TaxTMI 
TaxTMI 
2009 (4) TMI 479
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....d also through his proprietory ship concern called M/s. S.A. Fabrics clubbing the personal account and the account of M/s. S.A. Fabrics. In M/s. Star Synthetics Pvt. Ltd. Assessing Officer worked out that assessee had received unsecured loans of Rs.23,65,000 from M/s. Star Synthetics Pvt. Ltd. during the relevant previous year. Finding that M/s. Star Synthetics Pvt. Ltd. was having a reserve balance of Rs.64,28,793, Assessing Officer invoked section 2(22)(e) of the Act and treated the same at Rs.23,65,000 as deemed dividend. 3. In its appeal before the CIT(A), assessee contended that assessee made two fold contention. First was that, it had a closing balance of Rs. 51,79,000 in the debenture account that the said company which amount was....
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....ssessee from M/s. Star Synthetics Pvt. Ltd. was undisputed and there was also no dispute regarding the ............produce of Rs. 64,28,793. According to the learned CIT(A), proprietorship concern cannot be deemed as a distinct or separate from an individual as per the contention of the assessee debentures balance should also be considered while working out the outstanding loan if any. Learned CIT(A) was of the opinion that debentures at a fixed period with fixed interest and their nature was totally different from unsecured loans. Thus, he confirmed the addition of deemed dividend. 4. Now before us, it was submitted by the learned A.R. that assessee had based on resolution dated 20th March, 2001 of the Board of Directors of M/s. Star Sy....
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....) of the Act. But, he never adjudicated why debenture account also could not be considered for working out the loan/advances, balance. According to him, assessee was also withdrawing the amounts, has allowed under the conditions of debenture issue and assessee at no point of time vowed any money to the said company for application of section 2(22)(e) of the Act. As far as plea that accumulated profits are worked out share premium balance had to be included. He relied on the decision of Delhi Bench of this Tribunal in DCIT v. Maipo India Ltd. 116 TTJ 791. 5. Per contra the learned Departmental Representative supported the Order of the authorities below. 6. We have perused the orders and heard the rival contentions. There is no dispute ....
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....ns. The question as could be excluded the debenture account considering it to be not of such account or advance account as maintained by learned CIT(A) and the Assessing Officer. For this purpose, it is required to understand what is meant by debenture. 11. "In Law Lexicon at page 290 by P. Ramanatha Aiyar, 'debenture' is a document or a certificate signed by the officer of a corporation or company acknowledging indebtedness for money lent and guaranteeing repayment with interest; a security for a loan of money issued by a public company, usually creating a charge on the whole or a part of the company's stock and property, though not necessarily in the form of a mortgage. Section 137 of the Transfer of Property Act regards debentures as ....
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.... 13. In Narendra Kumar v. Union of India (supra), it has held that a "debenture" has been defined to mean essentially as an acknowledgment of debt with a commitment to repay the principal with interest. In India Cements Ltd. v. CIT (supra), it was held that obtaining a capital by issue of shares is different from obtaining loan by debentures. A loan obtained cannot be treated as an asset or advantage for the enduring benefit of the business of the assessee. 14. In Director General of Investigation & Registration v. Deepak F & P Corpn. Ltd. (supra), wherein it was held that a "debenture" is simply an acknowledgment of debt by the company whereby it undertakes to repay the amount covered by it and till then it undertakes further to pay ....