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2014 (5) TMI 1075 - ITAT PUNEValuation on account of impurities - Held that:- No interference is required in the order of the CIT(A) because he has allowed relief considering the trade practices, whereby the value of Gold in the ornaments manufactured, has been adjusted on account of impurities, alloy mixing, soldering joints, etc., whereas the Assessing Officer had adopted the rate of pure Gold. Nothing has been brought on record by the Revenue to establish any error in the approach of the CIT(A) in reducing the valuation on account of impurities, etc.. Accordingly, the action of the CIT(A) is hereby affirmed and the Revenue fails in its Ground of Appeal No.1. Addition on account of interest expenditure by invoking section 40A(2)(b) - Held that:- Though the Assessing Officer was justified in examining the interest paid to M/s Gajara Finance within the prescription of section 40A(2) of the Act, so however, factually it is evident that the Assessing Officer failed to demonstrate as to how the payment of interest to M/s Gajara Finance @ 15% was excessive or unreasonable having regard to the market rate of interest, which was a condition precedent for making a disallowance in terms of section 40A(2)(a) of the Act. In this case, assessee pointed out before the CIT(A) that the loans raised from M/s Thane Janta Sahakari Bank Ltd. and ICICI Bank were on account of a cash credit facility and fo7r acquisition of car respectively. Both the loans were secured against assets and on the contrary, borrowing from M/s Gajara Finance was unsecured and this aspect clearly showed that the terms and conditions of the two borrowings were not similar. In-fact, this aspect also justifies the interest paid to M/s Gajara Finance at a rate higher than that paid to the banks. This aspect of the matter has not been controverted by the learned Departmental Representative before us, and continues to hold the field. Therefore, considering the aforesaid aspects and in view of the discussion of the CIT(A) which we have extracted above, Revenue has to fail on this Ground. Disallowance out of interest expenditure by invoking section 40A(2)(b) - Held that:- The recipient organization to whom assessee has made the impugned payments. In order the CIT(A) has brought out the intended benefits, which the assessee was looking for, in return for incurring the expenditure. In our considered opinion, the decision of the CIT(A) does not require any interference inasmuch as he has factually brought out that considering the larger context of business expediency, the said expenditure has been incurred wholly and exclusively for the purposes of business. The order of the CIT(A) is hereby affirmed in the absence of any cogent material and reasoning with the Revenue to controvert the same. Thus, on this Ground also Revenue fails.
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