In the appeal no ITA 162/KOL/2017 ITO vs. M/s. Dayamayee Marble & Granite, the Income Tax Appellate Tribunal (ITAT) Kolkata Bench, cancelling the penalty held that the capital contributed in Cash Transaction by the partner in the partnership firm does not tantamount to loan or deposit within the meaning of section 269SS of the Income Tax Act, 1961.
The assessee M/s. Dayamayee Marble & Granite is a partnership firm, engaged in the marbles and granites trading business. one of the partners of the assessee had contributed an amount of Rs.12 lacs in cash towards capital contribution in the assessee firm. The Assessing Officer (A.O) observed that as the capital contribution received by the firm from the partner was equivalent to loan or deposit and as the receipts were in the nature of cash, it violated the provisions of section 269SS of the Act. The A.O levied penalty u/s 271D of the Income Tax Act, 1961.
in this appeal, the Commissioner of Income Tax (Appeals) (CIT(A)) observed that introduction of capital contributed by the partner in the partnership firm does not fall under the ambit of loan or deposit within the meaning of section 269SS of the Income Tax Act,1961. He further observed that the partner had duly reflected this introduction of the capital of Rs.12,00,000/- in the partnership firm in his individual balance sheet. The CIT(A) also noted that the assessee firm also had treated the receipt of Rs.12,00,000/- from the partner as capital introduced by the said partner. Accordingly, he deleted the penalty levied u/s 271D of the Act.
the bench has heard the rival submissions and find that the capital contributed by the partner in the partnership firm does not tantamount to loan or deposit within the meaning of section 269SS of the Act and accordingly we do not find any infirmity in the order of the ld. CIT(A) cancelling the penalty levied thereon. Hence, we do not deem it fit to interfere in the order of the ld. CIT(A). Accordingly, the grounds raised by the revenue are dismissed.