TMI Blog2019 (5) TMI 1943X X X X Extracts X X X X X X X X Extracts X X X X ..... remuneration has been credited on the last day of the Financial Year. As per the case of Mr. Purushottam Das Mimanidelete [ 2014 (12) TMI 801 - ITAT KOLKATA] the addition as the account in question is a current account and it is not a loan account. Moreover, it can be seen that the company M/s Panchdeep Constructions Ltd. received money from the assessee which makes it a commercial transaction of mutual benefit to both the parties and hence outside the purview of Section 2(22)(e) of the Act. Accordingly this ground of the assessee is allowed. Disallowance of interest - assessee s case is that the Assessing Officer restricted the claim of the assessee of deduction of interest to the extent of income earned by it under the head income from other sources - Whether assessee claims, is factually incorrect as the interest payment is related to income offered under the head income from house property? - HELD THAT:- Computation of income that rental income has been offered to tax under the head income from other sources and has been assessed as such. This, in our view, is not correct. The rental income may have to be brought to tax under the head income from house property if it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out at all during the previous year or even if let out, was not vacant during the whole or any part of the previous year. As per the Assessing Officer, words where the property is let cannot be read as where the property is intended to be let . For this proposition, the Assessing Officer has heavily relied upon the decision of the Hon ble Andhra Pradesh High Court in the case of Vivek Jain (supra). The Assessee ardently contested the action of the AO before CIT(A) and claimed that in view of S. 23(1)(c), the annual letting value (ALV) ought to have been determined at nil having regard to the fact the property could not be let out and remained vacant for the whole year. In support of this proposition, decisions of the Tribunal in the case of Premsudha Exports (P) Ltd. Presmshree gems (P) Ltd. vs. ACIT, 110 ITD 158 (Mum-Trib.) and Shakuntala Devi vs. DDIT in ITA No.1524/Bang/2010 order dated 20.12.2011 were relied upon before CIT(A). We notice from the order of the CIT(A) that the property was actually let out in the financial year 2006-07 to M/s IDBI Home Finance Ltd. at an actual rental value of Rs.12,600/- per month i.e. Rs.1,51,200/- per annum. During the year relevant to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. If the assessee intended to let the property and took appropriate efforts in letting the property but ultimately failed to let the same, the actual rent received from it will have to be considered as Zero being less than the sum referred in section 23(1)(a) of the Act. The revenue has not brought anything on record in rebuttal to say that the property has not remained vacant for the whole year or was self occupied in some manner. As noted above, the fact that the assessee had on the previous occasion in the preceding year rented the property remains un-traversed. We are not inclined to agree with the interpretation suggested by the Revenue that property should be actually let out in relevant to previous year. This interpretation does not appear consistent with the phraseology mandated in S. 23(1)(c) which includes a situation where the property can remain vacant during the whole of the relevant previous year. Hence, both situations namely property is let and remained vacant for the whole year cannot co-exist during the financial year. We also note from a reading of another provision i.e. sub-section (3) of section 23 of the Act, where the legislatures in their wisdom have u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as follows:- 4. We have heard rival submissions and gone through facts and circumstances of the case. We have gone through the facts of the case and found from the perusal of ledger account of assessee in the books of account of Ganesh Wheat Products (P) Ltd., the lender company, it is seen that as on the first day of the relevant accounting year 2005- 06 (A.Y. 2006-07) opening balance is at Rs.28,07,584/-. Thereafter, on several dates during the entire financial year there were several transactions through cheques and some in cash by either parties, i.e. the assessee and the loan giving company, resulting in shifting balances. On many occasions the balance was in favour of the assessee and on some other occasions the balance was in favour of Ganesh Wheat Products (P) Ltd. The ledger of the assessee further reveals that no payment by loan creditor is followed by a repayment by the loan debtor and, in fact, the payments by the assessee and Ganesh Wheat Products (P) Ltd. are independent of one another. No interest was charged by either side for advancing money on mutuality inasmuch as the loan account was a current account in nature. It is thus evident that there were reciproca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h advance or loan cannot be said to be deemed dividend with n the meaning of the Act. Thus, gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of section 2(22) but not cases where the loan or advance is given in return to an advantage conferred upon the company by such shareholder. From the above facts and legal proposition decided by Hon'ble jurisdictional High Court, it is clear that section 2(22)(e) of the Act was inserted to bring within the purview of taxation those amounts which are actually a distribution of profits but are disbursed as a loan so that tax thereon can be avoided. It is pertinent to note here that when dividends are declared by a company, it is solely the shareholders who benefit from the transaction. No benefits accrue to the company by way of dividend distribution. Thus, section 2(22)(e) of the Act covers only such situations, where the shareholder alone benefits from the loan transaction, because if the company also benefits from the said transaction, it will take the character of a commercial transaction and hence will not qualify to be dividend. In the case of the assessee, by giving and ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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