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TMI Blog2016 (2) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... made u/s 2(22)(e) of the LT. Act. 1961. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has failed to appreciate that the business of the company a well as the assessee is not primarily money lending as substantial income of the company is from rent. 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has failed to appreciate that the assessee did not furnish any evidence in the form of approval of RBI or application for NBFC to prove that the assessee's main business is money lending." 4. "On the facts and in the circumstances of the case and in law. The Ld CIT (A) has failed to appreciate that in the case of CIT Vs Parle Plastics Ltd (Bom), it was held that the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 90 lakh as rental income and Rs. 35,30,540/- as interest income on the loans advanced to the various parties. The CIT(A) deleted the addition on the ground that the loan taken by the assessee from M/s Monika Realtors Pvt. Ltd was taken in the ordinary course of business of the company and, therefore, covered by the Explanation provided in clause (ii) of section 2(22)(e) of the Act wherein it is mentioned that the provisions of section 2(22)(e) of the Act does not include any advance or loan made to a shareholder by a company in the ordinary course of its business where lending is a substantial part of the business of the company. 4. We have considered the rival submissions and arguments of the counsels and carefully perused the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld AR also submitted that assessee's case also got support from the Judgment of Hon'ble Bombay High Court in the case of Parle Plastics Ltd. 332 ITR 63 (Bom.), wherein it has been held that provisions of section 2(22)(e) of the Act are not applicable if the money borrowed by the share holder from the company in the ordinary course of business. The facts of the assessee's case are squarely covered by the above mentioned decisions as the assessee borrowed money in the ordinary course of business of the company where the money lending was substantial part of the business activity and had paid interest on such borrowings' We ,therefore, respectfully following the above decisions, uphold and sustain the conclusion drawn by the CIT(A) on this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the similar facts and circumstances. Thus the CIT(A) deleted the addition by relying upon the Judgment of Hon'ble Orissa High Court in the case of Bansidhar Omkarlal 58 ITR 462 (Orissa). 8. The Ld. DR submitted that the assessee was borrowing funds from market at the higher rate ranging between 12% to 15% and advanced money at the rate of 12%. He further submitted that he AO has rightly made the addition of Rs. 8,06,719/- u/s 36(1)(iii) of the Act being the differential interest and prayed that the order of CIT(A) may be reversed and that of AO be restored. 9. The Ld. AR on the other hand submitted that the assessee had raised money from the market on the prevalent rate of interest and several other factors such as availability of fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are governed by several factors such as urgency of funds required, availability of funds in the market, notice at which fund are required and creditworthiness of the persons raising the money. The Ld. CIT(A) had given a very detailed observation for arriving at his decision. In the case of Bansidhar Omkarlal (supra), it has been decided that there was no scope for application of the test of the reasonableness to a case of payment of interest and therefore the rate of interest could not be scaled down. Thus in view of the ratio laid down in the above decision by the Honble Orissa High Court , we find no infirmity in the order of CIT(A) and uphold the same on this point. 11. In the result appeal of the Revenue is dismissed. Order pronou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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