Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2010 (7) TMI AT This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2010 (7) TMI 1051 - AT - Income Tax

Issues involved: Appeal against CIT(A)'s order for A.Y.2007-2008 u/s 143(3) of the Income Tax Act, 1961.

Issue 1 - Disallowance of Interest:
The assessee appealed against disallowance of interest paid to specified persons u/s 40A(2)(b) of the IT Act in excess of 16%. The AO disallowed 6% interest, while the CIT(A) directed to allow interest at 16%. The assessee argued that the 18% interest paid to relatives was reasonable as it was unsecured, unlike bank loans. Citing precedent, the counsel contended that 24% interest to relatives was deemed reasonable. After considering arguments, the Tribunal found the 18% interest to be justifiable on unsecured loans and deleted the disallowance u/s 40A(2)(b).

Issue 2 - Disallowance of Travelling Expenses:
The assessee contested the disallowance of Rs. 50,000 out of total travelling expenses of Rs. 4,29,011, which included expenses for the assessee's wife. The AO disallowed 50% of the claim, later reduced to Rs. 50,000 by the CIT(A). The Tribunal noted that the wife's expenses were claimed as business expenses and upheld the CIT(A)'s decision, deeming the Rs. 50,000 disallowance reasonable. As the Revenue did not appeal against this relief, the Tribunal rejected the assessee's appeal on this ground.

In conclusion, the Tribunal partly allowed the assessee's appeal, upholding the interest payment to relatives at 18% and the disallowance of Rs. 50,000 for travelling expenses involving the assessee's wife.

 

 

 

 

Quick Updates:Latest Updates