TMI Blog2022 (7) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... isk, capacity, character, creditworthiness and market reputation of the assessee i.e. borrower. AO as well as the CIT(A) though admitted that this loan was taken for business purpose, the CIT(A) has restricted the interest expenditure to 18% and not that of actual 36%. CIT(A) has not taken cognisance of the exigencies of business and cash flow required for the business purpose by the assessee. Therefore, the CIT(A) was not right in holding that payment of interest at 18% is reasonable. Ground no.1 of the assessee s appeal is allowed. Addition on account of short booking of interest income - HELD THAT:- From the perusal of the records it can be seen that the ad-hoc expenses as stated by the Assessing Officer were actually incurred du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 passed by the CIT(A), Gandhinagar, Ahmedabad CIT(A)-13, Ahmedabad for the Assessment Years 2013- 14, 2014-15 2015-16 respectively. 2. As identical grounds have been raised in all these three appeals, grounds raised in ITA No.1229/Ahd/2018 for A.Y. 2013-14 are reproduced as under :- 1. The learned CIT(A) has erred both in law and on the facts of the case in confirming the action of the AO of making a disallowance u/s.40A(2) of the Act of interest of Rs.3,49,477/- as being excessive and unreasonable. 2. The learned CIT(A) has erred both in law and on the facts of the case in not appreciating that the lender does not fall under the provisions of Section 40A(2)(b) of the Act. 3. Alternatively and without prejudice, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. . 4. The learned CIT(A) has erred in law and on facts of the case in confirming action of the learned AO in levying interest u/s 234A/B/C of the Act. 4. The learned CIT(A) has erred in law and on facts of the case in confirming action of the learned AO in initiating penalty u/s.271(1)(c) of the Act. 4. The assessee derives income from manufacturing and dealing in Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the nature of facility enjoyed, securities provided, tenure allowed and risk involved by the assessee firm. The assessee firm paid total interest of Rs.71,88,467/- out of which interest of Rs.17,51,519/- was paid against unsecured loans taken from different parties. The Ld. AR further submitted that the list of parties to whom the assessee firm paid interest of Rs.17,51,519/- which was before the Assessing Officer as well as before the CIT(A). Ld. AR submitted that copies of confirmation of these accounts of the said parties were also submitted during the assessment proceedings. The Ld. AR submitted that the assessee has also given the details of interest payment in excess of 18% in respect of Naimish Jayantilal Choksi as the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. We have heard both the parties and perused the relevant materials available on record. The assessee is admitting that the interest expenses were higher than the normal interest rate available in the market. The requirement of the funds for urgency of the business can be the criteria to raise the interest rate i.e. 36%. At the time of submission the assessee submitted that the assessee has given the details of interest payment in excess of 18% in respect of Naimish Jayantilal Choksi and it is undisputed fact that the assessee firm paid the said interest to the said party. It was never disputed by the Revenue that the said loan facility was availed by the assessee for business purpose only. The day-to-day business activity requires cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no personal expenses involved in the same. Thus, the Assessing Officer was not right in making the addition on ad-hoc basis and has totally ignored the evidences put up by the assessee before the Revenue authorities. The CIT(A) has simply confirmed addition and ignored the evidences filed before the Assessing Officer. Therefore, ground no.2 is allowed. 13. As regards ground no.3 is concerned, the same is general in nature and hence dismissed. 14. As regards ground nos.4 5, the same are consequential and are not adjudicated at this juncture. Therefore, ITA No.1229/Ahd/2018 for A.Y. 2013-14 filed by the assessee is partly allowed. 15. As regards ITA No.1230/Ahd/2018 for A.Y. 2014-15, grounds are identical to that of A.Y. 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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