TMI Blog2011 (11) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 2(24)(iv) - Decided against the Revenue. - ITA No.95 of 2000 ITA No.96 of 2000 ITA No.97 of 2000 ITA No.98 of 2000 ITA No.99 of 2000 ITA No.100 of 2000 ITA No.101 of 2000 ITA No.104 of 2000 ITA No.28 of 2001 - - - Dated:- 2-11-2011 - MR. JUSTICE HEMANT GUPTA, MR. JUSTICE G.S.SANDHAWALIA, JJ. Present: Mr. Rajesh Katoch, Advocate, for the appellant-revenue. Mr. Akshay Bhan Mr. Alok Mittal, Advocates, for the respondent. HEMANT GUPTA, J. The following 9 appeals raise common question of law i.e. whether interest on the interest free loans obtained from the Company in which either the assessee or his/her spouse was a Director, is a perquisite and an income of the assessee in terms of Section 2(24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Himalya Ayurvedic Agro Research Centre Ltd. During the course of assessment proceedings, the assessee was asked to explain as to why interest income on such interest free loan be not included to assessee s income, as a deemed benefit under Section 2 (24)(iv) of the Act. The explanation of the assessee was not found to be satisfactory and the interest at the rate of 21% was brought to tax on account of deemed benefit under Section 2(24)(iv) of the Act. Such order was affirmed by the Commissioner of Income Tax (Appeals). But the Income Tax Appellate Tribunal (for short the Tribunal ) allowed the appeals by relying upon its earlier order passed in case of Varinder Gupta in ITA No.82/Chandi/96 decided on 09.12.1999 whereby interest on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Late A.K.Lakshmi others (by LRs) 113 ITR 368 and Commissioner of Income Tax, Madras Vs. S.S.M.Lingappan 129 ITR 597. In A.K.Lakshmi s case (supra), it was held that grant of amount by the Company for the personal use of its employees without charging interest is a benefit granted by the Company. The Court held to the following effect: .. We have no doubt that his section is not intended to restrict the discretion of the right of the company to advance amounts to its employees with or without interest or at any specified rate of interest. But the question would still arise whether granting amounts of the company for the personal use of its employees without charging interest would be the grant of any benefit. Our answer here must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amending Act of 1984, it was provided that where the employer has advanced any loan to an employee for the purpose of building a house or purchasing a site or a house and a site or for purchasing a motor car and either no interest is charged by the employer on the amount of such loan or interest is charged at a rate lower than the rate of interest, which the Central Government may, having regard to the rate of interest charged by it from its employees on loans for such purpose granted to them, such benefit will be regarded as perquisite . But such amendment was repealed in the very next year. In view of the said amendment, the Court held to the following effect: ..The question therefore arises whether the enjoyment by the assessee of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or loan at a concessional rate as any benefit or perquisite granted or provided by the lender-company to the director or employee, as the case may be. (emphasis supplied) xxx xxx xxx The question, however, remains as to whether non-charging of interest will also fall within the purview of section 2(24)(iv) of the Act. For the purposes of applying section 2(24) (iv) of the Act, the same test as to what constitutes a benefit or a perquisite has to be applied. If the loan granted to an employee or a director or a person who has a substantial interest in the company without charging any interest or at a substantial interest in the company without charging any interest or at a concessional rate of interest does not constitute any bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.R.S. Oberoi s case (supra). It observed: .The amendment made by the 1984 Amending Act was both to Section 17(2) and Section 40A(5). In the impugned judgment reference in fact had been made to inclusion of Sub Clause (vi) in Clause (2) of Section 17. Moreover, the High Court in the impugned judgment did not consider the amendments made by the Amending Act, 1984 on the ground it is difficult to see how this amendment can have any bearing upon the interpretation of the then existing provisions of the Act. . We do not think this approach was also correct. An amending provision can certainly give guidance to interpretation of the existing provisions. The judgments of the Madras High Court which were relied upon by the High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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