9911796707
TMI Blog1982 (2) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's claim for deduction under section 80L of the Act in respect of interest credited to the provident fund in excess of the statutory limit. 2. So far as the first ground is concerned, the relevant facts are that the assessee was given by the employer two loans, one for the purchase of equity shares in the employer-company and another for the purpose of purchase or construction of a house, both carrying interest at 4 per cent per annum. In the assessment made on the assessee, the ITO considered that the grant by the employer of the loans at 4 per cent as against the normal lending rate of the company at 12 per cent resulted in a monetary benefit by way of concession at the rate of 8 per cent. He, therefore, added the benefit of the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the facts and the rival contentions of the parties, we hold that the addition made in the assessment on this account is not justified. The two Madras High Court decisions referred to above would apparently support the plea that where an employee obtains loan which was free of interest from an employer the value of the benefit or advantage of the concession on account of non-charge of interest would attract the provisions of section 17(2)(iii) and would justify its inclusion in determining the employee's income But in the present case the two types of loans granted are not interest-free. Moreover, we find that with regard to the loan or advance made by the employer for the purchase of its own shares, it may not be possible to reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly any material which would show that the holding of the shares could result in any benefit or advantage by way of receipt of any annual dividend income, appreciation in share prices, possible future bonus issues, etc., and in fact it has been made clear that the employer does not guarantee performance which would result in any such advantage and further, that the transaction of the employee obtaining loan from the employer is purely in the nature of commercial transaction and at his own risk and responsibility. We are, therefore, satisfied that in any case so far as the loan taken by the assessee-employee in regard to purchase of shares is concerned, there is hardly any benefit or advantage accruing to him which can be brought to charge un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that in a reference taken by the department dated 22-9-1981 against this order, the department has not sought reference of any question with regard to this finding and the decision of the Tribunal from which it is obvious that the department has accepted this decision of the Tribunal in its earlier order. The orders of the departmental authorities in this case are much earlier to the date of the reference application. In these circumstances, it is unnecessary for us to go into the question as to whether the ratio of the decisions of the Madras High Court could be held to be applicable even to the grant of loan by an employer to the employee at concessional rate even assuming that in the present case the rate of interest charged could be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in CIT v. Smt. Shakuntala Banerjee [1979] 120 ITR 837, the ratio of which supports the assessee's claim in this case and, therefore, the ratio of the Allahabad High Court decision should be applied in preference to the ratio of the Full Bench decision of the Tribunal. In the Special Bench order, the claim of the assessee has been negatived on the ground that the contribution by the Provident Fund which is a trust cannot be said to belong to the assessee as the legal ownership of the trust property vests in the trustees and not in the assessee. The Allahabad High Court decision referred to by the learned representative of the assessee clearly postulates that a beneficiary of a trust can claim deduction under section 80L on interest recei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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