Delhi High Court
Cit vs Jet Life India Ltd on 13 December, 2011
Author: Sanjiv Khanna
$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA Nos.1276/2011 & 1277/2011
CIT ..... Appellant
Through: Ms. Suruchi Aggarwal,
Advocate
versus
JET LIFE INDIA LTD ..... Respondent
Through:
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V.EASWAR
ORDER
% 13.12.2011
C.M.No.22399/2011 in ITA 1276/2011
C.M.No.22408/2011 in ITA 1277/2011
These are applications for condonation of delay in refiling of the
appeals.
For the reasons stated in the applications, the delay is condoned.
The applications are disposed of.
ITA Nos.1276/2011 & 1277/2011
These appeals by Revenue filed under Section 260A of the
Income Tax Act, 1961 (Act, for short) impugn order dated 30th
November, 2010 passed by the Income Tax Appellate Tribunal
(tribunal, for short) upholding the order passed by the Commission of
Income Tax (Appeals) deleting penalty under Section 271E of the Act.
2. The Assessing Officer had imposed penalty under Section 271E
recording that the assessee had repaid amounts under the Golden
Bonds Scheme in violation of Section 269T of the Act. He rejected the
contention raised by the assessee that the said repayments were made
by adjustment of dues outstanding in the books and, therefore,
provisions of Section 269T were not attracted. It was held by the
Assessing Officer that the auditor‟s report enclosed with the return
clearly stated that the payments were not made by account payee
instruments and, therefore, there was violation of Section 269T.
3. Commissioner of Income Tax (Appeals) and the tribunal have
held that the payment under the Golden Bonds Scheme was not
repayment of any deposit, but was repayment of a loan and there was
no violation of Section 269T, as it stood at that time. Section 269T, at
that time, only covered deposits and did not include repayment of
loans. By an amendment introduced with effect from 1 st June, 2002,
repayment of loans was covered under Section 269T.
4. Commissioner of Income Tax (Appeals) had further held that in
the present case no payment by way of cash was made but book
adjustments were made, and accordingly there was no violation of
Section 269T in view of the judgment of this Court in CIT Vs. Noida
Toll Bridge Company Ltd. (2003) 260 ITR 262.
5. The nature and character of the Golden Bonds Scheme have
been discussed in detail in the order passed by the Commissioner of
Income Tax (Appeals). The aforesaid bonds were in nature of optional
fully convertible debentures. The subscribers to these bonds had option
to redeem them on expiry of 38 months or 58 months from the date of
allotment. The subscribers could apply for conversion of two bonds
into one fully paid equity share of Rs.10 at a premium of Rs.190/-
each, provided that such an option was exercised at appropriate time.
The rate of interest was stipulated in the scheme. This is an undisputed
position.
6. The Commissioner of Income Tax (Appeals) has referred to the
definition of term „deposit‟ in Section 2(b) of the Companies
(Acceptance of Deposits) Rules, 1975, which is as under:-
"2(b) "deposit" means any deposit of money
with, and includes any amount borrowed by, a
company, but does not include-
......................
"(x) any amount raised by the issue of bonds
or debentures secured by the mortgage of any
immovable property of the company or with an
option to convert them into shares in the company
provided that in the case of such bonds or
debentures secured by the mortgage of any
immoveable property the amount of such bonds or
debentures shall not exceed the market value of
such immovable property."
7. Reference was also made to the definition of term "debentures"
given in Section 2(12) of the Companies Act, 1956, which reads as
under:-
"2(12) "debentures" includes debenture
stock, bond and any other securities of a company,
whether constituting a charge on the assets of the
company or not;"
8. On reading of the two provisions, it has been rightly held by the
Commissioner of Income Tax (Appeals) and the tribunal that
debentures or bonds were not covered by the term "deposit" and was a
loan.
9. Section 269T of the Act has been interpreted by this Court in
the case of Baidya Nath Plastic Industries (P) Ltd. Vs. K.L. Anand,
ITO [1998] 230 ITR 522 (Delhi) and it was held that the said provision
before its amendment with effect from 1st June, 2002 would apply only
in cases of deposits and not in cases of loans. Madras High Court in the
case of A.M. Shamsudden Vs. Union of India [2000] 244 ITR 266
(Mad.) and Rajasthan High Court in CIT Vs. Secure Meters Ltd.
(2010) 321 ITR 611 have taken a similar view.
10. In view of the aforesaid decisions, the Legislature by Finance
Act had expanded the ambit and scope of Section 269T to cover
repayment of loans. This amendment, however, is with effect from 1st
June, 2002. The assessment years in question are 1999-2000 and 2000-
2001. The repayments in the present cases, it is admitted, were made
before 1st June, 2002.
8. In view of the aforesaid discussion, we do not find any merit in
the present appeals and the same are accordingly dismissed without
any order as to costs.
SANJIV KHANNA, J.
R.V.EASWAR, J.
DECEMBER 13, 2011
NA
