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2022 (2) TMI 605 - AT - Income TaxDisallowance u/s 40A(2) - excessive interest paid to Director of the appellant - AO observed that assessee has paid interest @ 18% to one of its director, however, it has charged interest from two of the unrelated party @ 15% and @ 11% respectively - HELD THAT:- During the course of appellate proceedings before us, the ld. Counsel has referred the decision of CIT Vs. Aditya Mediasales Ltd. [2010 (5) TMI 823 - GUJARAT HIGH COURT] wherein it is held that interest of unsecured borrowing was always higher than rate of interest paid to the bank or financial institution from where the loan raised were secured loan and accordingly unsecured interest paid to sun pharmaceutical @ 24% per annum as reasonable. Also in KARTEX EXPORTS [2020 (2) TMI 1617 - ITAT MUMBAI] in the absence of any material to indicate that the interest rate paid by the assessee is excessive or unreasonable, the unsecured loan taken @ 18% or even @ 20% is quite in consonance with the ground reality in business. Issue of tax neutrality - The submission of the assessee of comparatively prevailing bank interest rate of secured loan was not controverted by the ld. CIT(A). Further, it is noticed that ld. CIT(A) has simply rejected the submission of the assessee on the issue of tax neutrality stating that no evidences was furnished. In this regard after perusal of the material available in the paper book, it is noticed that assessee has filed copy of Income Tax return of Bharat J. Patel for assessment year 2014-15 along with detail of unsecured loan as on 31st March, 2014, vide its submission dated 7.11.2016 made before the assessing officer demonstrating that because of showing of higher return of income of ₹ 3,86,04,868/- there was no any attempt to evade tax and the same was tax neutral. In the light of the above facts and circumstances we consider that decision of ld. CIT(A) is not justified, therefore, this ground of appeal of the assessee is allowed. Disallowance of fees paid towards Investment Advisory Services - HELD THAT:- During the year under consideration the assessee could not substantiate with relevant evidences that these expenses were related to loan syndication fees and the same was claimed as Investment Advisory Services without any break up of the detail of loan advances arranged by these two parties. Therefore, we do not find any infirmity in the decision of ld. CIT(A) after following the decision of coordinate bench of the ITAT [2019 (2) TMI 1996 - ITAT MUMBAI] Appeal of the assessee is partly allowed.
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