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TMI Blog2017 (2) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... l loan by M/s Prescomec Auto Co.Pvt. ltd. where the assessee is a Director and in terms of the aforesaid Resolution the Directors in lieu thereof the assessee too has been permitted to make temporary drawings of advances to the maximum limit of ₹ 50 lakhs. It is seen that there is no change in facts and circumstances of the case. No distinguishing fact or circumstance has been canvassed by the Revenue to take a contrary view. In the absence of any distinction on facts or law respectfully following the order of the ITAT, the appeal of the assessee is allowed. - I.T.A .No.-867/Del/2015 - - - Dated:- 4-11-2016 - SMT DIVA SINGH, JUDICIAL MEMBER For The Assessee : Sh. B.B.Mathur, CA For The Revenue : Sh.Anil Kumar Sharma, Sr.D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other family members had furnished personal guarantees to the bank for enabling the assessee company to obtain a Bank guarantee and the company passed a resolution on 16.06.2005 authorizing the Directors to avail temporary advances for the personal requirement to the extent of ₹ 50 Lacs each, in lieu of their providing personal guarantee for the loan and credit facilities available to their assessee company. Hence section 2(22)(e) of the Act it has been held was not attracted. Inviting attention to the order of the ITAT, it was submitted that the facts were identical in as much that in para 3 of the said order it had been noted that the assessee had availed of working capital limits from the Citi Banks ₹ 2.5 crores. The Citi Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital loan by M/s Prescomec Auto Co.Pvt. ltd. where the assessee is a Director and in terms of the aforesaid Resolution the Directors in lieu thereof the assessee too has been permitted to make temporary drawings of advances to the maximum limit of ₹ 50 lakhs. It is seen that there is no change in facts and circumstances of the case. No distinguishing fact or circumstance has been canvassed by the Revenue to take a contrary view. In the absence of any distinction on facts or law respectfully following the order of the ITAT, the appeal of the assessee is allowed. The specific reasoning of the Co-ordinate bench followed is reproduced hereunder:- 3. After hearing rival contentions I find that the undisputed fact is that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meaning of the Act. Thus, for gratuitous loan or advance given by a company to those classes of share holders would come within the purview of section 2(22) but not to the cases where the loan or advance is given in return to an advantage conferred upon the company by such share holder. 11. In the case before us, the assessee permitted his property to be mortgaged to the bank for enabling the company to take the benefit of loan and in spite of request of the assessee, the company is unable to release the property from the mortgage. In such a situation, for retaining the benefit of loan availed from Vijaya Bank if decision is taken to give advance to the assessee such decision is not to give gratuitous advance to its share holder but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment between the assesse and the company was merely for the sake of convenience arising out of business expediency. In the facts and circumstances of the case, it is not appropriate to hold that the amount withdrawn by the assessee partakes the character of deemed dividend under the provisions of s.2(22)(e). The CIT(A) had rightly deleted the addition made on account of deemed dividend by the AO. 3.3. The Ld.CIT(A), in my view, has wrongly interpreted these case laws, as being applicable, only when certain property is pledged as collateral security by the guarantor. He wrongly concluded that, as the assessee has not pledged any of his assets the propositions laid down in these case laws do not apply to the facts of this case. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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