2016 (7) TMI 1452

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..... n the case of Sarjan Realities Ltd. [2014 (8) TMI 206 - GUJARAT HIGH COURT] In so far as the rate of interest at 18% considered to be excessive, the Co-ordinate Bench in the case of Vipul Y. Mehta (2010 (7) TMI 1051 - ITAT AHMEDABAD) has held that the payment of interest @ 18% per annum to the relatives on unsecured loans cannot be said to be excessive or unreasonable. - Decided in favour of assessee.
SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER Appellant by : Shri S.N. Soparkar with Parin Shah, AR Respondent by : Shri K. Madhusudan, Sr. D.R. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA Nos. 239 & 1836/Ahd/2012 are two separate appeals by the Assessee preferred against two different orders of .....

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..... id interest @ 18% to the related parties whereas it has paid interest to unrelated parties @ 12%. Therefore, computed the disallowance being difference of interest @ 18% and interest @ 12%. Addition of ₹ 31,10,556/- was made in A.Y. 2008-09, an addition of ₹ 41,60,927/- was made in A.Y. 2009-10. 7. Assessee carried the matter before the ld. CIT(A) but without any success. 8. Before us, the ld. counsel for the assessee vehemently submitted that payment of interest @ 18% per annum cannot be considered as excessive. In support, the ld. counsel relied upon the decision of the Co-ordinate Bench in the case of Asian Mills Pvt. Ltd. in ITA Nos. 1382/Ahd/2011 and 2161/Ahd/2011 and also on in ITA No. 869/Ahd/2010 in the case of Vipul Y .....

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..... ehalf of the revenue that considering the market rate the aforesaid interest paid at the rate of 12 per cent can be said to be excessive and/or unreasonable. Under the circumstances, solely because the assessee for whatever reasons/consideration paid the interest at different rates by that itself cannot be a ground to come to the conclusion that paying of interest at higher rate than paid to other party was excessive and/or unreasonable. Under the circumstances, both/the commissioner (Appeals) as well as the tribunal have rightly deleted the disallowance of ₹ 1.22 crores made by the Assessing Officer under section 40A(2)(b). Under the circumstances, question is answered against the revenue. [Para 4.0]" 11. In so far as the rate of in .....

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