Section 2(22)(e) not attracted if appellant has given his personal properties as collateral security to bank for loan

I.T.O. Vs. Sri Siddhartha Paul (ITAT Kolkata)

Fact that the company M/s. Palsons Drugs Pvt. Ltd has obtained credit facilities from the bank including term loan and the fact that the assessee gave his personal properties as collateral security to the bank for the loan and other credit facilities granted to the company M/s. Palsons Drugs Pvt. Ltd is not in dispute. The earlier explanation of the assessee that the advances were taken to purchase flats on behalf of the company does not contradict the fact of guarantee being given etc. Even if the earlier explanation is rejected the latter uncontroverted fact comes to the rescue of the assessee. The fact that the assessee had given his personal property as collateral security for enabling M/s. Palsons Drugs Pvt. Ltd to obtain loan and other credit facilities is not in dispute. Under the circumstances the proposition of law as laid down by the Jurisdictional High Court in the case of ‘Pradip Kumar Malhotra vs CIT’ (supra) squarely applies to the facts of the case. In view of the above discussion we uphold the order of ld. CIT(A) and dismiss this appeal of the revenue. So provision of section 2(22)(e) of the Act would not be attracted.Full Text of the ITAT Order is as follows:-

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Filed under ITAT JudgmentsSection 2(22)(e)

Author Info

Name: CA Sandeep Kanoi

Qualification: CA in Job / Business

Company: Taxguru Consultancy

Location: Mumbai, Maharashtra

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