On the facts, the Tribunal’s deletion of penalty was affirmed by the High Court as there was no basis to treat share application money as a loan or deposit. Explanation (iii) to section 269T defines “loan or deposit” narrowly as a sum repayable on demand or after a period. Share application money is paid for participation in capital and is not repayable in the manner of a loan or deposit. Therefore, sections 269SS and 269T are not attracted and no penalty under sections 271D or 271E can be imposed for receipt or repayment of share application money. (AY.  2004‑05 to 2007‑08)