1.  CIT Vs. M/s Muthoot Financiers, I.T.A. No. 336, 338 & 341 of 2002, Date of Decision:  03.02.2015, High Court of Delhi

Whether advances given by partner of a partnership firm to the firm violates the provisions of section 269SS and liable to penalty u/s 271-D? Held: No

Brief Facts:

The assessee is a partnership firms involved in the business of banking and registered under the Kerala Money Lending Act. During the course of the assessment proceedings, it was found that the firm had accepted payments from the partners, in cash. The AO held that interest was given to the partners on the amount advanced, which conclusively proved that transactions are between different persons whereby the firm has accepted and repaid loans in cash, and accordingly, imposed penalty under Section 271-D of the Act.

Held:

The transactions between the partner and the firm do not partake the character of a loan or deposit and therefore, there is no applicability of the provisions of Section 269-SS of the Act. There is no separate legal entity for the partnership firm and the partner is entitled to use the funds of the firm. Hence Penalty u/s 271D of the Income tax Act, 1961 is not attracted. The present appeals filed by the revenue are devoid of any merit.

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2.  Kul Foundation Vs. Commissioner of Income Tax, I.T.A. No. 1692/PN/2013, Date of pronouncement: 30.01.2015,  ITAT - Pune

Issue: Whether registration u/s. 12A can be denied for (i) Clause No.23 of the object clauses of the Trust Deed is specifically for the benefit of the Jain Community, which is a specific religious community and which attracts the provisions of sec.13(1)(b) and – (ii) the Trust has not commenced its activities as yet? Held: No

Held:

i.    The allowability of the deduction under sections 11 and 12 of the Act is to be looked into by the Assessing Officer while completing the assessment in the hands of the assessee at the relevant time. Whether the said deduction under sections 11 and 12 of the Act is allowable or not to the Trust or the Institution by way of non-fulfillment of the conditions laid down in section 13(1)(b) of the Act is to be considered by the Assessing Officer while completing assessment in the hands of the assessee Trust or Institution. But the said violation by the Trust or Institution on account of provisions of section 13(1)(b) of the Act, if any, are not to be considered by the CIT while granting registration under section 12A of the Act.

ii.    The powers of the Commissioner to satisfy himself about objects and the genuineness of the activities are recognized under law. However, only because the Trust has not commenced the activities, the Commissioner would have no authority to ipso facto reject the application for registration on that count alone.

In the result, the appeal of the assessee is allowed.

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