Madhya Pradesh High Court
Commissioner Of Income Tax vs Motilal Subhodh Kumar Jain on 13 May, 2004
Equivalent citations: (2005)197CTR(MP)58, [2005]277ITR524(MP)
Author: Arun Mishra
Bench: Arun Mishra
JUDGMENT Arun Mishra, J.
1. This appeal has been preferred by the CIT, Jabalpur, under Section 260A of the IT Act, 1961 (hereinafter referred to as 'the Act'), aggrieved by an order passed by the Tribunal, Jabalpur, in ITA No. 530/Jab/1995 on 9th Dec., 1998, relating to the asst. yr. 1990-91.
2. For the asst. yr. 1990-91, the assessee was charged with the penalty for contravention of Section 269T of the Act. A show-cause notice was issued as to why the assessee be not levied with penalty for violation of Section 271E of the Act. Reply was filed by the assessee. AO passed an order (A.1) dt. 7th March, 1991, holding that case of the penalty was made out. Penalty of Rs. 31,200 was imposed. An appeal was filed by the assessee to the CIT(A). Appeal was dismissed. Imposition of the penalty was upheld. Order (A.2) was passed by the appellate authority on 23rd Aug., 1994. Aggrieved by the orders, assessee filed the appeal before the Tribunal. Appeal has been allowed and the order passed by the CIT(A) has been set aside. Order of imposition of the penalty has been set aside. The Tribunal has held that the assessee-firm has not accepted any deposit and it appears that amount which is refunded was only loan, relying on a decision of the apex Court in CIT v. Bazpur Co-operative Sugar Factory Ltd. , therefore, the provisions contained in Section 269T are not applicable, therefore, the penalty of Rs. 31,200 levied by the AO has been set aside.
3. Shri Rohit Arya, learned counsel for the Revenue, has submitted that Section 269T of the Act, as it stood in the year 1990-91, covers in its ambit, any deposit which includes the case of loan also, thus, he has submitted that penalty was rightly imposed which has been illegally set aside.
4. Shri G.N. Purohit, learned counsel for the respondent-assessee, has submitted that order is proper. Loan has been later on specifically included under Section 269T of the Act in the year 2002; Section 269T was not attracted, hence, no interference is called for in this appeal.
5. Section 269T of the Act provides mode of the repayment of certain deposits, in case repayment is made of any deposit the aggregate of the amount of deposit and interest is Rs. 10,000 or more, same has to be paid by an account payee cheque or account payee bank draft. As per proviso to Sub-section (1), amount can be credited in the account if the repayment is by banking company or cooperative bank. Explanation (ii) provides that for the purpose of this section 'deposit' means "any deposit of money" which is repayable after notice or repayable after a period and in case of a person other than the company includes "deposit of any nature". Section 269T, Sub-section (1) and its Expln. (ii) which are relevant quoted below :
"Mode of repayment of certain deposits.--(1) No company (including a banking company), co-operative society or firm shall repay to any person any deposit otherwise than by an account-payee cheque or account-payee bank draft where the amount of the deposit, or where the amount of the deposit is to be repaid together with any interest, the aggregate of the amount of the deposit and such interest, is ten thousand rupees or more :
Provided that where the repayment is by a banking company or co-operative bank, such repayment may also be made by crediting the amount of such deposit to the account (if any) with such company or bank of the person to whom such deposit has to be repaid :
x x x x x x Explanation.--For the purposes of this section,--
[Substituted for following Clause (i) by the Finance Act, 1985, w.e.f. 1st April, 1986:)
(i) 'banking company' shall have the meaning assigned to it in Clause (i) of the Explanation to Section 269SS;
(ia) 'co-operative bank' shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
(ii) '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."
6. Amendment has been made in the above provisions by the Finance Act, 2002, the amended Section 269T reads thus :
"Mode of repayment of certain loans or deposits.--No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account-payee cheque or account-payee bank draft drawn in the name of the person who has made the loan or deposit if--
(a) the amount of the loan or deposit together with the interest, if any, payable thereon, or
(b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, is twenty thousand rupees or more :
Provided that where the repayment is by a branch of a banking company or cooperative bank, such repayment may also be made by crediting the amount of such loan or deposit to the savings bank account or the current account (if any) with such branch of the person to whom such loan or deposit has to be repaid.
Explanation.--For the purposes of this section,--
(i) 'banking company' shall have the meaning assigned to it in Clause (i) of the Explanation to Section 269SS;
(ii) 'co-operative bank' shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
(iii) 'loan or deposit' means any loan or 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 loan or deposit of any nature."
7. It is clear from the amended Section 269T of the Act that "loan" word has been introduced in Section 269T for the first time in the year 2002, w.e.f. 1st June, 2002. The statement of the object has been provided in Clause 95 of the Budget 2002-03 which reads thus :
"Modification of the provisions relating to mode of repayment of certain deposits.--Under the existing provisions of Section 269T of the IT Act, no branch of a banking company, co-operative bank and no other company or co-operative society or partnership firm or other person, can repay any deposit made with such entity otherwise than by an account-payee cheque or an account-payee draft drawn in the name of the person who has made the deposit, in cases where the amount of deposit or the aggregate of the deposits held, exceeds twenty thousand rupees. The Explanation below Sub-section (2) of the said section defines 'deposit' to mean any deposit of money, which is payable after notice or repayable after a period and, in the case of a person other than a company, includes deposit of any nature.
The said section, which is intended to counteract tax evasion, is applicable only to deposits. It is proposed to substitute the existing section by a new section so as to extend its scope to loans also and delete provisions contained therein, which have become obsolete.
These amendments will take effect from 1st June, 2002."
8. The object of the modification is clear that scope of Section 269T has been extended to loans also for the first time. It is not a case of clarificatory amendment incorporated, as submitted by the learned counsel for the Revenue; loan is distinguishable from the deposit and loan has been included w.e.f. 1st June, 2002. In our opinion, the submission of the learned counsel for the appellant that this Court should hold that deposit of any nature includes the loan also, is not acceptable and stands repelled. The apex Court has held in CIT v. Bazpur Co-operative Sugar Factory Ltd. (supra), the essence of a deposit is that there must be a liability to return it to the party by whom or on whose behalf it is made on the fulfilment of certain conditions. It has not been disputed in this appeal by the learned counsel for the parties that amount in question was that of loan.
9. The Madras High Court has also considered the distinction between loan and the deposit under Sections 269SS, 269T and 271E. In A.M. Shamsudeen v. Union of India , the distinction between loan and deposit has been pointed out and it has been held that unamended Section 269T covers deposits not the transaction of loan.
10. Prior to amendment made in Section 269T of the Act, Section 269SS provided the mode of taking or accepting certain loans and deposits. Relevant part of Section 269SS is quoted below :
"Mode of taking or accepting certain loans and deposits.--No person shall, after the 30th day of June, 1984, take or accept from any other person (hereinafter in this section referred to as the depositor), any loan or deposit otherwise than by an account-payee cheque or account-payee bank draft if,--
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in Clause (a) together with the amount or the aggregate amount referred to in Clause (b), is [substituted for "ten" by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989], twenty thousand rupees or more; xxxxxx Explanation.--For the purpose of this section,--
(i) 'banking company' means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in Section 51 of that Act;
(ii) 'co-operative bank' shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
(iii) 'loan or deposit' means loan or deposit of money."
11. A bare reading of Section 269T prior to the amendment and Section 269SS makes it abundantly clear that legislature made a distinction between the mode of repayment of certain deposits which conditions provided in Section 269T were not made applicable to a case of loan; loan and deposit have been treated differently in Section 269SS and unamended Section 269T of the Act. Loan had not been included in deposit under unamended Section 269T, thus, scheme of Sections 269SS and 269T, as the provision stood before amendment in the relevant assessment year, provided for repayment of certain 'deposit' by way of account payee cheque not that of loan.
12. No other submission was raised.
13. Resultantly, we find the appeal to be meritless. Same is hereby dismissed. Parties to bear their own costs as incurred.