Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (9) TMI 6 - AT - Income TaxOptionally Fully Convertible Debentures (OFCDs), whether a security or a loan & deposit For contravention of section 269SS, penalty u/s 271D to be levied Held that:- Relying upon the decision of the Hon'ble Supreme Court in 'Sahara India Real Estate Corpn. Ltd. & Others' [2012 (9) TMI 559 - SUPREME COURT], the OFCDs of the assessee are neither 'loans', nor 'deposits', but securities - 'Hybrids', i.e., hybrid securities, i.e., OFCDs are 'securities' under the Companies Act as well as under the SEBI Act. In the case of 'Sahara India Real Estate Corpn. Ltd. & Others' it has been held 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 Further, it has been held by the Superme Court that interest on investments (Securities and bonds and debentures) was not in the nature of interest on "Loan" or "Advance" to which the provisions of Interest Tax Act where applicable. Therefore, the monies which are received by the appellant company by way of subscription money for allotment of debenture cannot be equated with respect of any deposit within the meaning of Section 269SS of the I. T. Act and the provisions of section 269SS will not be attracted to the subscription received for issue of debenture and, therefore, the penalty levied u/s 271D is cancelled. In the present case, Ld. CIT (A) cancelled the penalty levied on the assessee u/s 271D of the Act, observing the provisions of Section 269SS of the Act to be not attracted. Obviously, when the OFCDs of the assessee 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 IT Act is entirely not attracted Further, the question of the assessee having been prevented by reasonable cause within the meaning of Section 273B of the IT Act for not complying with the provisions of Section 269SS of the Act, no longer survives Decided against the Revenue.
|