TMI Blog2022 (4) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... ns by the assessee from its related parties. Backed by our aforesaid observations, we are unable to find favour with the incomparable basis that had been adopted by the Assessing Officer for triggering the provisions of section 40A(2)(a) of the Act. Apart from that, we find, that as brought to our notice by the Ld. AR, the assessee in the immediately preceding year i.e. A.Y. 2013-14 had paid interest on the unsecured loans in question @ 18% and the same had been accepted by the Assessing Officer vide his order passed u/s. 143(3) for the said year. We are of a strong conviction that not only the basis adopted by the Assessing Officer for triggering the provision of section 40A(2)(a) of the Act is fallacious, but the same also militates ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on 29 ITJ 89 (Jabalpur Tribunal) in Raj Traders ITO which accepted that AO has not given any evidence of lower interest rate so allowed interest paid @ 18%, 19% 20.52%. b) That TDS by appellant firm has been made for unsecured creditors on interest paid @ 18% they are already taxed, so disallowing here is a double taxation. c) That unsecured loans are easily available as compared to Bank which is not so easy and more difficulty. 2. Controversy involved in the present appeal lies in narrow compass, i.e., sustainability of disallowance of interest expenses made by the Assessing Officer u/s. 40A(2)(a) of the Act. 3. Succinctly stated, the assessee had claimed deduction of interest expenses @ 18% on the old unsecured loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nything to the contrary contained in any other provision of this Act relating to the computation of income under the head Profits and gains of business or profession . (2)(a) Where the assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred to in clause (b) of this sub-section, and the Assessing Officer is of opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d view, the Assessing Officer, while adopting the bank lending rate had lost sight of the fact that the loans from the bank would have required providing of security, incurring of certain hidden charges, as well as satisfaction of number of other formalities; unlike the raising of unsecured loans by the assessee from its related parties. Backed by our aforesaid observations, we are unable to find favour with the incomparable basis that had been adopted by the Assessing Officer for triggering the provisions of section 40A(2)(a) of the Act. Apart from that, we find, that as brought to our notice by the Ld. AR, the assessee in the immediately preceding year i.e. A.Y. 2013-14 had paid interest on the unsecured loans in question @ 18% and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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