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I. Today's Headlines:
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1.
DCIT V. Sahara India Commercial Corpn. Ltd., ITA No.5772/Del/2010, Date
of decision 26.08.2013, INCOME TAX APPELLATE TRIBUNAL, NEW DELHI
OFCDs do not fall under and cannot be equated with receipt of ‘loan’
or ‘deposit’ under the provisions of Section 269SS of the IT Act,
evidently, no violation of the said Section can be said to have been
committed by the assessee to attract penalty u/s 271D.
Held :
The Company has received subscription through private placement in
respect of Optionally Fully Convertible Debentures and the same shown
in the balance sheet under the head “loan & advances”,
The Hon’ble Supreme Court in the cases of CIT Vs Bhaskar Meter 202
ITR 612 (Col.) Shankar Const. Co. Vs CIT 189 ITR 463 (Kar) was of the
view that debenture issued by a company is a “Security” and not a “Loan”
or “Deposit” and, therefore, the subscription received for issue of
debenture cannot be equated with receipt of “Loan” or “Deposit” within
the meaning of section 269SS of the I. T. Act.
Therefore, the Hon’ble Appellate Tribunal held that OFCDs do not fall
under and cannot be equated with receipt of ‘loan’ or ‘deposit’ under
the provisions of Section 269SS of the IT Act, evidently, no violation
of the said Section can be said to have been committed by the assessee.
Hence, penalty u/s 271D of the act is entirely not attracted. As such,
the order of the Ld. CIT (A) does not contain any error or infirmity in
this regard. So, the order of the Ld. CIT (A) is upheld.
(Please click here to view Judgment)
2. Genesis Indian Investment Co. Ltd. V CIT(A); ITA No. 2878 of 2006; Date of Decision 14.08.2013; ITAT-Mumbai
As per circumstances of the case, the assessee had received an
additional consideration from the foreign company in respect of the
delay in completion of process of buy back of shares. The Ld. AO was of
the contention that the consideration received was interest income in
the hands of assessee.
Held No.
The payment of interest was directed by the SEBI under regulations 22
and therefore it was held that this is not a penalty but the payment of
interest on account of failure to make the payment by the acquirer as
per the time schedule prescribed under SEBI regulations. It is clear
that this payment of interest @ 15% was not on account of any accretion
in the value of the asset in question. However, the case in hand the
interest received by the assessee is for the period prior to the
tendering of shares and acceptance of the same therefore, the interest
relates to the delay in completing the process of buy back of shares
under open offer.
If the interest is paid for delay in making the payment then it
cannot be treated as part of consideration. In the case in hand the
delay for which the interest has been received by the assessee is in the
process of buy back of shares in the open offer after announcement of
the intention of acquiring of shares. It is not a case of delay in
making the payment of the determined consideration after the transaction
of purchase of sale is over.
In the case in hand the interest is received in pursuance to the
directions of the SEBI and due to delay in completion of the process of
buy back of shares as prescribed under the SEBI regulations. The real
acquisition of shares took place only in the month of November 2001 and
prior to the said date it cannot be said that the interest was paid due
to delay in the payment of consideration. Therefore, we held that the
additional amount received by the assessee being 15% interest from
8.8.2000 to 22.11.2001 is part of sale consideration and accordingly
will be treated as part of capital gain and not the income from
interest.
(Please click here to view Judgment)
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