TMI Blog2009 (2) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... present respondent. 2. While admitting this appeal, this Court formulated the following substantial questions of law : 1. Whether on the facts and circumstances of the case, the Tribunal was justified in law in holding that sum of Rs.49.06 lakhs which has remained unpaid without being claimed by the Debenture holders till the assessment year 1999-2000, was income of the Appellant for the assessment year 1999-2000 solely based on the entry in the books of the Appellant made in the year 1998 ? 2. Whether the Tribunal was justified in law in holding that redemption of redeemable debentures, issued in 1988 was due in 1995 and thereafter it became income of the Appellant, despite the proviso to sub-Section 205C of the companies Act, according to which the liability of the assessee has not ceased?" 3. The appellant-assessee borrowed money from the public by way of secured loan through the instruments 14% redeemable debentures and as per the terms of the issue, the redemption was due in the year 1995. The relevant assessment year in the present proceedings is 1999-2000. On due date, the appellant-Company redeemed the debentures for which it received the redemption notice from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t transfer the said money to the Investor Education and Protection Fund. The Tribunal, accordingly, found that the AO has rightly treated the amount as an income of the Assessee and has rightly treated it as Trade Receipt and brought to tax. The aforesaid order of the Tribunal has been impugned in this tax appeal at the instance of the appellant-Assessee. 5. The learned Senior Counsel Shri Usgaonkar appearing for the appellant has submitted that the unclaimed amount could not have been treated to be time-barred debt. It is submitted by him that mere unilateral entry in the Books of Account of the debtors, itself is not relevant for the purpose of coming to the conclusion that the liability has come to an end. It is submitted that the said entry itself will not confer any benefit on the debtor. Shri Uasgaonkar further submitted that even if the debt has become time-barred, the liability has not ceased and as per Section 205C of the Companies Act, 1956, the Assessee was required to transfer the funds to the account of the Investor Education and Protection Fund. In order to substantiate his arguments, Shri Usgaonkar has relied upon a decision of the Honourable Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to the Reserve Fund Account; (ii)the aforesaid amount was utilized by the Assessee-Company for its business purpose, treating the same as its own money for its trading activity; (iii) the money was all through out used by the Assessee; (iv) the Assessee has not tried to trace out the debenture holders to pay back the said amount and had not transferred the money to the Investor Education and Protection Fund. 8. The learned Counsel Shri Usgaonkar has fairly conceded that the amount, in question, was utilized for the purpose of Assessee's business. But, he has confined his argument only on the ground that the claim is not barred by limitation and in this respect, he has relied upon Section 205C of the Companies. Act. Section 205C reads as under: " 205C. Establishment of Investor Education and Protection Fund. - (1) The Central Government shall establish a fund to be called the Investor Education and Protection Fund (hereafter in this section referred to as the "Fund") (2) There shall be credited to the Fund the following amounts, namely:- (a) amounts in the unpaid dividend accounts of companies; (b) the application moneys received by companies for allotment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding activity. Till date this money was utilized by the assessee. Thus the assessee not only failed to trace the debenture-holders to pay back the money but also not transferred the money to the "Investor Education Protection Fund" as required under the law. This money was not, of course, the assessee's own money which the assessee company has treated wrongly as its own money. When it is so, then we find no hesitation to uphold the order of the A.O. who has rightly treated this amount as Trade Receipt and brought to tax." It has also been found by the Tribunal in para 9 of its order that the Assessee has not paid any interest after 1995. It is not in dispute that the repayment of the redeemable debenture which was issued in the year 1988 was due in 1995 and after 1995, the money was lying with the Assessee as unclaimed, which was not even subsequently transferred to the Investor Education and Protection Fund. Considering the aforesaid aspect of the matter, in our view, the Tribunal was justified in holding that the amount, in question has rightly been treated as Trade Receipt by the AO. In the case of Commissioner of Income-Tax vs. T.V. Sundaram Iyengar and Sons Ltd. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t been claimed by the customers. The claims of the customers have become barred by limitation. The assessee itself has treated the money as its own money and taken the amount to its profit and loss account. There is no explanation from the assessee why the surplus money was taken to its profit and loss account even if it was somebody else's money. In fact, as Atkinson J. pointed out that what the assessee did was the commonsense way of dealing with the amounts." In the instant case, since it is not in dispute that the amount, in question, has already been utilized by the Assessee for the purpose of its business from time to time and by Board Resolution the Assessee has transferred the amount to the Reserve Fund Account, and considering the Judgment of the Supreme Court in the case of Commissioner of Income-Tax vs. T.V. Sundaram Iyengar and Sons Ltd. (supra), the amount utilized for the purpose of business of the Assessee was required to be treated as business income. 10. Considering the aforesaid aspect of the matter and considering the fact that the Assessee has already utilized the money from time to time for its business purpose and having been taken benefit of utilizi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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