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TMI Blog2017 (4) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of interest paid on borrowed fund invested in exempt assets. 2. On the facts and in the circumstances of the case the Ld. C.I.T.(A) has erred in confirming the deemed dividend income u/s. 2(22)(e) of the 1. T. Act, 1961 amounting to Rs. 21,13,676/-. 3. On the facts and in the circumstances of the case the Ld. C.I.T.(A) has erred in confirming the disallowance of Rs. 6,42,436/- on account of interest on loans not for the purpose of business. 4. On the facts and in the circumstances of the case the Ld. C.I.T.(A) has erred in confirming the estimated income of House Property at Rs. 63,000/- by the Ld. A.O. 5. Other grounds of Appeal may be argued before or at the time of hearing of this appeal." 2. After hearing the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the company releasing equitable mortgage and under such circumstances the assessee was in that case allowed to take loan from the company. In the case in hand the ld. DR submitted that such situation has not arisen. 4. After hearing the rival submissions I find that the Jurisdictional High Court in the case of Pradip Kumar Malhotra held as follows :- "The phrase 'by way of advance or loan' appearing to sub-clause (c) of section 2(22) must be construed to mean those advances or loans which a shareholder enjoys for simply on account of being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than 10 per cent of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proposition laid down by the jurisdictional High Court is that transactions, whether the assessee has permitted his property to be mortgaged to the bank, for the company to take certain benefit by way of loan and when certain facilities granted by such company in lieu of such mortgage and in lieu of the same, the company grants some interest free advance to the assessee, such transaction is not a gratuitous transaction. This principle is fulfilled in the case on hand. Thus respectfully following the same we allow this ground of the assessee as the amount advanced by the company to the assessee is not a gratuitous transaction. 6. Ground no.3 is against the disallowance of interest paid. The claim of the assessee has to be examined with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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