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TMI Blog2015 (9) TMI 1411X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under these Acts, then assessee will not be entitled for deduction. - Decided against revenue Addition u/s.40A(2)(b) - Held that:- The payment of interest at a little higher rate to the persons even if covered u/s.40A(2)(b) cannot be termed as exorbitant when the fair market value of such interest cost is being considered. The assessee has paid interest commensurate with the interest rate prevailing in the open market. An order in case of Vipul Y. Mehta vs. ACIT [2010 (7) TMI 1051 - ITAT AHMEDABAD] has been brought to our notice, wherein Tribunal has upheld the allowance of the interest rate @ 18% per annum to the relatives on unsecured loan. Considering all these aspects, we are of the view that ld. First Appellate Authority has appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income on 27.09.2009 declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and a notice u/s.143(2) of the Income Tax Act was issued on 25th September, 2010, which was duly served upon the assessee. On scrutiny of the accounts, it reveals to the Assessing Officer that assessee has collected the employees' contribution but failed to make deposits of such amounts in the PF accounts of those employees within time limit provided under the PF and ESI Act. Therefore, the Assessing Officer has made a disallowance of ₹ 1,81,414/-. 4. On appeal, ld. First Appellate Authority has deleted the disallowance on the ground that these amounts have been paid before the due date of filing of return and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cama Motors Pvt. Ltd. Interest @ 16% ₹ 4,78,846/- Interest @ 12% ₹ 3,83,077/- Difference ₹ 95,769/- Accordingly, excess payment of interest of ₹ 6,83,311/- is disallowed." 8. On appeal, ld. CIT(A) has deleted the disallowance. We find from the computation of income in the assessment order that Assessing Officer has made disallowance of ₹ 6,83,311/-. However, in the ground, Revenue has taken a figure of ₹ 21,83,749/-. This figure does not emerge from the impugned orders. It is an erroneous mention of the ground. 9. With the assistance of ld. Sr. D.R., we have gone through the record carefully. Section 40A(2)(b) contemplates that if some undue benefit is being extended by the assessee to the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal has upheld the allowance of the interest rate @ 18% per annum to the relatives on unsecured loan. Considering all these aspects, we are of the view that ld. First Appellate Authority has appreciated the controversy in right perspective. Assessee has not extended any undue benefit to the persons covered u/s.40A(2)(b) of the Income Tax Act. This ground of Revenue's appeal is rejected. 10. In the next ground of appeal, Revenue has pleaded that ld. CIT(A) has erred in deleting the addition made by Assessing Officer u/s.2(22)(e) of the Act. 11. The brief facts of the case are that on perusal of the accounts, it reveals to the Assessing Officer that assessee has received an amount of ₹ 62,06,638/- from Cama Motors Pvt. Ltd. and recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T in case of ACIT vs. Bhaumik Colour Pvt. Ltd. reported in 118 ITD 1. This decision of ITAT has been upheld by the Hon'ble Bombay High Court. Hon'ble Delhi High Court has also held in case of CIT vs. Ankitech (P.) Ltd. in [2012] 340 ITR 14 that the assessee should be a share holder in the lender company and such holding should be more than 10% of the voting rights, only then Section 2(22)(e) would be attracted. Hon'ble Jurisdictional High Court has also concurred with hon'ble Delhi High Court. Therefore, respectfully following the decision of Hon'ble Gujarat High Court in case of CIT vs. Daisy Packers (p.) Ltd. (supra), we do not find any error in the order of ld. CIT(A) on this issue. This ground of appeal is rejected. 14. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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