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2022 (2) TMI 472 - AT - Income TaxAddition u/s 40A - Addition made as assessee could not explain the reasons for payment of interest to the business creditors that too sister concerns whereas it is not charging any interest from the debtor - HELD THAT:- Trading transactions are genuine and accepted as such, then, disallowance of expenditure is not in accordance with law. It is also his submission that the assessee has received interest and has also paid interest @ 15% to the sister concerns and only the net interest has been debited to the Profit & Loss Account. From the various details furnished by the assessee in the paper book, it is noted that the assessee has paid interest as well as received interest from both the sister concerns, namely, M/s Samjhai Nath Industries and Saraswati Ginning Pressing & Oil Mills. Further, the transactions with the parties have not been doubted and these are business transactions. The AO has also not brought anything on record to the effect that the assessee has violated the provisions of section 40A(2)(b) - Hon’ble Supreme Court in the case of SA Builders [2006 (12) TMI 82 - SUPREME COURT] has held that once the assessee establishes that there was a nexus between expenditure and the purpose of business, the Revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case.- Decided in favour of assessee.
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