2014 (11) TMI 1241

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....-tax Act, 1961[hereinafter referred to as 'the Act'] of a sum of Rs. 3,59,95,832/-. 2. Brief facts of the case are that the assessee, an individual, filed his return of income for the assessment year 2009-10 on 25/03/2010 declaring a total income of Rs. 1,77,27,090/-. During the assessment proceedings u/s 143(3) of the Act, the Assessing Officer observed that the assessee has availed the benefit of a housing loan of Rs. 3.50 crores and the advances amounting to Rs. 1,89,95,832/- from M/s.Firepro Systems Pvt. Ltd., of which he is a Managing Director and was having substantial interest in the said company. He also observed that M/s.Firepro Systems Pvt. Ltd., has adequate accumulated profits during the assessment year. Therefore, he....

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.... had explained in detail that he owned an apartment bearing No.53 (New No.501), in Embassy Crown, Aga Abbas Ali road, Bangalore which was occupied by him for his residence and that M/s.Firepro Systems Pvt. Ltd., to meet the dire needs of finance, approached the banker i.e. Canara Bank, Cantonment Branch in the year 2002 to sanction a loan of about Rs. 5 crores as working capital and the bank took into account the financial affairs of the company and agreed to sanction the loan but wanted that a collateral security in the form of mortgage of an immovable property of substantial value to further strength its security. In view of the same, the assessee, being the Managing Director, offered his house as a collateral security apart from his pers....

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....ed by the company cannot be treated as deemed dividend u/s 2(22)(e) of the Act. For ready reference, the relevant portions of the above decisions are reproduced hereunder: (i) Pradip Kumar Malhotra vs. CIT (2011) 338 ITR 538)(Cal.): "After hearing the learned counsel for the parties and after going through the aforesaid provisions of the Act, we are of the opinion that the phrase 'by way of advance or loan' appearing in sub-section (e) must be construed to mean those advances or loans which a share holder enjoys for simply on account of being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ....