TMI Blog2019 (10) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the Assessing Officer s own admission, the assessee had submitted the details of such expenses. Therefore, without making necessary enquiry to prove that the expenditure claimed by the assessee under these two heads is not genuine or unverifiable, the Assessing Officer cannot disallow a part of it purely on ad hoc basis. Therefore, in our view, no disallowance out of sales promotion and travelling expenses are called for. In view of the aforesaid, we sustain the disallowance made by the Assessing Officer out of motor care and telephone expenses - ITA no.3110, 3111 And 3112/Mum./2018 - - - Dated:- 26-7-2019 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER For The Assessee : Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y (HUF) of the partners who are related parties. Therefore, he called upon the assessee to furnish the details of loan and interest payment to the concerned parties. After perusing the details, he found that the assessee had paid interest @ 15% on the unsecured loans. Since, the unsecured loans were availed from related parties, the Assessing Officer was of the view that interest paid @ 15% is unreasonable having regard to the market rate of interest. Accordingly, he called upon the assessee to explain why disallowance of interest expenditure should not be made under section 40A(2)(b) of the Act. Though, the assessee objected to the proposed disallowance, however, the Assessing Officer did not accept the submissions of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e market rate. He submitted, no material has been brought on record by the Assessing Officer to demonstrate that interest paid @ 15% is not as per market rate of interest on such types of loans. He submitted, these loans were continuing from past years and no disallowance of interest expenditure on such unsecured loans has ever been made by the Assessing Officer in the past assessment years. The learned Authorised Representative submitted, merely because the rate of interest on fixed deposit is less than the interest paid on unsecured loans, it cannot be said that interest paid on unsecured loans is unreasonable. In support of his contention, the learned Authorised Representative relied upon the following decisions: i) Aja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the present case, the first condition of section 40A(2) of the Act has been fulfilled as the assessee has made the payment to the related parties. However, as regards the second condition relating to unreasonableness of the payment made, on a perusal of the impugned assessment order it is noticed that the Assessing Officer has not brought any material on record to demonstrate that the payment made is excessive and unreasonable having regard to the market rate. Simply stating that the rate of interest paid on unsecured loan is higher than the fixed deposit interest rate, the Assessing Officer has restricted the rate of interest on unsecured loans to 12% per annum. The Assessing Officer has not brought any comparable case to demonstrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch expenses. Alleging that the assessee could not furnish the log book to prove the motorcar expenses and holding that the personal element cannot be ruled out, he disallowed 10% out of the total expenses claimed in all the assessment years under appeal. Though, the assessee challenged the aforesaid disallowances before the learned Commissioner (Appeals), however, the disallowances were sustained. 12. The learned Departmental Representative relied upon the order of the Assessing Officer and learned Commissioner (Appeals). 13. We have considered rival submissions and perused the material on record. As could be seen in course of assessment proceedings the assessee has furnished certain details. However, it coul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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