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2018 (4) TMI 629 - AT - Income TaxDisallowance u/s.40A(2)(b) - disallowance of interest invoking the provisions of Section 40A(2)(b) of the Act for the reason that to some related parties - assessee has paid the interest at the rate of 12.5%, 12% and 10% and on certain lending to the related parties interest has been charged at the rate of 8% or lower rate - Held that:- Since the business of the appellant was of financing, these interest rate keeps on changing depending upon the demand and supply of fund requirements. Since the assessee first has having the surplus funds and there was no demand that is why the surplus funds given to the parties on lower rate of interest. Further also it was argued by the ld. AO that the interest rates depend upon various other factors also like the borrowed/advances are call money or for fixed period. Jurisdictional High Court in the matter of Aaditya Medicals Ltd. vs. CIT [2010 (5) TMI 823 - GUJARAT HIGH COURT] wherein, the interest at the rate of 24% to the related parties was treated to be allowable. Thus it does not warrant any disallowance u/s.40A(2)(b) of the I.T. Act. Arguments of Ld. AR that interest depend upon the number of factors such as amount of loan, period of loan, creditworthiness of the parties etc. - Decided against revenue
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