Meaning of “Investment/deposit”

Case Name : Director Of Income-Tax (Exemption) Vs. Alarippu

Citation :[2000] 111 TAXMAN 511/244 ITR 358 (DELHI)

Court : Delhi High Court

Section : 11

Meaning : The expressions used in the provisions of sections 11(5) and 13(1)(d) are ‘investment’ and ‘deposit’. The former expression means to lay out money in business with a view to obtain an income or profit. Deposit, on the other hand, means that which is placed anywhere, as in any one’s hands for safe-keeping, something entrusted to the care of another. These two expressions have been used in a cognate sense and have to be understood as such. In order to constitute an investment, the amount laid down should be capable of and result in any income, return or profit to the investor and in every case of investment, the intention and positive act on the part of the investor should be to earn such income, returns, profit. In order to constitute an investment, the monies shall be laid out in such a manner as to acquire some species of property which would bring in an income to the investor. A loan, on the other hand, is granting temporary use of money, or temporary accommodation. The words ‘investment’, ‘deposit’ and ‘loan’ are certainly different. Section 11(5) refers to pattern of investment by the assessee. Section 11(5) was introduced by the finance act, 1983, with effect from 1-4-1983, i.E., From assessment year 1983-84. It prescribes the forms and modes of investing and depositing money referred to in sections 11(2)(b). Subsequently, new forms and modes have been added. Section 13(1)(d), as amended by the finance act, 1983, provides that the income of any charitable or religious trust or institution will not be entitled to exemption under sections 11 and 12, if certain conditions stipulated therein are not complied with. The word ‘deposit’ does not cover transaction of loan which can be more appropriately described as direct bailment. The essence of deposit is that there must be a liability to return it to the party by whom or on whose behalf it has been made on fulfilment of certain conditions. In the commercial sense, the term is used to indicate the aforesaid transaction as deposit of money for employment in business, deposits for value to initiate security for deposit of title deeds, similar documents as security for loan, deposit of money bills in a bank in the ordinary course of business of current account and deposits of a sum at interest as a fixed deposit in a bank.

Case Name : Alarippu Vs. Ito

Citation :[1997] 60 ITD 478 (DELHI – TRIB.)

Court : Itat-Delhi

Section : 11

Meaning : The expressions used in sections 13(1)(d) and 11(5) are ‘investment or deposits’. The expression ‘investment’ as per webster’s new international dictionary (second edition unabridged) means ‘to lay out (money or capital) in business with the view of obtaining an income of profit’. Deposit, on the other hand, means, that which is placed anywhere, as in anyone’s hands for safe keeping, something entrusted to the care of another. These two expressions have been used in cognate sense and have to be understood as such.