2006 (1) TMI 97

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....Raja J.- The present appeal is filed under section 260A of the Income-tax Act, 1961 by the Revenue, in I.T.A. Nos. 1187/Mds/1998 dated July 13, 2004, passed by the Income-tax Appellate Tribunal, Madras "B" Bench, raising the following formulated substantial question of law. "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the penalty levied u....

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....ween the assessee and Mr. S.V.S. Manian, Proprietor of Manian Creation, was current account in nature and was not a loan or deposit. The Deputy Commissioner of Income-tax rejected the contention and was of the view that there was a clear violation of the provisions of section 271D and levied a penalty of Rs. 2,94,000 under section 271D of the Act. Aggrieved by the order, the assessee filed an a....

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....7 ITR 330 and held that section 269SS is constitutionally valid and therefore the penalty levied by the Assessing Officer ought to be considered. The Tribunal, on hearing the arguments, held that, on the merits, the transaction does not fall within the meaning of loan or advance and hence there is no violation of section 269SS. We heard the arguments of learned counsel for the Revenue. We have ....

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.... had been shown as "unsecured loan from directors" in the balance-sheet. As per the Companies Act, under the Companies (Acceptance of Deposits) Rules, 1975, under rule 2(b)(ix), deposit does not include any amount received from a director or a shareholder of a private limited company. Therefore the transaction between the appellant and the director cum shareholder is not a loan or deposit and it i....