AO HAS U/S 40A(2) DISALLOWED INTEREST PAID TO RELATIVES @18% AND OTHERS @ 12%.I.E 6% HAS BEEN DISALLOWED.INTEREST PAID TO BANK 14.25% AND UNSECURED LOAN FROM RELATIVES WAS TAKEN TO TIDE OVER THE CRISIS AS BANK HAS REFUSED LIMITS AS MAJOR DEBTOR HAD GONE TO BIFR.WHETHER AO ACTION RIGHT???
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You may visit the following case: 2009 TMI - 32197 - PUNJAB AND HARYANA HIGH COURT. In addition i am fully in agreement with the view of the Mr. Kothari that it is an issue of facts. If the facts shows that the interest paid to relatives is genuine, you would get the justice at the appropriate forum.