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2019 (2) TMI 169 - AT - Income TaxPenalty u/s. 271D - violation of the provisions u/s. 269SS - whether the trade advances could be called as ‘loan’ or ‘deposit’ in terms of provisions of section 269SS? - Held that:- The terms ‘loan’ and ‘deposit’ are not mutually exclusive, there are a number of common features between the two. It was held in the case of Abdul Hamid Sahib v. Rahmat Bi [1964 (12) TMI 62 - MADRAS HIGH COURT] that a loan is repayable the moment it is incurred while it is not so with the deposit. In a deposit, unlike a loan, there is no immediate obligation to repay. Normally a deposit is for a fixed tenure. In the present case, the amounts received by the assessee are as trade advances and there is no evidence that there was any stipulation as to the period or any stipulation for interest. It is therefore matter of grave doubt as to whether the amounts received from the parties can be characterized as loan or deposit. In our view, they are trade advances received for the purpose of supply of goods dealt by the assessee. Such trade advances cannot fall under the purview of section 269SS of the Act so as to attract penalty u/s. 271D of the Act. - Decided in favour of assessee.
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