9911796707
TMI Blog1986 (7) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Atma Ram Properties Pvt. Ltd. It had been contended by the assessee before the ITO that though the assessee had not received any dividends on the shares in this year the objection of acquisition of these shares was to earn dividend or bonus as and when the company declared. The ITO, however, was of the view that this claim of the assessee could not be allowed. The ITO found that the assessee had given a loan of Rs. 9,74,752 to M/s. A.R. Chadha Co. (India) Pvt. Ltd. on which no interest had been charged by the assessee. He also found that there was balance of Rs. 2,25,350 with M/s. Atma Ram Properties Pvt. Ltd. on which again no interest had been charged by the assessee. The ITO had referred this matter to the IAC under s. 144B and he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57,00,000 were available out of the sale proceeds of shares the assessee had taken a loan of Rs. 20,00,000 approximately from New Bank of India in Account No. 1266 to finance the purchase of shares and payment of Wealth-tax. It was also noted by him that the main ground for disallowance of interest by the ITO was that the assessee had advanced loans to companies in which he was interested to the extent of Rs. 12 lakhs without any interest. The ITO had disallowed proportionate interest at the rate of 18 per cent on the above amount and had adjusted it against the interest claimed by the assessee as a deduction. 3. Before the CIT(A) it was pointed out that the loan to M/s. A.R. Chadha Co. Pvt. Ltd. had been advanced in the previous year a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 14,94,000. 5. We have heard the ld. departmental representative, who mainly relied on the finding given by the ITO that the assessee had his own funds with connected companies and which could have been withdrawn for investment in the shares. He contended that the assessee s action in taking interest-bearing loan while its own money was available when payment of interest was a scheme to reduce his tax liability. He referred to the decision of the Supreme Court in the case of McDowell Co. Ltd. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC) and contended that such action of the assessee should not be encouraged and interest should not be allowed. The ld. Counsel for the assessee, on the other hand, besides relying on the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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