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TMI Blog2022 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... mary responsibility to repay the loan rests upon the assessee, to safeguard against any future liability on him. The assessee insisted the property be registered in his name which was being used by the business purpose of the company i.e. M/s. Subu Chem Pvt. Ltd. It is admitted position that the assessee is not enjoying own rent from the company. Therefore, this shows that substance of transaction is purchase of property for the purpose of business of the company i.e. M/s. Subu Chem Pvt. Ltd. and it cannot be called as a gratuitous loan or advance given by the company to the assessee. It is a pure business transaction carried out by the company i.e. M/s. Subu Chem Pvt. Ltd. and ratio laid down by the Hon ble High Court of Calcutta in the case of Pradeep Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] is squarely applicable to the present case. CIT(A) is justified in holding that the AO is not right in bring to tax sum as a deemed dividend in the hands of the assessee. Since, We held that the provision of section 2(22)(e) of the Act have no application to the facts of the case, there is no necessity to deal with the other contentions raised on behalf of the assessee. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013-14 and ITA No. 2526/PUN/2017 by the assessee and cross appeal by the Revenue in ITA No. 152/PUN/2018 against the common order dated 08-06-2017 passed by the Commissioner of Income Tax (Appeals)-4, Pune [ CIT(A) ] for assessment year 2013-14. 2. Since, the issues raised in all the four appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties, we proceed to hear all the four appeals together and to pass a consolidated order for the sake of convenience. 3. First, we shall take up appeal in ITA No. 135/PUN/2018 for A.Y. 2013-14 filed by the Revenue as it is constitutes the root of the matter. 4. The Revenue raised five grounds of appeal amongst which the only issue emanates for our consideration is challenging the action of CIT(A) in deleting the addition of ₹ 7,86,03,706/- ignoring payment of full amount of interest paid by the company in the facts and circumstances of the case. 5. We note from the record that the assessee is an individual and filed its return of income declaring a total income of ₹ 47,09,400/- which was processed u/s. 143(1) of the Act. The AO observed that the assessee is a Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ife Smt. Prem Sheela Gupta and his father Shri Kapil Deo Prasad Gupta having 5% each. To have a corporate office, decided to purchase a commercial premises located at Viman Nagar, and M/s. Bajaj Finance Ltd. offered to provide required finance, M/s. Bajaj Finance Ltd. advanced loan of ₹ 20,30,,00,000/- and out of which it was decided of ₹ 6,00,00,000/- will be used by M/s. Subu Chem Pvt. Ltd. and the balance loan amount ₹ 14,30,00,000/- allocated to the assessee and drew our attention to the Page Nos. 73 to 164 of the paper book. He submits that since the amount of ₹ 14,30,00,000/- is allocated to the assessee and he will reimburse to M/s. Subu Chem Pvt. Ltd. proportionate amount of interest payable to M/s. Bajaj Finance Ltd. He submits that M/s. Bajaj Finance Ltd. advanced loan of ₹ 20,30,00,000/- vide four separate loan agreements and drew our attention to Page No. 180 of the paper book. He submits that the addition made by the AO and as confirmed by the CIT(A) to the extent therein is not maintainable as the lower authorities below both failed to see the true nature of payment entry which is essential before applying the provisions contained in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The M/s. Bajaj Finance Limited, a leading financial institution was ready to provide the required finance but on a condition that M/s. Krish Auto (I) Pvt. Ltd. another group company and the Directors of M/s. Subu Chem Pvt. Ltd. should also become the co-borrowers along with the company . The company accepted above mentioned condition of M/s. Bajaj Finance Ltd. Accordingly, M/s. Bajaj Finance Ltd. sanctioned a loan of ₹ 20,30,00,000/- as per loan agreements as under : Particulars of Loan Agreement Nos. Amount (Rs.) Bajaj Finance 204051 2,76,729.00 Bajaj Finance 257271 15,63,193.00 Bajaj Finance 271532 3,96,31,721.00 Bajaj Finance 279135 10,25,25,911.00 Bajaj Finance 308517 99,63,771.00 Bajaj Finance 308592 4,98,18,854.00 10. Shri Jitendra K Gupta, the assessee, the main Director of the company holding 90% of shares and also holds 90 % shares in the other group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floor which was purchased by the company let out to others earning lease amount. We note that there is no dispute by the ld. DR that the first floor was occupied by the company and paying no rent to the assessee and the ground floor which was purchased by the company was let out and income earned thereon was offered as business income in the hands of the company . Therefore, we find force in the arguments that there is a consideration passed to the assessee by giving ₹ 2,66,65,600/- towards the purchase of upper floors and also stamp and registration cost. 14. We note from the certificate dated 05-11-2016 issued by M/s. Bajaj Finance Ltd. that, the assessee was the co-borrower along with the company M/s. Krish Auto (I) Pvt. Ltd, Smt. Prem Sheela Gupta (wife of the assessee) and Shri Kapil Deo Prasad Gupta (father of the assessee) and the loan facility was collectively, but, independently availed by the coborrowers. Therefore, it is clear, the co-borrowers along with assessee have collectively availed the financial facilities and the loans were disbursed to the vendors which is evident from the loan agreements at Page Nos. 73 to 164 in the paper book. 15. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out by the company i.e. M/s. Subu Chem Pvt. Ltd. and ratio laid down by the Hon ble High Court of Calcutta in the case of Pradeep Kumar Malhotra reported in 338 ITR 538 is squrely applicable to the present case which is reads as under : After hearing the learned Counsel for the parties and after going through the aforesaid provisions of the Act, we are of the opinion that the phrase by way of advance or loan appearing in sub-clause (e) must be construed to mean those advances or loans which a shareholder enjoys for simply on account of being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power; but if such loan or advance is given to such share holder as a consequence of any further consideration which is beneficial to the company received from such a shareholder, in such case, such advance or loan cannot be said to a deemed dividend within the meaning of the Act. Thus, for gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of Section 2(22) but not to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 2526/PUN/2017 is dismissed. 26. Now, we shall take up appeal in ITA No. 152/PUN/2018 for A.Y. 2013-14 filed by the Revenue. 27. Ground No. 1 raised by the Revenue is against the deleting of addition made on account of protective basis in the case of assessee. We note that the CIT(A) held in Para No. 7.3.4 that no addition is maintainable in the hands of the assessee as the same was retained in the hands of its Director on substantive basis. We dismissed in the aforementioned paragraph the similar ground raised by the assessee in ITA No. 2526/PUN/2017, therefore, ground No. 1 raised by the Revenue is misconceived and it is dismissed. 28. Ground Nos. 2 and 3 raised by the Revenue challenging the action of CIT(A) in allowing proportionate interest paid to NBFC for non-deduction of TDS. We note that the CIT(A) discussed this issue from Page Nos. 3 to 10 of the impugned order, wherein we note that the AO disallowed interest of ₹ 1,23,13,245/- for non-deduction of TDS. The CIT(A) observed that the interest paid to M/s. Standard Chartered Bank and HDFC Bank where TDS is not required to deduct as per sub-clause (ia) of clause (iii) of subsection (3) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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