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TMI Blog2018 (1) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... rding addition u/s.2(22) (e) of the Act back to the file of the ld. Assessing Officer for consideration afresh in accordance with law. In the result, appeal of the assessee is allowed for statistical purpose. - I.T.A. No.662/Mds/2017 - - - Dated:- 8-1-2018 - SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Appellant : Ms. Jharna B. Harilal, FCA For The Respondent : Shri. B. Sagadevan, IRS, JCIT ORDER This is an appeal filed by the assessee, directed against an order dated 30.11.2016 of ld. Commissioner of Income Tax (Appeals)- 3, Chennai, wherein he sustained an addition of B14,50,116/- out of a total addition of B31,00,116/- made by the ld. Assessing Officer. 2. Assessee has filed this appeal with a delay of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company. Assessee also relied on a decision of Co-ordinate Bench in the case of CIT vs. G. Sreevidya, 138 ITD 427 and that of Hon ble Calcutta High Court in the case of Pradip Kumar Malhotra vs. CIT, 338 ITR 538. 4. However, ld. Assessing Officer did not accept the above reply. According to him, the Company had a turnover of B8,57,12,270/- during the relevant previous year. As per the ld. Assessing Officer the Company though it was granted credit facilities by State Bank of Hyderabad, for which collateral security and personal guarantee were given by the assessee, it had not availed any such credit facilities. On the other hand, as per ld. Assessing Officer bill discounting credit of the Company with State Bank of Hyderabad stood reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that there was a mutual agreement between him and the Company, by which the latter had agreed to provide financial assistance to the assessee as and when required by him. 6. However, ld. Commissioner of Income Tax (Appeals) was not impressed by the above arguments. Nevertheless he found that assessee had given a loan of B16,50,000/- to Company and hence only the net amount of B14,50,116/- could be considered for addition u/s.2(22) (e) of the Act. Thus he confirmed the addition to the extent of B14,50,116/-. 7. Now before me, ld. Authorised Representative strongly assailing the orders of the lower authorities submitted that intention of the legislature for inserting Sec.2(22) (e) of the Act was clear from the decision of the Kolkat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidya (supra) had no applicability since there was no pre-condition attached to the personal guarantee and collateral security offered by the assessee. Further according to him, the Board resolution was also not on record. 9. Ad libitum reply of the ld. Authorised Representative was that the Board resolution was very much there. In any case, according to her, this was not a vital ingredient to show that there was a reciprocal arrangement. According to her, addition u/s.2(22)(e) of the Act was not justified in law. 10. I have considered the rival contentions and perused the orders of the authorities below. Ld. Assessing Officer in the assessment order has clearly noted that the Company M/s. Rasim Exports Private limited had not availe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TING OF THE BOARD OF DIRECTORS OFM/s. Rasim Exports Private limited HELD ON 30.06.2008 at Annexure building, DTA unit, 2/230, Ethiraj 2nd street, Avadi road, Karaiyanchavadi, Chennai 600 056. RESOLVED THAT the company has decided to authorize its directors, Mr. R. Varusai Mohamed and Mrs. V. Fasulunnisa to withdraw funds from the company as per requirement for personal purposes against the personal guarantee and the collateral security given by them for facilitating the enhancement of credit facility taken by the company Specimen Signatures of Directors:- 1. Name and Signature - Mr. R. Varusai Mohamed 2. Name and Signature Mrs. V. Fasulunnisa .. As for the collateral offered by the assessee for loans raised by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same property was offered as collateral to both SIDBI as well as State Bank of Hyderabad, did not elicit a clear answer from the ld. Authorised Representative. Resolution of the Company which has been reproduced does not specify the amount which assessee could withdraw from the Company. It is highly improbable for a prudent Company to authorize a share holder to withdraw funds from it, without setting out any limit, based only on the personal requirement of the concerned shareholder. However, if the assessee is able to demonstrate that he had suffered a detriment by offering of personal guarantee and collateral to the loans raised by the Company, there indeed can be an element of quidpro- quo. As mentioned by the ld. Departmental Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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