TMI Blog2014 (1) TMI 1772X X X X Extracts X X X X X X X X Extracts X X X X ..... le having regard to the legitimate needs of the assesseecompany’s business vis-à-vis the benefits derived by or accruing to the assessee-company as a result of such payments of financial charges because the basis of quantification of such payments are not clear and instances of utilization of such services do not fully justify the payment. This finding of the AO was confirmed by the ld.CIT(A) on the basis that the total bank guarantee for the period 1.4.2007 to 31.3.2008 was ₹ 56,500,000/- 1% of such amount comes to ₹ 5,65,000/-. Thus, this a reasonable amount to be paid as guarantee commission to the related parties, on the basis of such payments made by the appellant itself in the earlier year. Balance amount allowed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or contracts undertaken. Ld.CIT(A) ought to have deleted such adhoc disallowance when financial exigency of the business warranted guarantee of these parties round the year. 2. Ld.CIT(A) further erred not to appreciate documentary evidence, explanation and submission of the appellant that fixed monthly charges guaranteed the availability of assets as and when the need arose. Both the lower authorities erred in law and on facts in applying provisions of section 40A(2)(b) of the Act without placing any cogent evidence on record of excessive payment to related parties. 3. Levy of interest u/s.234B of the Act is not justified. 4. Initiation of penalty u/s.271(1)(c) of the Act is not justified. The appellant craves leave to add, amend, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed to Shri Yatish H. Shah. She submitted that the authorities below have not taken the assets placed by related parties to the banker. She placed reliance on the decision of Hon ble ITAT C Bench Ahmedabad rendered in the case of Dy.CIT vs. Ravi Ceramics in ITA No.2959/Ahd/2009 for AY 2006-07, dated 11/05/2012. She also placed reliance on the decision of the Hon ble ITAT L Bench Mumbai rendered in the case of KPMG India Private Limited vs. DCIT and Others in ITA No.8824/Mum/2004 for AY 2001-02, dated 08/06/2012. In support of the contention that the AO ought to have demonstrated the excessiveness and unreasonableness of the financial charges paid to the related concern, she submitted that there is no comparative figure before the AO. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of the AO was confirmed by the ld.CIT(A) on the basis that the total bank guarantee for the period 1.4.2007 to 31.3.2008 was ₹ 56,500,000/- 1% of such amount comes to ₹ 5,65,000/-. Thus, this a reasonable amount to be paid as guarantee commission to the related parties, on the basis of such payments made by the appellant itself in the earlier year. Balance amount allowed by the A.O. amounting to ₹ 4,70,000/- can be attributed to the amount paid by the appellant on account of interest free fund provided by the related parties from time to time. In page-4 of the paper-book No.2, the assessee has given the utilization of sources under LLMS guaranteed by the parties to whom the financial charges paid. Since this informa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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