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II. Direct Tax Case laws:
1.
M/s. IFB Agro Industries Ltd. Vs. Joint Commissioner of Income-tax,
I.T.A No. 1721/Kol/2012, Date of Order : 19.12.2013, ITAT-Kolkata
Inter-corporate deposits (“ICDs”) are not “loans and advances” and are not assessable to tax as “deemed dividend”
S.
2(22)(e) refers to ‘loans’ and ‘advances’ and does not refer to a
‘deposit’. The fact that the term ‘deposit’ does not mean a ‘loan’ and
that the two terms are two different & distinct terms is evident
from the Explanation to S. 269T and S. 269SS of the Act where both the
terms are used. Further, the second proviso to S. 269SS recognises the
term ‘loan’ taken or ‘deposit’ accepted. Once it is accepted that the
terms ‘loan’ and ‘deposit’ are two distinct terms which have distinct
meaning then if only the term ‘loan’ is used in a particular section the
‘deposit’ received by an assessee cannot be treated as a ‘loan’ for
that section. The Companies Act, 1956 also makes a distinction between a
“loan” and a “deposit” in s. 58A, 269 & 370. The distinction
between a “loan” and a “deposit” is that in the case of a “loan”, the
needy person approaches the lender for obtaining the loan. The loan is
lent at the terms stated by the lender. In the case of a “deposit”, the
depositor goes to the depositee for investing his money primarily with
the intention of earning interest. Also, s. 2(22)(e) enacts a deeming
fiction and cannot be given a wider meaning than what it purports to
cover. It has to be interpreted strictly. Thus, the view of the AO &
CIT(A) that an Inter-corporate deposit is similar to a loan is not
correct.
(Please click here to view the judgment)
2. Sunder Deep Educational Society vs. Addl CIT, ITA No. 2428/Del/2011, Date of Order : 06.12.2013, ITAT-Delhi.
S.
11: Law on taxability of voluntary donations as “anonymous donations”
u/s 115BBC or as “cash credit” u/s 68 in hands of charitable trust
explained
The
assessee, a charitable institution, received donations of Rs. 3.55
crore. It maintained a record indicating the name and address of the
donors. It claimed that the said donations had been applied for
charitable purposes as per s. 11 and nothing was assessable. The AO
conducted a test check by sending letters to the donors. To the extent
of donations aggregating Rs. 1.96 crore, the letters came back
undelivered or were not replied to. The AO held that as the
confirmations were not received, the said donations were “anonymous
donations” and assessable to tax u/s 115BBC. He held that alternatively,
the said sum was assessable as a “cash credit” u/s 68 as the identity,
genuineness and credit worthiness of the alleged donors was not
proved.On further appeal by the assessee to the Tribunal HELD allowing
the appeal:
(i) S.
115BBC which assesses “anonymous donations” does not apply because the
assessee has maintained a record of the identity indicating the name and
address of the person making the contribution;
(ii) S.
68 seeks to assess cash credits as income. However, when the non-corpus
voluntary donations are already disclosed as income and applied for
charitable purposes, s. 68 has no application. The fact that the
complete list of donors was not filed and the donors were not produced
does not mean that the assessee was seeking to introduce unaccounted
money into the trust;
(Please click here to view the judgment)
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