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2016 (1) TMI 128 - AT - Income TaxDisallowance of interest paid to the persons who comes u/s 40A(2)(b) - whether it as unreasonable and excessive and restricting and confirming the interest payment to them at 12% as against interest paid at 15% to 18% per annaum on their unsecured deposits as being continued to be paid as in earlier years and accepted by the department in earlier years? - Held that:- A perusal of chart shown by the assessee of interest expenditure incurred in this year and earlier years, we notice that the assessee has not increased the rate of interest to any depositor and in some of the case; the rate of interest has been reduced and paid at a lesser rate as mutually agreed by the depositors. Therefore, as regards the contention of the assessee that the consistency is to be maintained while completing the assessment, we find force in his argument. Further, we find that the assessee is not having any immovable property without which the banks would not lend any loans at a lesser rate as this is one of the primary requirements for taking loans from the banks. Further, we are of the opinion that the consistency should have been followed in completing the assessment proceedings unless there is cogent reason or justifiable grounds for the Revenue to depart from its earlier decisions made u/s 143(3) of the Act. We are of the opinion that the ld. CIT (A) was not right in confirming the disallowance made by the AO on account of interest paid to the persons u/s 40A(2)(b) by holding it unreasonable and excessive and also restricting the interest payment to them @ 12%. Accordingly, we allow the ground of appeal taken by the assessee and order deletion of the same. - Decided in favour of assessee.
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