IN THE CASE OF I.P. INDIA (P) LTD. (SUPRA) IN THE PRESENT CASE AS FACTS OF BOTH THE CASES ARE SIMILAR AND THE ISSUES RAISED ARE IDENTICAL, THE FIRST APPE LLATE ORDER IS THUS UPHELD. THE GROUNDS INVOLVING THE ISSUE ARE THUS REJECTED. 6. CONSEQUENTLY THE APPEAL IS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH OCTOBER, 2012. SD/- SD/- (A.N. PAHUJA) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH OCTOBER, 2012. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.