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2018 (6) TMI 1780 - AT - Income TaxAddition u/s 40A(2)(b) - interest ranging from 12% to 15% - restriction of payment of interest to 12% instead of interest at the rate of 15% paid by the assessee to the persons covered under section 40A(2)(b) - HELD THAT:- Rate of interest charged and received by the assessee is justifiable and in commensurate with prevailing market rate - assessee contended that the bank interest was in the range of 15% and in respect thereof, the assessee was required to produce security against such loans, whereas the loans availed by the assessee were unsecured loans. By taking of loans from related persons, it could avoid a lot of formalities. We are of the view that the payment of interest at a little higher rate to the persons even if covered under section 40A(2)(b) cannot be termed as exorbitant when the prevalent market rate of interest is being looked into, and there is no question of undue benefit being given to the related persons. We find no justifiable reasons to restrict the interest rate at 12% by the Revenue authorities. Accordingly, disallowance made by the Revenue is deleted, and the ground of appeal of the assessee is allowed.
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