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TMI Blog2018 (4) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... ee with this contention of the assessee. We modify the order passed by the learned CIT(A) and direct the Assessing Officer to compute differential interest income by adopting interest rate at 9.5%. Disallowance of expenses relating to IPR - Held that:- We agree with the contentions of the assessee that concept of prior period expenses cannot be applied in the instant case, since the assessee has acquired the rights over the IPR over a period. Under revenue cost matching principle, all the expenditure incurred in acquiring IPR have to be treated as revenue expenditure irrespective of the year in which it was incurred and has to be allowed against sales revenue of IPR. With regard to the remaining disallowance, the learned AR submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , availability of funds, past performance, period and size of loan etc., yet the Assessing Officer took the view that charging of interest at a lower rates like 3.25%, 4.25%, 6% etc. is not a prudent practice followed by a prudent businessman. Accordingly the Assessing Officer took the view that interest should have been charged by the assessee @ 14% on the money advanced by him. Accordingly, the Assessing Officer, computed difference in interest income at ₹ 4,98,786/- by applying rate of interest @ 14% and added the same to the total income of the assessee. 3. The learned CIT(A) gave partial relief to the assessee by directing the Assessing Officer to compute interest on loan by adopting interest rate of 12%. Still aggrieved, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey at such a lower rate, when he is borrowing money @ 9% and 10%. The purpose of carrying business is to earn profit and no businessman will do this knowing full well that he would be incurring loss in this process. We notice that the assessee has not cited any compelling reasons for lending money at such a lower rate. We notice that the assessee is having long relationship with Patel group, to whom these loans have been given. Hence we find merit in the contentions of the Ld D.R that the action of the assessee is beyond the scope of human probabilities. Under these set of facts, we are of the view that the tax authorities are justified in computing interest income by adopting higher rate of interest. Since, the assessee has borrowed loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of ₹ 210 lakhs. The assessee claimed a sum of ₹ 28.63 lakhs as expenditure and offered balance amount of ₹ 181.37 lakhs as his income under the head income from other sources . The Assessing Officer examined the details of expenditure claimed by the assessee. He took the view that certain portion of expenses claimed by the assessee included prior period items and in respect of certain items the assessee did not furnish evidences. Accordingly, he disallowed a sum of ₹ 11.85 lakhs from the claim of ₹ 28.63 lakhs made by the assessee. The learned CIT(A) also confirmed the same and hence the assessee has filed this appeal before us. 8. We heard the parties on this issue and perused the record. The Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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