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TMI Blog2007 (8) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... rs Pvt. Ltd. free of interest. According to the Revenue, since the concerned asses- see obtained benefit of such loan through her husband free from interest such benefit should be treated as income and should have been reflected in return. Having not shown such income in the tax return the assessee escaped assessment of such income. Hence, the assessments for the relevant years were liable to be reopened. Challenging such notice the writ petition was filed by Ishran Devi Oberoi. During the pendency of the proceeding Ishran Devi Oberoi died leaving her surviving her heirs and legal representatives under her will. The appellant in F. M. A. No. 1720 of 1997 was the executor to her estate. The appellant Prithivi Raj Singh Oberoi in Appeal No. 2909 of 2002 was also a director of the above named companies. He was also served identical notice on similar charge. Altogether four writ petitions were heard by the learned single judge in respect of different assessment years, his Lordship disposed of the writ petitions by the common judgment arid order dated July 30, 1991, impugned in these appeals. It was contended on behalf of the appellants that at the time of original assessment all releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed in the affidavit-in-opposition filed by the Revenue before the learned single judge. No affidavit-in-reply was filed to confront such allegation. Hence, the contentions of the Revenue as stated in the affidavit-in-opposition were deemed to have been admitted by the assessee. The learned judge was right in dismissing the writ petition by observing that no prejudice had been caused to the assessee by issuance of such notice. Law on the subject 8 In the case reported in CIT v. P. R. S. Oberoi [1990] 183 ITR 103 (Cal), the Division Bench observed that the director had a running account with the company. Sometimes he also lent and advanced diverse sums to the company without any interest. It was not the case of the Revenue that benefit was derived by the director or his wife through him from a loan which was given by the company for which the company had to pay interest and thereby obtained benefit of deduction of tax. Their Lordships also noted the fact that by amending the provisions of sections 17(2) and 40A, the Revenue wanted to include loan given by any employer to its employees for purchase of house or motor car within the mischief of "perquisite". Such amendment was with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the date of its insertion, namely, April 1, 1985, with a view to provide relief to salaried taxpayers. The very fact that the statute had to be amended at the first instance to bring the said item within the purview of the expression 'perquisite' and it later sought to delete the same from the date of its insertion clearly shows that Parliament does not intend to treat interest-free loan or loan at a concessional rate as any benefit or perquisite granted or provided by the lender-company to the director or employee, as the case may be. If the loan granted to an employee without charging any interest or by charging interest at a concessional rate amounts to a benefit for the purposes of section 17(2)(iii) of the Act, there was no need for Parliament to introduce, by the Taxation Laws (Amendment) Act, 1984, the new sub-clause (vi) in section 17(2) of the Act. The subsequent omission of the said sub-clause by the Finance Act of 1985 with effect from the date of its proposed insertion was also made with a view to give relief to salaried taxpayers. It is to be noticed that Explanation 2(b) to section 40A(5) of the Act defines a perquisite to mean, inter alia, any benefit or amenity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by an inclusive definition, the meaning of the word is to be enlarged, it would receive a strict interpretation. It is also a cardinal rule of construction of a fiscal statute that, even if two views are possible, the view which is favourable to the assessee must be accepted while construing the provisions of a taxing statute. For the reasons aforesaid, the non-charging of interest on the amount over drawn in the relevant year cannot be treated as a benefit for the purposes of section 17(2)(iii) of the Act. The question, however, remains as to whether the non-charging of interest will also fall within the purview of section 2(24) (iv) of the Act. For the purposes of applying section 2(24)(iv) of the Act, the same c 'is to what constitutes a benefit or a perquisite has to be applied. If the 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 does not constitute any benefit for the purposes of Explanation 2(b)(iii) to section 40A(5) or section 17(2)(iii) of the Act, by the same yardstick, such loan cannot also be construed as benefit or a perquisite for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was accordingly allowed. 10 Following the aforesaid two decisions being P. R. S. Oberoi [1990] 183 ITR 103 (Cal) and V. M. Salgaocar [2000] 243 ITR 383 (SC), the learned single judge in Ishran Devi Oberai [2001 250 ITR 362 (Cal), held that the benefit enjoyed by the petitioner by way of exemption from payment of interest of loan could not be termed to be an "income" under section 2(24)(iv) and as such notice issued under section 148 was not valid. Our view 11 Under section 2(24)(iv), "income" includes the value of any benefit or perquisite whether convertible into money or not, obtained from a company either by a director or a person, having substantial interest in the company or relative of a director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person. The aforesaid notices had been issued presumably to rope in the assessee under section 2(24)(iv). The Division Bench held that the interest-free loan could not be said to be "income". Such finding was noted with approval by the Supreme Court. We do not find any scope of disagreement on that score. Hence, the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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