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2021 (1) TMI 1162 - Tri - Insolvency and BankruptcySeeking setting aside of the rejection of claim of the Applicant - financial debt or not in view of intercorporate deposits - seeking to declare the Applicant as a Financial Creditor - HELD THAT:- It is an undisputed fact that the Applicant has provided the amount in terms of letter dated 01.04.2014 and 01.04.2015 and such amount along with interest is due from the Corporate Debtor. The documents filed by the Applicant show that in order to avail the services from the Applicant, the Corporate Debtor has appointed Applicant as sales promoter and accepted security deposit. Deposit is not the mainstay of the agreement for any funds in respect of business purposes. It is only an incidence of the agreement for services, Unlike as stated in order passed by a bench of this Adjudicating Authority in IA No, 02/JPR/2018 dated 28.09.2018, it is not even related to agency agreement. It is evident that the agreement between the party is not for time value of money as the crux and essence of the agreement. Interest paid by the Corporate Debtor is incidental to the blocking of deposit amount and is a resultant consequence. Also, the claim of the Applicant to be considered a financial debt in terms of the code must fall under any of the category mentioned Section 5(8) (a) to (i). After analysing Form 26 AS annexed by the Applicant vide dairy no. 1967/2019, it is noted that the Corporate Debtor had deducted tax under Section 194A and 194H of the Income Tax Act, 1961 for FY 2013-14 and 2014-15 and for FY 2015-16 tax was deducted under Section 194A and 194J. Section 194A deals with interest other than interest on securities. Section 194H deals with income by way of commission or brokerage and Section 194 J deals with fees for professional or technical services - The above observation shows that the Corporate Debtor had deducted tax against the interest on the amount provided by the Applicant. On the other hand, the Applicant has failed to submit sufficient documents to establish that the amount was borrowed by the Corporate Debtor for commercial purpose, as it is nowhere mentioned in the letters dated 01.04.2014 and 01.04.2015 that the corporate debtor is in need of money or the said deposit will be used for its business activities. Merely intercorporate deposit does not make it a financial debt, amidst the background and facts stated by the Applicant. Just because the interest component may have resulted in a larger income for the Applicant, or the Corporate Debtor may have acknowledged interest payable does not make it a core financial deal. It can be concluded that the RP has rightly considered the claim of the Applicant as operational debt - Application dismissed.
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