TMI Blog2014 (2) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital account in their respective proprietary concerns for the purpose of construction of building and purchase of machinery of the new company, it cannot be treated as a loan or deposit as contemplated u/s 269 SS - In any event shares were allocated by the company to the promoter directors for the amounts contributed – the decision in Shri SidhData Ispat P.Ltd. [2012 (9) TMI 846 - DELHI HIGH COURT] and IP. INDIA PVT. LTD. [2011 (11) TMI 252 - DELHI HIGH COURT] followed - no penalty can be levied – thus, the penalty levied u/s 269SS of the Act set aside – Decided in favour of Assessee. - ITA No.5942/Del/2010 - - - Dated:- 23-1-2014 - A D Jain And J Shudhakar Reddy, JJ. For the Appellant : Piyush Kaushik Adv. For the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter to the Addl.CIT, Range 13, New Delhi for considering initiation of penalty proceedings u/s 271 D of the Act. The Addl.Commissioner passed an order u/s 271 D on 21.6.2009 levying penalty u/s 271 D for violation of S.269 (SS) of the Act. Aggrieved the assessee filed an appeal before the Ld.Commissioner of Income Tax (Appeals) without success. Further aggrieved the assessee is in appeal before us. 3. The Ld.Counsel for the assesse Mr.Piyush Kaushik submitted that: (a) Contribution received by private company from a director cannot be treated as a loan or deposit for the purpose of S.269 SS. He relied on the following case laws: Lipcam Marketing P.Ltd. vs. ACIT in ITA 3629/Del/2010 dt. 14.11.2011; CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of CIT vs. Idhayam Publications Ltd. (2006) 285 ITR 221 (Madras). Without giving any reason as to why he is not following this judgement, the First Appellate Authority went on to confirm the penalty. In our view this is wrong. 6.1. The Hon ble Madras High Court in the case of Idhayam Publications Ltd. (supra) held as follows. The assessee is running a company in the name of M/s. Idhayam Publications Private Limited for publication of books. The relevant assessment year is 1992- 93. In the assessment proceeding, the Assessing Officer noted that the assessee had accepted a cash loan of Rs. 2,94,000 from M/s. Manian Creations, a sister concern, in violation of the provisions of section 269SS of the Act. With the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that section 269SS is constitutionally valid and therefore the penalty levied by the Assessing Officer ought to be considered. The Tribunal, on hearing the arguments, held that, on the merits, the transaction does not fall within the meaning of loan or advance and hence there is no violation of section 269SS. We heard the arguments of learned counsel for the Revenue. We have perused the materials available in record. Admittedly Mr. S. V. S. Manian was one of the directors. Therefore the order of the lower authority clearly shows that there was a running current account in the books of account of the assessee in the name of Mr. S. V. S. Manian. Mr. S. V. S. Manian used to pay the money in the current account and used to withdraw the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the promoter Director of the assessee company have contributed these amounts by withdrawing from the capital account in their respective proprietary concerns for the purpose of construction of building and purchase of machinery of the new company, it cannot be treated as a loan or deposit as contemplated u/s 269 SS. Hence on this sole ground this penalty has to be deleted. 6.2. In any event shares were allocated by the company to the promoter directors for the amounts contributed. In such a situation the decision of Hon ble Jurisdictional High Court in the case of CIT vs. Sri Sidh Data Ispat P.Ltd. and CIT vs. IP India P.Ltd. are applicable and no penalty can be levied. By applying the propositions laid down in the above case laws to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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