Case Law Details
DCIT Vs Shri Shekhar G. Patel (ITAT Ahmedabad)
Conclusion:
Non-charging of interest on the loan amount given by lending company to its director could not be a perquisite as no remuneration or salary in the capacity of the director had been drawn from the lending company nor any interest expenditure was shown in its profit and loss account.
Held:
Assessee-director had taken interest free loan from the company in which he was director. AO opined that if an interest at the rate of 15 per cent been charged, assessee would be required to pay amount of Rs. 47 lakhs, therefore, the company had extended undue benefits by not charging interest from assessee which had to be construed as perquisite in the hands of assessee under section 2(24)(iv). It was held assessee being director neither an employee of the lending company nor he was having substantial interest in the lending company. AO had also not brought anything on record to say that the aforesaid companies have paid any sum of money which was by way of obligation payable by assessee. There was no fresh loan taken during the year under consideration but it was the loans taken in the preceding years. No interest was charged in earlier year nor any perquisite value was assessed. Moreover, lending company did not have any interest expenditure in its profit and loss account therefore, there was no obligation of assessee in respect of any interest was paid by the lending company on behalf of assessee. Thus, non-charging of interest on the loan amount did not constitute a perquisite.
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