TMI Blog2016 (7) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... d allow this ground of the assessee. Disallowance on account of interest payment in excess of 12 % - Held that:- Even the Income Tax Authorities as per Income-tax Act, 1961, charges interest from the assessee @ 15%. In the given circumstances, the assessee paying interest on unsecured loans at rates varying from 12 % to 18 % cannot be said to be higher side and does not call for any disallowance. Hence, set-aside the orders of the lower authorities and delete the addition. Disallowing the interest paid to two HUFs - Held that:- Not convinced with the arguments of the ld. Authorized Representative of the assessee. The assessee has given a gift of ₹ 1 lakh each to its two HUFs and immediately taken the same money back as loan and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent. The assessee explained that the amount was paid to relatives of the assessee whose ornaments the assessee has taken on rent. It was submitted that the assessee has received 9812.050 gms. of gold ornaments on rent. It was submitted that the assessee s firm uses gold for manufacturing of gold ornaments and by taking the gold ornaments on rent, it does not require to buy fresh gold bullion from the market. The family members whose ornaments are lying idle by this way can earn interest income. It was submitted that the cost of taking gold on rent was much less i.e. 1 % to 3 % per annum against taking external loan at 15 % - 18 % for buying the gold and using the same as stock in trade. It was, therefore, submitted that the amount should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Department u/s 143(1) of the Income-tax Act, 1961. He further submitted that in assessment year 2005-06, the assessee claimed deduction for rent for gold ornaments at ₹ 1,31,180/-, which was also accepted by the Department u/s 143(1) of the Act. Therefore, it was his submission that consistency should be maintained in income tax proceedings and on this principle no disallowance should be made for rent for gold ornaments. 6. The ld. Departmental Representative on the other hand supported the orders of the lower authorities. 7. I have heard the rival submissions and have perused orders of the lower authorities and the material available on record. In the instant case, the assessee claimed the deduction for rent paid for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that in case of consistent view taken in favour of the assessee on questions, the Court will not take a different view without very convincing reasons. Therefore, following the rule of consistency as in earlier assessment years, the rent of gold ornaments had been allowed as deduction to the assessee and there being no difference in facts pointed out during the year under consideration, I set aside the orders of the lower authorities and vacate the disallowance of ₹ 1,31,180/- under the head Rent of gold ornaments and allow this ground of the assessee. 12. In ground no.2 of the appeal, the grievance of the assessee is that the ld. CIT(A) has erred in upholding the disallowance of ₹ 1,71,163/- on account of interest pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the lower authorities. 17. I find that the assessee has claimed the interest on unsecured loan at rates varying from 12 % to 18% and the AO was of the view that the assessee should have paid interest @ 12 % per annum and, accordingly, made the disallowance of excess payment of interest of ₹ 1,71,163/-, which was also confirmed by the ld. CIT(A). I find that even the Income Tax Authorities as per Income-tax Act, 1961, charges interest from the assessee @ 15%. In the given circumstances, the assessee paying interest on unsecured loans at rates varying from 12 % to 18 % cannot be said to be higher side and does not call for any disallowance. Hence, I set-aside the orders of the lower authorities and delete the addition of ₹ 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted by the assessee to reduce tax liability and hence, the deduction for interest expenditure of ₹ 26,500/- claimed by the assessee has rightly been disallowed. Therefore, I confirm the order of CIT(A) and dismiss this ground of the assessee. 23. In ground no. 4 of the assessee, the grievance of the assessee is that the ld. CIT(A) has erred in confirming the disallowance ₹ 26,608/- out of telephone and car expenses. 24. The brief facts of the case are that the assessee claimed ₹ 19,042/- as telephone expenses and ₹ 27,245/- as car expenses and ₹ 42,431/- as depreciation on car. Since no log books were maintained, the AO estimated the personal use at 20% of the expenditure and made addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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