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2015 (11) TMI 736 - AT - Income TaxExcess interest paid by the assessee under section 40A(2)(a) - CIT (A) has allowed partial relief to the assessee whereby the interest has been restricted to 13.5% instead of 15% - Held that:- It is the consistent view of the Hon’ble Supreme Court that the rule of consistency should be followed in respect of assessment proceedings though the principle of res judicata is not applicable. During the course of hearing, it was enquired by the Bench whether the assessee and the person who had given the loan both are assessed to Income-tax at maximum marginal rate or not. To this, it was replied by the assessee that both are taxed at maximum marginal rate. Therefore, it cannot be said that higher rate of interest is paid by the assessee to the lenders to evade income-tax In the present case the matter before the ld. CIT (A) was payment of interest for the A.Y. 2006-07 and also for A.Y. 2008-09. In both the matters, the interest was restricted by the AO to 12% whereas in the matter for A.Y. 2006-07, the CIT (A) has uphold the payment of interest @ 15%. In the assessment year under consideration before us, the ld. CIT (A) has restricted it to 13.5% despite the fact that in the earlier assessment year the payment of interest @ 15% has been upheld. We do not find any justification in the order passed by the ld. CIT (A). The reason given by the AO were also available with him when ld. CIT (A) has passed the assessment order for A.Y. 2006-07. Since there is no material change in the circumstances, therefore, the interest payable cannot be reduced to 13.5%. Therefore, we are of the view that the orders passed by AO and ld. CIT (A) are required to be set aside and we accordingly held that the 15% interest claimed by the assessee for the loan borrowed is allowed. - Decided in favour of assessee.
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