TMI Blog2004 (8) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant, before allotment of shares and the conclusion of the contract. - In this situation, we answer the question referred to us in the affirmative, in favour of the Revenue - - - - - Dated:- 24-8-2004 - Judge(s) : P. K. BALASUBRAMANYAN., HARI SHANKAR PRASAD. JUDGMENT The judgment of the court was delivered by P.K. Balasubrmanyan C.J.- At the instance of the assessee, the Income-tax Appellate Tribunal, Patna Bench, has referred the following question for our opinion under section 256(1) of the Income-tax Act, 1961. "Whether the acceptance of share application money in cash amounting to Rs. 20,000 or more violates the provisions of section 269SS?" During the course of the assessment proceedings for the assessment year 1990 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proviso to the section. The only other relevant limb of the section is Explanation (iii). That part of the Explanation reads: "Explanation.- For the purposes of this section-... (iii) 'loan or deposit' means loans or deposit of money." Section 269T provides for the mode of repayment of certain deposits and in Explanation (ii) to that section, it is provided: "'deposit' means any deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes deposit of any nature." The assessee sought to explain that these amounts were received by it as share application money from ten persons and subsequently shares were allotted to those persons and, consequently, the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of shares in the company. These amounts had either to be returned to the applicants or shares for these amounts had to be issued to the applicants. The question for our decision is as to the nature of the payment by the applicants into the hands of the assessee while making applications for shares. In other words, until the applications for the issue of shares are processed and shares allotted or the amounts refunded to the applicants, what is the character of the amounts paid into the company by the applicants for share allotments. The amounts are clearly not loans repayable even without a demand by the lenders. But they are liable to be refunded to the applicants once it is decided that shares were not to be allotted to them. In a sens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an application for shares is a deposit of money in the company which is repayable by the company after the period for allotment of shares comes to an end, or a decision is taken regarding the allotment of shares. Thereafter, the amount is repayable to the person who paid the money, even without a demand in that behalf. In the case of refusal of shares the amount has to be returned in specie. In that context, it appears to us that there cannot be much difficulty in holding that the amount paid in support of an application for shares must be considered to be a deposit till the allotment of shares or refund of the money on rejection of the application. What will happen if shares are ultimately allotted to the applicant? What is the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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