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2020 (11) TMI 365 - ITAT AHMEDABADInterest expenses paid to the related parties being excessive - Disallowance u/s. 36(I)(iii) - assessee has paid interest to various parties @ 24% and to some of the parties @ 12% - assessee explained that non banking financial institutions were charging interest between 18 to 24% for short term loan and also need security or mortgage against the loan - AO not agreed with the assessee and stated that assessee was unable to prove the reasonableness of the payment made u/s. 40A(2)(b), therefore, restricted the rate of interest on loan to the extent of 18% as against 24% paid by the assessee, the excess interest - HELD THAT:- As decided in own case [2020 (6) TMI 193 - ITAT AHMEDABAD] There cannot be any disallowance for the year under consideration on the money borrowed in the earlier year. As relying on SRIDEV ENTERPRISES [1991 (1) TMI 52 - KARNATAKA HIGH COURT] we hold that there cannot be any disallowance on account of interest expenses being excessive paid to the related parties under section 40A of the Act. Hence we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him - disallowance on excess interest payment made u/s. 36(1)(iii) is deleted. Therefore, this ground of appeal of the assessee is allowed. Disallowance u/s. 14A - HELD THAT:- We hold that no disallowance of interest expense claimed by the assessee can be made on account of investments under the provision of section 14A r.w.r. 8D of Income Tax Rules. Hence, we reverse the order of the authorities below. The AO is directed to delete the addition made by him on account of the interest expenses component. Accordingly, this ground of appeal is partly allowed. Disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) - assessee has defaulted in depositing the contribution of employee’s provided fund and ESIC within the prescribed due date - HELD THAT:- During the course of appellate proceedings before us, the ld. counsel has agreed that this issue has been decided by the Hon’ble Jurisdictional High Court in the case of CIT vs. GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT] against the assessee.
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