Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Home Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles News Highlights
Extracts
Home List
← Previous Next →

Trimurty Colonizers & Builders P. Ltd. Versus The DCIT, Central Circle-3, Jaipur

2017 (9) TMI 571 - ITAT JAIPUR

Disallowance of interest expenses u/s 40A(2)(b) - amount received being unsecured loan - Held that:- As both the authorities below have not commented upon as to how Sh. Udai Kant Mishra would be covered under the provisions of sec.40A(2)(b). However, having seen the pattern of shareholding, and after taking into consideration the totality of facts and judicial pronouncements, we are of the considered view that the reasonable rate of interest ought to have been adopted at 14% against 12.5% as ado .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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. In law and in facts and circumstances of the case, the CIT (A) ought to have deleted the addition made by the AO u/s 40A(2)(b) of the Income Tax Act, 1961 since .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s submitted before the AO that the appellant having also paid interest @ 14.4% to outsiders, the interest payment commensurate with the prevailing industry norms. The impugned addition is baseless and contrary to the law. 4. In law, in the facts and circumstances of the case, the CIT (A) has grossly erred in confirming the impugned addition of ₹ 26,811/- of interest paid u/s 40A(2)(b) of the Act alleging the lack of commercial expediency. The impugned addition is therefore contrary to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unds 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 consider .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Director of the company but the company itself. 3.2. On the contrary, the ld. D/R supported the orders of the authorities below. 3.3. We have heard rival contentions, perused the material on record and gone through the orders of the authorities below. The AO has decided this issue in para 4.3 of his order as under :- 4.3. I have considered the reply of the assessee carefully and not found satisfactory. The submission of the assessee in summary is that these loans were taken for commercial ex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The submission of the assessee does 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 i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n higher side to the above person specified under section 40A(2)(b) which is allowable to extent of 12.50% as prevailing in the market and the assessee company itself received interest @ 12.50%. Hence interest calculated @ 12.50% per annum on interest paid to Shri Udai Kant Mishra is allowed and balance interest paid to them is disallowed and added back to the total income of the assessee. This would result an addition of ₹ 26,811/- which is worked out as under :- S.No. Name of the persons .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plicable 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. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s: • Gujarat Gas Financial Services Ltd (Guj) • Enviro Control Associated (P) Ltd • Ramavatar Garg (ITAT Jaipur) • Udaipur Distillery Co. Ltd (Rajasthan) • Subhash Chandra (SOT ASR) • SA Builders Ltd (C) • Bansilar Gupta (SOT ASR) • Alfa rubber Industries (ASR) • Chamba Mal Roopchand (ASR) • Hynoup Food & Oil Industries Pvt Ltd(AHD) It has been repeatedly held by Hon ble Apex Courts that the expression for the purpose of business is wider in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 exam .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Forum
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version