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2016 (4) TMI 43 - GUJARAT HIGH COURT

2016 (4) TMI 43 - GUJARAT HIGH COURT - TMI - Disallowance u/s 40A - Whether the Appellate Tribunal has erred in law and on fact in holding that payment of interest @ 15% and 16% to the persons covered u/s 40A(2)(b) is commensurate with the prevailing market rate? - Held that:- Tribunal has recorded a finding of fact to the effect that the interest paid by the assessee to the persons mentioned under section 40A(2)(b) is commensurate with the interest rate prevailing in the open market. In the lig .....

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ted by the Assessing Officer as deemed dividend u/s 2(22)(e) of the Act in this case? - TAX APPEAL NO. 281 of 2016 - Dated:- 15-3-2016 - MS. HARSHA DEVANI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR MR BHATT, SR. ADVOCATE with MRS MAUNA M BHATT, ADVOCATE ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Heard Mr. M. R. Bhatt, Senior Advocate, learned counsel for the appellant. 2. The appellant has challenged the order dated 29.09.2015 passed by the Income Tax Appellate Tribunal, A .....

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proposed question No.1, the assessee Company paid interest of ₹ 32,43,885/- to persons covered under section 40A(2)(b) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Interest had been paid @ 15% in the case of Cama Motors Pvt. Ltd. and @ 16% in the case of R. J. Cama & Co. Pvt. Ltd. The Assessing Officer allowed the interest payment @ 12% and disallowed the balance. 4. In assessee s appeal, the Commissioner (Appeal) deleted the disallowance. The Revenue carried the .....

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rket at a lower price than similar facility availed from the persons covered under section 40A(2) (b), then that excess payment would not be allowed to the assessee as deduction. The question that arose before the Tribunal was that what was the fair market value of interest paid by the assessee on the loans obtained from the persons covered under section 40A(2)(b). The Assessing Officer was of the view that the loans ought to have been taken at the interest rate of 12% and not the interest rate .....

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