1980 (7) TMI 134

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....he ITO required the assessee company to show cause why 15 per cent of such interest should not be disallowed under the provisions of s. 40A(8) of the Act. In reply the assessee stated that M/s A. Dougall & Co. were its selling agents and the deposits in question were advances made by them as a security and, therefore, its case was covered by sub-cl. (vii) of the Explanation to sub-s. (8) of s. 40A, and consequently it did not fall within the mischief of the main section. The ITO observed that in the balance-sheet this amount was shown under the head "Loans" and there was no other head of advance as security. He also took the view that unless advances were against the orders for the supply of goods the same could not be treated as covered by....

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....ld. counsel for the assessee also invited our attention to the order of the CIT (A) dt. 6th Oct., 1969 in the case of M/s A. Dougall & Co. for the asst. yrs.1969-70 and 1971-72 in which the ld. CIT (A) expressed the opinion that the loans advanced by that firm to the assessee company on such beneficial terms were of commercial nature and were for commercial reasons. The ld. Deptl. Rep. submitted that this was only a stray observation by the CIT (A), as he had held that the proceedings under s. 147 against the firm's order M/S. A. Dougall & Co., were not valid. We are unable to agree with the Dept. In this behalf, because there is a clear finding by the CIT (A) that loans advanced were of the nature of commercial advances. Apart from this on....

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....r exclusively for the use by the directors and the same are treated as perquisites in their hands. Therefore, the personal user of the company's cars by the directors should appropriately have been treated as a perquisite benefit or amenity in the hands of the directors and assessed as such. A faint hearted attempt was made by the Deptl. Rep. to suggest that it can be treated as a perquisite only if the cars were placed at the disposal of the director exclusively. We do not see any force in this submission for the reason that the whole includes the part and if a car, which is wholly placed at the disposal of a director is treated as perquisite, then if a car is partly used by him for his personal purpose, it can also be treated as a perquis....