TMI Blog2016 (10) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... The Respondent : Shri Randhir Gupta ORDER PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee and is directed against the order of the Ld.CIT(A)-24, Mumbai dated 29.7.2013 pertaining to A.Y.2010-11. 2. The only issue raised in the ground No.1 is against the confirmation of disallowance of ₹ 33,36,543/- by the ld. CIT(A) by following the earlier decision of Co-ordinate Bench of the Tribunal in assessee s own case for the assessment year 2004-05 out of interest as made by the AO under the provisions of section 40A(2)(b) of the Income Tax Act, 1961(hereinafter referred to as the Act). 3. At the time of hearing, the ld.AR submitted that the present case of the assessee is covered by the decision of Co-ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant while deciding the amount of deduction allowable to the assessee u/s 40A(2) of the LT. Act, 1961. The disallowance has not been made for the reason that the expenditure is not genuine. The disallowance has been made by virtue of the provisions of sec. 40A(2) whereby any expenditure which is excessive or unreasonable is required to be disallowed. The assessee has not shown as to how the interest @ 18% paid to persons specified u/s 40A(2)(b) was not excessive and unreasonable in light of the opinion of the Assessing Officer that the interest at the rate of 12% was reasonable and the findings of the Hon'ble Tribunal in the case of the assessee itself for the A.Y. 2004-05 on the same set of facts. Charging of interest at a given r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and others and also details of interest paid to various persons during the relevant assessment years are filed. According to Ld. Counsel those persons have included the interest paid by assessee as income in their respective return of income and paid taxes accordingly. The details are enclosed at pages 22 to 24 of assessee s Paper Book. According to the Ld. Counsel for the assessee, the interest payment was genuine and incurred wholly and exclusively for the purpose of business and the lower authorities have not elaborated that how this expenditure of interest is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made. 6. On the other hand, Ld. Sr.DR argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e produced some bills issued to the assessee by various suppliers for this year, in which it is clearly mentioned that in case of late payment interest @18% to 26% to be charged. Similarly, he has also explained that the assessee itself has stipulated the charging of interest @24% from its customers for late payment. Before us Ld. Counsel for the assessee also explained that the interest rate charged by banks @ 12% to 15% on C.C limits or bank loans, which includes some other hidden charges and it is also fact that bank while sanctioning loan put quite onerous liabilities like submission of stock statements, project report by Chartered Accountant, timely payment of instalments and also satisfactory securities of equal amount or more of loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whom assessee has paid interest are being taxed higher rates, the entire exercise undertaken by the Assessing Officer is neutral exercise as far as the payment of tax is concerned and there is no question of evading of payment of tax by any of the parties. Further, Hon'ble Bombay High Court has clearly laid down that CBDT in its circular No.6-P dated 06/07/1968 debars the Assessing Officer from not allowing such payment made to relatives and sister concerns, where there is no attempt to evade the tax. Respectfully following the decision of the Hon'ble Bombay High Court (supra) and going by the facts of the case, we allow the claim of the assessee. 5. In view of the above decision of the Tribunal in assessee s own case, we s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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