9911796707
TMI Blog2010 (5) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... As in the case of Omkarmal Gaurishankar [ 1990 (9) TMI 123 - ITAT AHMEDABAD-C] held that the rate of 24 percent cannot be treated as unreasonable or excessive and therefore, directed allowance of the entire interest. Further, it is held that deposits being old, interest thereupon was never disallowed in the past, no disallowance in respect of interest is validly being made. In this case also, interest has been paid in the past at the rate of 24 percent In view of the above, it is held that funds being used for business purposes coming over from the preceding assessment years, in the past years it having been allowed at the rate of 24 per cent., interest of 24 percent being not excessive or unreasonable in view of the factum that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m interest having been paid being not persons covered under section 40A(2)(b) of the Income tax Act, 1961, even the auditor having wrongly covered them under section 40A(2)(b) of the Act, the learned lower authorities grossly erred in holding that these persons are covered under section 40A(2)(b) of the Income tax Act, such a finding is unjustified and bad in law. The facts of the case are that the Assessing Officer observed that the assessee has paid interest to relatives at the rate of 24 percent whereas interest is allowed to the outsiders at 12 percent Therefore, the Assessing Officer made disallowance of Rs. 2,58,625 under section 40A(2)(b) of the Act. It is submitted before the learned Commissioner of Income-tax (Appeals) that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to a few creditors at the rate of 24 percent When interest has been received at the rate of 24 percent there was no harm in paying interest at the rate of 24 percent The Assessing Officer as well as the learned Commissioner of Income-tax (Appeals) have failed to give the reasons as to how it is excessive particularly in view of the fact that interest was also received from all the debtors at the rate of 24 percent It is further contended that relative has been defined in section 2(41) which states that "relative" in relation to an individual means the husband, wife, brother or sister or any lineal ascendant or descendent of that individual. In the case of the assessee, only wife is covered under the definition of section 40A(2)(b) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the family members at the rate of 24 percent and 12 percent to other than family members while prevailing bank interest rate is 12 percent Thus the Assessing Officer has justified the disallowance of excessive interest of 12 percent rate. After hearing the rival contentions and on perusal of the materials available on record, I am of the view that the assessee has received interest at the rate of 24 percent and declared the total receipt of Rs. 8,37,367 and after making payment at different rates, the net interest income of Rs.59,391 has been declared in the profit and loss account. The assessee has charged interest at the rate of 24 percent from several debtors and therefore, there was no loss of revenue to the assessee rather this is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
