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TMI Blog1978 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... r, increased the disallowance by another Rs. 10,000. It was submitted that the cars are mostly used only for the purpose of the business and the disallowance of Rs. 8,600 is sufficient for the non-business expenditure. It appears that there are no separate accounts showing the expenditure in car maintenance. There is, however, a travelling expenses account in which the total debit on travelling as well as maintenance of cars amounts to more than Rs. 92,000. In the prior years there has been such disallowance and Rs. 5,000 disallowed was not appealed against by the assessee. On these facts, we accept the Department's contention that there is a case for further disallowance. However, since only Rs. 5,000 has been found to be disallowable in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of interest which is more than 18 per cent could not be considered as allowable. Such excess payment of interest amounted to Rs. 21,196. The assessee's submission is that there was no warrant for disallowance at all since on an average the interest paid by the assessee on the deposits was less than 12 per cent. He further submitted that the assessee had exhausted the bank credits which were available and so had to go for further finances only in the open market. He pointed out that the market rate of interest was 21 per cent and above and so it cannot be said that the interest paid was excessive having regard to the market value of the facility enjoyed by the assessee. 5. We find that the ITO has jurisdiction to disallow a part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be recorded. 7. It was next objected that 9 1/2 per cent service charges should not be treated as interest. We find this objection also without any merit. What is to be seen is not how the banks classify the payments made for loans and advances but how much the public will have to pay whether called as interest or service charges for the purpose of getting loan from the banks. It is clear that that would be more than 21 1/2 per cent. We are, therefore, of opinion that there was no case for disallowance of Rs. 21,196. 8. We now take up the departmental appeal. The point in this appeal is whether the provisions of s. 160(1) would apply in the assessee's case. This point has already come up before us in the prior years and we have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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