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2022 (2) TMI 425 - AT - Income TaxDisallowance of excess interest paid to related persons specified u/s 40A(2)(b) - AO restricted the interest payment @12% p.a. and made the disallowance - HELD THAT:- Assessee has paid interest to several parties and paid interest between 11.5% to 18% during this assessment year and assessee has taken loans from specified persons, viz. Dura Tech and Hemali Gada and paid interest to them @15% to 17%, respectively. Since the unsecured loan availed by the assessee from several parties, and agree that the risk to non specified persons is more than the specified persons and Ld.CIT(A) has pegged the rate @15% whereas assessing officer restricted it at 12%. Considering the information available on record, in our considered view, Ld.CIT(A) has pecked @15% which is reasonable when compared to the average rate of unsecured loan for the whole assessment year, it will be more or less 15%. Therefore, we do not see any reason to disturb the findings of Ld.CIT(A). Accordingly, ground raised by the assessee is dismissed. TDS on interest payment - HELD THAT:- We observe from the record and submissions made by Ld.AR and have gone through the forms which were filed by the recipients of interest which shows that these forms were filed specifically for assessment year 2014-15. The informations submitted before us indicate all the relevant informations required to make the claim of interest without deducting tax at source. We do not see any reason to reject of the claim of the assessee. Therefore, we direct the assessing officer to allow the claim of the assessee to the extent the amounts are mentioned in the above said form 15G / 15H. Accordingly ground raised by the assessee is allowed. Allowability of Expenditure incurred towards purchase, labour and site expenses - HELD THAT:- We observe that assessee has claimed the expenditure in the year of actual addition to the cost of the project. However, the bills were raised in the next assessment year i.e. in F.Y. 2014-15 (AY 2015-16). As a prudent method of accounting adopts the income and expenditure on matching principle. The cost is incurred but the actual bills were raised in the subsequent year. It does not change the character of the expenditure but only timing to record the bills. In actual, all the costs incurred are charged to work-in-progress. It does not make any difference when actual bills are recorded. The important thing is whether the cost is incurred for the project. Therefore, in our considered view, the addition sustained by the learned CIT(A) is not proper and accordingly, the ground raised by the assessee is allowed.
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