TMI Blog2017 (5) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, this amount is deleted. On the issue of loan from M/s VTC, the account copy indicates that there was opening balance as well to an extent of ₹ 1.08 Crores. We were informed that no proceedings u/s 2(22)(e) of the IT Act were initiated in earlier year. However these amounts are not interest free. Assessee paid interest at 8% per annum to an extent of ₹ 9,92,477/- during the year, thus, we are of the opinion that this amount is not a ‘benefit’ obtained by Assessee, but there is a ‘benefit’ to the company. Thus the order made by A.O and sustained by Ld. CIT(A) on account of loan received by Assessee, on which consideration in the form of interest was paid by Assessee to the benefit of the company, is not sustainable.See ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m M/s. RPC and being substantial shareholder, these amounts are to be assessed as deemed dividend u/s 2(22)(e) of the IT Act. Accordingly proceedings u/s 147 of the IT Act were initiated and a notice u/s 148 was issued to Assessee. It was submitted by Assessee that these amounts were received on interest and Assessee has paid the interest to the company, therefore, the amount cannot be treated as deemed dividend u/s 2(22)(e) of the IT Act. However A.O did not accept the contentions and treated the amounts involved as income of Assessee. 3. In appeal before the CIT(A), Assessee contested the issue of reopening of assessment as well as the issue of invoking the provisions of Sec. 2(22)(e) of the IT Act. After considering the Assessee s sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that the appellant had stood guarantee f or the company in the past as a result of which his personal loan-worthiness in the eyes of the banks and other f inancial institutions had become precarious, is also not a relevant consideration as per the provisions of the section. 5.9 The AR has also submitted, that the relation between the appellant and the company was that of an employee and employer and that similar loans had been advanced to various other employees of the company as well. In this order, the A.O has discussed the difference between the nature of loans advanced to the other employees, Strictly as salary advances, Whereas the loan to the appellant is not in that category. In any event, the Position of the appellant cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 1322 (Kol-Trib) in ITA No. 1817/Kol/2009 dated 11-03-2016. 6. Ld. DR however submitted that the basic contentions for invoking the provisions of Sec. 2(22)(e) have been satisfied that (i) Assessee is a major shareholder having 50% shareholding (ii) the company has accumulated profits (iii) Assessee has obtained loan which was used for personal benefit and constructed a house. With reference to the argument that provisions of Sec. 115 O will apply, it was submitted that provision will apply for the declared dividends, whereas provisions of Sec. 2(22)(e) of the IT Act are applicable for the deemed dividends which are a class apart and cannot be mixed. It was however fairly admitted that the amount of ₹ 1,00,000/- was a repayment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held as under: 5. We have heard the arguments of both the sides and also perused the relevant material available on record. One of the main contentions raised by the ld. counsel for the assessee at the time of hearing before us is that the loan in question treated as deemed dividend under section 2(22)(e) by the authorities below was taken by the assessee from M/s. Surya Business Pvt. Limited on interest and since the said Company was compensated by way of interest paid by the assessee on loan, the assessee in real sense did not derive any benef it f rom the funds of the Company so I . T. A . N o. 1 8 1 7 / KO L . / 2 0 0 9 Assessment year: 2006-2007 as to attract the provisions of section 2(22)(e). Although the ld. D.R. has veheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Assessing Off icer af ter having noticed that interest at the rate of 9% per annum was paid by the assessee on such loan, which, according to him, was a consideration received f rom her shareholders, which was benef icial to the Company and the order of the ld. CIT(Appeals) giving relief to the assessee was upheld by the Tribunal vide its order dated 29.06.2015 passed in ITA No. 1124/KOL/2012 by relying on the decision of the Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra). Keeping in view the said decision of the Hon'ble Calcutta High Court which has been f ollowed by the Coordinate Bench of this Tribunal in the case of M/s. Zenon (India) Pvt. Limited I . T. A . N o. 1 8 1 7 / KO L . / 2 0 0 9 Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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