TMI Blog2012 (11) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out by the assessee amounting to manufacture of beedi. - In favor of assessee Disallowance u/s.40A(2)(b) - Alleged that interest paid to the persons at the rate of 22% excessive and unreasonable – Held that:- Amount is borrowed in earlier years at a stipulated rate of interest and which is still utilized for the purpose of business, the interest rate could not have been renegotiated. Even the lending rate by banks in respect of secured loan is as high as 19.5%. Therefore, rate of interest, paid by the assessee is quite reasonable - Since the rate of interest paid by the assessee is reasonable disallowance deleted - TAX APPEAL No. 2488 of 2010 - - - Dated:- 18-1-2012 - MR. AKIL KURESHI AND MS SONIA GOKANI JJ. Appearance: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld the order of the CIT(Appeals), by relying on the decision of this Court reported in 282 ITR 568. This Court decided the issue by holding that the use of tobacco which was used in the input do not retain its identity once the beedies are rolled and in relation to the assessee's status as unit of small scale industrial undertaking, the Court decided the issue in assessee's favour by holding that while ascertaining the monetary limit laid down in the provision, all assets of business be not taken into consideration, upholding the version of the Tribunal treating the activity carried out by the assessee amounting to manufacture of beedi. The Tribunal in the instant case has decided the issue basing it on the decision of this Court. With not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank and financial institutions, the rate of interest to associate concern is little higher but the amounts borrowed from bank are secured and hence carries lesser risk. Even the bank interest is almost at 19.5% and if we calculate the overhead expenses i.e. the registration charges, stamp duty charges, expenses to be incurred for submitting stock statements, etc. to the bank, the bank interest will automatically increase to a certain level. Therefore, the comparison of rate of interest paid by the assessee on unsecured loan with the secured loan is incorrect. It is also settled law that the decision how the business should be carried on is the prerogative of the assessee and the Assessing Officer cannot dictate the terms as to how the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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