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2018 (6) TMI 1168 - AT - Income TaxAddition u/s 40A(2)(b) - loans from specified persons - whether payment of interest at the rate of 18% to such persons on the loans availed from them is excessive or not, having regard to the fair market value of such loans? - Held that:- No doubt, AO took into consideration interest rate at 12%. This is the rate on which banks used to grant small time loans. This rate was also keeps on fluctuating from 12% to 14%, but it is to be kept in mind that loans availed by the assessee were unsecured loans. It has avoided a large number of formalities, such as, giving securities, pledging something etc. In such situation a little payment of higher rate of interest could not be termed as excessive. Therefore, we are of the view that the ld.CIT(A)has rightly deleted the disallowance. Addition on purchase of car - as per AO since car was purchased in the name of Manager, it was not owned by the assessee, therefore, expenditure incurred for acquiring car as well as depreciation is not admissible to the assessee - Held that:- Car was used practically for the business purpose of the assessee. It has provided finance for purchasing the car. The only name of the Manager is being reflected in the registration certificate. Otherwise, for all other practical purposes car was used by the assessee. CIT(A) has looked into supporting evidence, and thereafter allowed incidental expenses as well as depreciation. After going through order of the ld.CIT(A), we do not find any reasons to interfere in it Addition u/s 40(a)(ia) - non deduction of tds - CIT-A deleted this addition on the ground that M/s.Narmada Chem has filed its return and included receipts from the assessee in its taxable income - Held that:- The issue in dispute is covered in favour of the assessee by the decision of the Hon’ble Delhi High Court in the case of CIT Vs. Ansal Landmark Township P.Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT) held that second proviso to section 40(a) of the Act is to be read as applicable with retrospective effect. According to this proviso, if a payee has filed its return disclosing payment received, then the assessee would not be considered in default. Additional depreciation on lab equipments and electrical installation - Held that:- According to the assessee, it is part of plant & machinery and additional depreciation is eligible as per proviso of section 32(1)(a). Since this electrical machine required additional power and it is inter-connected with its manufacturing activity, it cannot be said that these cables etc. would not be part of manufacturing process. Similarly, lab equipments are linked to manufacturing process, and depreciation would be applicable. The ld.CIT(A) has rightly held that the assessee is entitled for additional depreciation on these items. - Revenue appeal dismissed.
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