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TMI Blog2016 (1) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... Bharat, Judicial Member Both these appeals by the Assessee are directed against the separate orders of the Ld.Commissioner of Income Tax(Appeals)-6, Ahmedabad ['CIT(A)' in short] dated 21/05/2012 21/06/2011 pertaining to Assessment Years (AY) 2009-10 2008-09 respectively. Since both these appeals relate to same assessee, these were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. First, we take up the Assessee's appeal in ITA No.2161/Ahd/2011 for AY 2008-09. The Assessee has raised the following grounds of appeal:- 1. The Ld.CIT Appeals VI Ahmedabad has erred in law and on facts in passing appellate order dated 20/06/2011 for A.Y. 2008-09 in the case of appellant by confirming disallowance of ₹ 18,77,302/- on account of interest expenses u/s.40A(2)(b) of the Act. 2. The Ld.CIT(A) has erred in law and on facts by confirming the disallowance of ₹ 15,29,863/- on account of business development expenses. 3. The appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal on or before of the final hearing of appeal. 2. Briefly stated facts are that the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered in the case of CIT vs.Glaxo Smithkline Asia (P) Ltd. reported at 236 CTR (SC) 113 :: (2010) 195 Taxman 35 :: (2010) 47 DTR 65. The ld.counsel for the assessee submitted that the case-laws relied by the ld.CIT(A) are not applicable as all the cases are pertaining to AYs 1988-89, 1988-89 and 1988-89 and 1978-79 respectively which is a very old period and interest rates of that period cannot be compared with the rates of AY 2009-10. The ld.counsel for the assessee placed reliance on the decision of Aflon Alplast Pvt.Ltd. vs. ITO (ITAT D Bench Ahmedabad)in ITA No.1186/Ahd/2012 for AY 2008-09, dated 30/01/2015. He relied on the decision of the Coordinate Bench (ITAT B Bench Ahmedabad) in the case of ACIT vs. Sh.Laxmi Bidi Trading Co. in ITA Nos.414 to 417 1952/Ahd/2009 2461/Ahd/2010, dated 29/11/2013. The ld.counsel for the assessee relied on the judgement of Hon'ble High Court of Gujarat in the case of CIT vs. Aditya Medisales Ltd. in Tax Appeal No.559 of 2009, dated 04/05/2010. He relied on the decision of the Coordinate Bench (ITAT C Bench Ahmedabad) in the case of ACIT vs. Saumya Construction P.Ltd. in ITA No.1129/Ahd/2008 for AY 2005-06, dated 13/08/2010. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance of interest expenditure. In that case, the interest was paid @24% to the related parties. The assessee has further relied on the decision of the Coordinate Bench in ITA Nos.414 to 417 1952/Ahd/2009 2491/Ahd/2010 in the case of ACIT vs. Sh.Laxmi Bidi Trading Co.(supra), wherein the Tribunal held that the Revenue has not brought any evidence as to what was the prevailing rate of interest in the market except the bank rate, therefore deleted the disallowance. In that case, the payment of interest was made at 18%. The Hon'ble High Court of Gujarat in the case of CIT vs. Aditya Medisales Ltd. in Tax Appeal No.559 of 2009, dated 04/05/2010(supra), the Hon'ble High Court upheld the finding of the Tribunal, wherein the payment to Sun Pharmaceuticals Industries Ltd. @24% p.a. was treated to be reasonable. Reliance is also placed on the decision of the Coordinate Bench in the case of ACIT vs. Saumya Construction Pvt.Ltd.(supra), in that case, the interest paid @36% was held to be reasonable. The ld.counsel for the assessee has placed reliance on the decision of the Coordinate Bench (ITAT B Bench Ahmedabad) in the case of ITO vs. Ambica Ginning Pressing (P) Ltd. in ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the issue regarding business development expenses in favour of Revenue in para-14 of its order dated 08/07/2013 by observing as under:- 14. We have heard the rival contentions and perused the materials on record. The assessee incurred the expenses on training of Mr. Aditya Agarwal, son of the director of the assessee company. The assessee had only argued the case on the basis of legal aspect but details of business development account shows that the assessee had paid fees of UK University of Sounthamtion, traveling expenses and credit card expenses. The son of the director was not employee of the assessee company and the said foreign stay expenses were personal expenses. The assessee could not establish any business purposes out of such personal expenses of the director. The burden of proof lies upon the assessee that the expenses were incurred wholly and exclusively for the purpose of the assessee's business. The Hon'ble Karnataka High Court in the case of Mac Explotee P. Ltd. Vs CIT (Kar), 286 ITR 378, the Hon'ble Madras High Court in the case of Silicon (India) Ltd. Vs DCIT (Mad), 295 ITR 422, the Hon'ble Bombay High Court in the case of Echjay Forg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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