TMI Blog2017 (9) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the market value of the interest which is sine qua non for making disallowance under sec.40A(2)(b). In view of the above observation, the AO is hereby directed to re-compute the disallowance. The ground of the assessee’s appeal is partly allowed for statistical purposes - ITA No. 314/JP/2017 - - - Dated:- 4-9-2017 - Shri Bhagchand, AM And Shri Kul Bharat, JM Assessee by : Shri Rajeev Sogani ( CA ) and Shri Rohan Sogani ( CA ) Revenue by : Shri Varinder Mehta ( CIT ) ORDER Per Shri Kul Bharat, JM. This appeal by the assessee is filed against the order of ld. CIT (A)-4, Jaipur dated 07.02.2017 pertaining to assessment year 2012-13. The assessee has raised the following grounds of appeal :- 1. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT (A) ought to have therefore deleted the said addition. 6. The Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal. 2. Briefly stated the facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment was framed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) vide order dated 08.01.2014. While framing the assessment, the AO made disallowance of interest expenses by invoking the provisions of section 40A(2)(b) of the Act. Against this order, the assessee preferred an appeal before ld. CIT (A), who after considering the submissions confirmed the addition. Aggrieved, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not carry much weight. Even if it is accepted that loans were obtained for commercial expediency and it was compelled to take loans from key persons of the group due to market position/situation it does not justify the availing of loans by the assessee from key persons of the group at a very higher rate. Had there been business expediency as claimed by the assessee but no prudent business person will take loans on higher interest rate and give loans on low interest rate. Therefore, it cannot be said to be business prudence to avail loans at higher rate from the persons covered under section 40A(2)(b) of the IT Act, 1961 and to give loans at lower rate to the persons again covered under section 40A(2)(b) of the IT Act, 1961. Thus the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the AO. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon by the assessee. In this case against total income of ₹ 12,40,330/- declared in the return of income for the year, AO completed the assessment order on 08.01.2015 at a total income at ₹ 12,67,140/- after making the addition of ₹ 26,811/- towards interest by invoking the provision of section 40A(2) of the Act wherein AO held that the interest paid to person specified u/s 40A(2)(b) of the Act is allowable to the extent of 12.5% which is market rate. In view of this finding, AO disallowed excess of interest over 12.5% in following case and added to the total income of the assessee. Sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010, there Judges Bench of Hon ble Supreme Court have held as under: In our view, S.A. Builders Ltd. vs. Commissioner of Income-Tax (Appeals) and Another, reported in 288 ITR 1 needs reconsideration ... In view of Hon ble Apex Court s observation, in this case, there is a need of the hour to clearly establish the principle of commercial expediency. But, assessee has failed establish the same before the AO and also during the appellate proceeding. Assessee s submission is not based on facts to establish its claim of commercial expediency. According, the same is examined in para below. Here, it is pertinent to mention that Sh Udai Kant Mishra is the key person and CMD of the the Trimurty group . M/s Trimurty Colonizer and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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