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2017 (5) TMI 65 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - loan obtained by Assessee on interest - Held that:- As far as the amount considered as deemed dividend as a loan from M/s RPC is concerned, this is not a loan obtained during the year but repayment made during the year. There was an opening balance of ₹ 16,98,000/- at the beginning of the year and Assessee paid an amount of ₹ 1,00,000/- on 08-07-2006 and year ending balance has been reduced to ₹ 15,98,000/-. Since the amount is a repayment to the company and not a loan obtained from the company, invoking provisions of Sec. 2(22)(e) of the IT Act on this amount does arise, accordingly, this amount is deleted. On the issue of loan from M/s VTC, the account copy indicates that there was opening balance as well to an extent of ₹ 1.08 Crores. We were informed that no proceedings u/s 2(22)(e) of the IT Act were initiated in earlier year. However these amounts are not interest free. Assessee paid interest at 8% per annum to an extent of ₹ 9,92,477/- during the year, thus, we are of the opinion that this amount is not a ‘benefit’ obtained by Assessee, but there is a ‘benefit’ to the company. Thus the order made by A.O and sustained by Ld. CIT(A) on account of loan received by Assessee, on which consideration in the form of interest was paid by Assessee to the benefit of the company, is not sustainable.See Pradip Kumar Malhotra Versus Commissioner of Income-tax, West Bengal-V [2011 (8) TMI 16 - CALCUTTA HIGH COURT ]. - Decided in favour of assessee.
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