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TMI Blog1982 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... r cent. Thus, he held that the assessee had derived benefit by not paying interest to the company. Thus, he brought to tax Rs. 15,238 under section 2(24)(iv). 2. The assessee appealed to the AAC. The AAC held that the assessee withdrew a sum of Rs. 1,05,000 from the company without proper authorisation and there was no resolution passed by the board of directors of the company as it is clear from the minutes book. He held that the ITO is not justified in bringing to tax an amount of Rs. 15,238 being the value of benefit or perquisite obtained by the assessee from the company under section 2(24)(iv). Against the same, the revenue has come up in appeal. 3. The learned departmental representative strongly urged that the assessee has been g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T [1979] 117 ITR 362 (Cal.). 4. I have considered the rival submissions. The assessee is a director of Century Hotels (P.) Ltd. He has drawn an amount of Rs. 1,05,000 from the said company and no interest has been charged by the company. The question for consideration is whether the assessee has received the value of any benefit or perquisite from the company. Section 2(24)(iv) reads as under : " (iv) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or perquisite. The Madras High Court held that as the assessee had a current account with the company right from 1959 it has to be assumed that the overdrawing in his account was not unauthorised and to the extent the company allowed the assessee to use its funds without any obligation to pay interest thereon, the company should be deemed to have granted a benefit to him. It was held that the company allowed the assessee to withdraw the money without any obligation to pay interest and so the company should certainly be deemed to have granted benefit to the assessee. In this case also, there was no resolution of the board, but it was implied that as the account was being operated from 1959, the overdrawings were not unauthorised. In this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases of Kulandaivelu Konar, A.K. Lakshmi as well as the decision reported in the case of Lakshmipat are directly on the point. I prefer to follow those decisions. Thus, in my view, the assessee has derived benefit by taking advance of Rs. 1,05,000 free of interest and it is taxable. The ITO was right in taxing Rs. 15,238 and the AAC was wrong in deleting the same. I set aside the order of the AAC and restore the order of the ITO in taxing Rs. 15,238. 7. In the Tribunal's order dated 7-5-1982 in the case of P. Dayananda Pai [IT Appeal No. 534 (Bang.) of 1979], no decision has been given on merits. That was only restored to the AAC. Hence, that order will not have any bearing. 8. In the result, the appeal is allowed. - - TaxTMI - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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