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TMI Blog1984 (3) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... count year ending31-3-1979). He was also allowed by the company free use of the car, for which the IAC determined the value of the perquisite at the rate of Rs. 3,600 in each of the two years. 3. The controversy before us is regarding the value of the benefit derived by the assessee on account of the debit balance in his account with the said company. In the assessment year 1978-79, the opening balance as on1-4-1977was a debit of Rs. 35,813 which was reduced to Rs. 20,799 as on31-3-1978. The IAC took the average of the opening and the closing balance at Rs. 28,306 and estimated the interest thereon at the rate of Rs. 4,245 which is held to be the benefit derived by the assessee from the said company and deemed to be the assessee's income u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78] 111 ITR 444 (Mad.) where the Court had approved the decision in A.R. Adaikappa Chettiar's case on the interpretation of the word 'obtained' occurring in section 2(6C)(iii) of the Indian Income-tax Act, 1922 ('the 1922 Act'). The Commissioner (Appeals) distinguished the decision in Addl. CIT v. A.K. Lakshmi [1978] 113 ITR 368 where the Madras High Court under the similar circumstances held that the benefit obtained by the director on account of interest-free advances by the company was assessable as a perquisite under section 17(2)(iii)(a) of the Act. At the hearing before us, the learned departmental representative relied on Lakshmipat Singhania v. CIT [1974] 93 ITR 162 (All.) where the Court observed that section 2(6C) was in absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company at their discretion and the said drawings by the directors were unauthorised. However, no details of the said litigation had been filed before us to show that the account of the assessee director Gurmukh Singh in the said company was also subject-matter of the said litigation. We also note that on24-10-1977there was a settlement between the directors inter se which was filed before the High Court and the company's petition was disposed of accordingly. It, however, appears that in 1978, there was again a dispute regarding the drawings from the company's bank account in the State Bank ofIndia,Najafgarh Road,New Delhi. However, here again in the absence of any documents before us, we cannot infer that assessee-director Gurmukh Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The learned counsel for the assessee has urged that the loans to directors could be given only after obtaining the previous approval of the Central Government under section 295 of the Companies Act, 1956, as the employer here was a public limited company. However, this contention was not raised before the lower authorities and we have no evidence one way or the other to verify whether any previous consent of the Central Government for advancing the loan to the assessee was obtained. Even otherwise, even if a loan is given to the assessee by the company in infringement of section 295, that is not relevant when the limited questions before us is whether any benefit was obtained by the assessee from the employer company. 8. We have alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to have given a personal benefit to such employee and the benefit was not derived by the employee de hors his status as an employee and, therefore, the assessee was granted a benefit within the meaning of section 17(2)(iii). Similar were the observations of the Madras High Court in A.K. Lakshmi's case where non-charging of interest by the employer company on the current account of the director was held to confer a benefit on the employee. We have already noted above in paragraph 4 the view of the Allahabad High Court in Lakshmipat Singhania's case that when a person received benefit from the company as a director, the value of the benefit was deemed to be his income and there was no further requirement of any kind and it was not nec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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