9911796707
TMI Blog1992 (11) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... case for the assessment year 1979-80 in ITA No. 842/Bang/1982 dated 18-4-1984 deleting such addition. 2. The assessee is a director of M/s V.M. Salgaocar Bros. (P.) Ltd. in which he had a current account. For the assessment year 1982-83 for which the accounting year ended on 31-3-1982, there was debit balance in the current account at Rs. 1,30,420. Following the judgment of the Madras High Court in the case of Addl. CIT v. A.K. Lakshmi [1978] 113 ITR 368 wherein it has been held that non-charging of interest on the debit balance of account of the director or employee amounted to perquisites, the Assessing Officer computed the perquisites at 15% of the debit balance and thus brought to tax a sum of Rs. 19,563 under section 17(2) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986] 19 ITD 381. 6. We have duly considered the submissions of the parties and the decisions cited by both the parties. The issue involved in the case of A.K. Lakshmi considered by the Madras High Court and in the case of P.R.S. Oberoi considered by the Calcutta High Court was the same, but the Courts came to diametrically opposite conclusions. In the Madras case, there was finding that the company was paying interest on its borrowals, but it did not charge any interest on such overdrawings by the directors. The Madras High Court concluded that the director derived a benefit in that he got the use of the monies belonging to the company or any other employer without having any liability to pay any interest and that amounted to " perquisit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that loan granted to an employee or a director or a person who has a substantial interest in the company without charging any interest or at a concessional rate of interest did not constitute any benefit or amenity falling within clause (b)(iii) of Explanation 2 to section 40A(5) of the Act. This according to the Calcutta High Court manifested clearly the intention of the Parliament. Finally the Calcutta High Court concluded that non-charging of interest on the amount overdrawn cannot be treated as a benefit for the purpose of section 17(2)(iii) of the Income-tax Act, 1961. It also came to the conclusion that non-charging of interest or charging of concessional rate of interest did not constitute any benefit for the purpose of Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
