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M/s Dhruv And Company Versus Asstt. Commissioner of Income Tax

2016 (3) TMI 825 - ITAT CHANDIGARH

Disallowance u/s 40A - CIT(Appeals) restricted the rate of interest to 15% as against 18% claimed by the assessee and 12% allowed by the Assessing Officer - Held that:- The loans were taken from the same persons/relatives. It is true that for the purpose of disallowance under sect ion 40A(2) of the Act, the guiding factor is whether the expenditure is excessive or unreasonable, having regard to the fair market value of the case, services or facilities for which the payment has been made. In our .....

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ld. CIT(Appeals) is unwarranted and hence, we delete the same. - Decided in favour of assessee - ITA No. 897/CHD/2015 - Dated:- 19-2-2016 - H. L. Karwa, VP And And Rano Jain, AM For the Appellant : Shri Hari Om Arora For the Respondent : Shri Manjit Singh ORDER Per: H L Karwa: This appeal filed by the assessee is directed against the order of ld. CIT(Appeals) - I, Ludhiana dated 30.09.2015 relating to for assessment year 2008-09. 2. In this appeal, the assessee has taken the following grounds: .....

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of interest to 15% as against 18% claimed by the Appellant and 12% allowed by the Appellant. The disallowance of interest which works out to ₹ 3,38,140 is untenable and contrary to law. The facts of the case and market rate of interest has been ignored to be considered properly by the Ld. Commissioner of income Tax (Appeals). 3. While framing the assessment, the Assessing Officer disallowed a sum of ₹ 6,76,279/- on account of excess interest paid to partners and family members. The A .....

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ailable in the range of 12% to 13% after giving col lateral security to the bank. But, in the case of market loans, no security is required and no paper or other formality is to be completed. Accordingly, it was stated that the rate of 18% per annum paid to unsecured loans was reasonable. The Assessing Officer did not accept the above contentions of the assessee and disallowed a sum of ₹ 6,76,279/- and added the same to the income of the assessee. 4. On appeal, the ld. CIT(Appeals) restric .....

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07 by the Assessing Officer on account of interest has been deleted by the ld. CIT(Appeals) vide his order dated 11.11.2012 in appeal No. 605/IT/CIT(A)/ASR/08-09. The relevant findings of the ld. CIT(Appeals), Amritsar are as under: "5. Shri J P Bhatia, Advocate, the ld. Counsel for the appellant appeared and on the date of hearing on 9.11.2012, furnished written submissions of accounts relying thereunder the case laws cited as Ram Avtar Garg v. ITO, reported at (2010) 4 ITR (JP) 245. The m .....

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rlier years too. After giving full deliberations and pondering carefully the system of appellant's business being followed consistently and also appreciating the progress in taxable income than last year, I am of the considered opinion that there seems to harm in curtailing the rate of interest @ 12% than actually paid and claimed by the appellant @ 18% p.a., far far below the prevalent market rate of intt. @ 24% p.a. Further, I agree with the appellant's contention the Revenue ought not .....

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