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TMI Blog2018 (4) TMI 1870X X X X Extracts X X X X X X X X Extracts X X X X ..... the first instance on the plea paddled on behalf of the assessee that interest rate @ 18% cannot be seen as excessive or unreasonable having regard to the fact that the assessee has incurred interest costs at the similar rate on borrowed funds from uncontrolled parties. This fact itself proves the case of the assessee in affirmative. The revenue has not been able to counter this aspect of justification for making payment of interest alleged at higher rate qua other lenders. Therefore, we do not consider it necessary to look into the other plea of the assessee on requirement of determination of market rate of interest independently. In view of the aforesaid discussion, we do not find any infirmity in the order of the CIT(A) in drawing conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 4. The CIT(A), however, revisited the entire issue and found merit in the case of the assessee for non-applicability of section 40A(2)(b) of the Act. The relevant para of the order of the CIT(A) is reproduced hereunder:- 5.2 At para-16 of the assessment order; AO observed that the appellant had paid interest @ 18% to two directors of the company as against the interest paid @ 11% to 13% to other parties and therefore interest of 5% was considered as excessive and was being disallowed. The contentions of the Ld. A.R. are that the appellant had paid interest @ 18% to two unrelated parties namely Marineline Ship Breakers Pvt. Ltd. M/s R.K. Gupta Sons ; therefore AO's observation that the interest paid to other parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lone who have been paid interest @ 18% p.a. on the loans/advances availed but there are other parties too to whom interest @ 18% p.a. was paid on the loans/advances availed. The parties Marine Line Ship Breakers Pvt.Ltd. and R.K.Gupta Sons was referred to augment the aforesaid contention. It is thus contended on behalf of the assessee that the provisions of section 40A(2)(b) cannot be applied to interest costs towards borrowals from directors where the interest cost incurred qua non-related parties are similar and comparable. Secondly, it is contended on behalf of the assessee that the value of services i.e. market rate of interest has not been independently determined by AO at all and therefore there was no warrant for the AO to hold int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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