TMI Blog2017 (4) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... ntor for the credit facilities taken by the company - Held that:- The proposition laid down in Pradip Kumar Malhotra Versus Commissioner of Income-tax, West Bengal-V [2011 (8) TMI 16 - CALCUTTA HIGH COURT] 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case the Ld. C.I.T.(A) has erred in confirming the disallowance of ₹ 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 ₹ 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 contentions I find that ground no.1 should be restored to the file of AO, as he has not examined the disallowance u/s 14A of the Income Tax Act, 1961 (Act) with respect to share of profit received by the assessee from partnership firms which are also not includibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 the voting power; but if such loan or advance is given to such shareholder as a consequence of any further considerate which is beneficial to the company received from such a shareholder, in such case, such advance or loan cannot be said to a deemed divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the help of a cash flow statement. The assessee should demonstrate whether interest bearing funds have gone into taxable income earning activities. It is for the assessee to demonstrate that interest fee funds have been utilised for perso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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