Commission to CMD for personal guarantee may be treated as ploy to divert funds

CIT vs. United Breweries Ltd (Karnataka High Court ) ITA No. 404 of 2009 Date of Decision 15th October 2011 Honorable high Court in this case on the issue of payment of Commission by United Breweries Ltd. To its Chairman Shri. Vijay Mallya held that though the chairman has stood as guarantor in his personal capacity, the bank has lent money not on personal Guaranty of the Chairman but on the Assets of the Company which are offered as a security to the bank. This personal Guarantee is adopted as a mean to pay remuneration to managing Director for which he was otherwise not entitled too. It is ...