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2018 (12) TMI 522 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - CIT-A allowed partial relief - Held that:- Assessee could not have advanced the loan of ₹ 3,00,00,000/-, if she was not closely related to one of the partners. No doubt, ld. Authorised Representative argued that such loan given to Sm. Priya Racherl did not individually benefit any partners or firm and hence Section 2(22) (e) of the Act would not apply. However, we are of the opinion that such a narrow definition to the word ‘’individual benefit’’ cannot be given. The benefit will include direct or indirect things. Partner whose friend’s wife received the advance had indirectly benefited from the advance received by the assessee from M/s. Symbiotic Infotech P. Ltd. We are therefore of the opinion that ld. Commissioner of Income Tax (Appeals) fell in error in giving relief of ₹ 3,00,00,000/- to the assessee. We dismiss the grounds 6 to 10 of the assessee and allow the appeal of the Revenue. Disallowance of interest expenditure - interest relatable to term loan having been fully utilized for acquiring immovable property in the name of assessee firm for its business purposes - Held that:- It is not disputed that there was a net overdrawing of ₹ 1,70,69,208/- in partners accounts, if considered together, as on date of obtaining the loan viz 12.11.2011. It may be true that the loan was immediately put to use for the purpose of acquiring property. However, if the partners had not overdrawn by ₹ 1,70,69,208/-, assessee could have saved atleast the interest on such amount. In other words, we cannot say that there was full utilization of loans taken by the assessee for the purpose of its business. As already mentioned by us, assessee itself had admitted before ld. CIT (Appeals) that cash credit account was not used for the purpose of business. In such circumstances, we are of the opinion that CIT (A) was justified in sustaining Addition - decided against assessee.
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