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2020 (9) TMI 85 - ITAT AHMEDABADDisallowance u/s 36(1)(iii) on account of diversion of interest-bearing fund - HELD THAT:- Assessee has agreed for the disallowance of the amount of interest on the amount diverted as interest-free loans and advances. As such the issue is limited to the extent of the rate of interest which needs to be applied on such interest-free loans and advances. As per the revenue the average rate of interest is 11.45% whereas the assessee claims the same to be at 8.73%. From the order of the AO we find that the assessee in most of the cases has borrowed money on interest at the rate of 12% and in very few cases at the rate of 15% and 10.5 %. Admittedly the assessee has borrowed more amount on interest at the rate of 10.50%. AO has worked out average cost of the borrowed funds at the rate of 11.45% which appears very reasonable and logical in the given facts and circumstances. As such the assessee in none of the case has borrowed fund at the rate of 8.73% as claimed by him as the cost of borrowed fund. Accordingly, we do not find any merit in the argument of the assessee. Thus, we confirm the order of the authorities below. Hence the ground of appeal of the assessee is dismissed.
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