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2022 (7) TMI 263 - AT - Income TaxDisallowance of interest expenses paid to depositor in excess of 18% - HELD THAT:- It was never disputed by the Revenue that the said loan facility was availed by the assessee for business purpose only. The day-to-day business activity requires cash flow regularly and to fill up the gap of cash flow and working capital requirement the assessee has taken the urgent loan. The loan advanced by the said financer/party is unsecured in nature and before advancing the said loan the said party has evaluated the credit risk, capacity, character, creditworthiness and market reputation of the assessee i.e. borrower. AO as well as the CIT(A) though admitted that this loan was taken for business purpose, the CIT(A) has restricted the interest expenditure to 18% and not that of actual 36%. CIT(A) has not taken cognisance of the exigencies of business and cash flow required for the business purpose by the assessee. Therefore, the CIT(A) was not right in holding that payment of interest at 18% is reasonable. Ground no.1 of the assessee’s appeal is allowed. Addition on account of short booking of interest income - HELD THAT:- From the perusal of the records it can be seen that the ad-hoc expenses as stated by the Assessing Officer were actually incurred during the business of the assessee firm and there was no personal expenses involved in the same. Thus, the Assessing Officer was not right in making the addition on ad-hoc basis and has totally ignored the evidences put up by the assessee before the Revenue authorities. CIT(A) has simply confirmed addition and ignored the evidences filed before the Assessing Officer. Therefore, ground no.2 is allowed. Disallowance u/s 40(a)(ia) - AR submitted that Rs.15,000/- (i.e. 30% of Rs.50,000/-) as required under Section 40(a)(ia) of the Act is already disallowed in the computation of income filed for the subject A.Y. for non-deduction of TDS on professional fees having paid - HELD THAT:- From the ledger account along with copy of invoice which was submitted before the authorities, the Assessing Officer as well as the CIT(A) has not taken proper cognisance of the same. In fact, Form No.3CD has given the details of the TDS and, therefore, this addition does not sustain. Therefore, ground no.3 for A.Y. 2015-16 is allowed.
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