9911796707
TMI Blog2022 (3) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 19, 06,456/- made by the assessing officer. 3. The facts in brief are that the assessee, an individual, is in the business of trading activities in shares and F&O. In the course of assessment proceedings the assessing officer noticed that the assessee has taken interest bearing loan and also advanced the same on interest. Further, it was also seen that during the year, the assessee has paid interest of Rs. 1, 43, 82,624/- and also received the interest of Rs. 58, 99,173/-. On perusal of the details of interest paid and interest received, it was found that out of total interest paid, the amount of Rs. 1,27,09,707/- was paid to the related parties and the interest was paid @ 15% whereas, the loan was given to the firm, wherein the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otteries P Ltd vs DCIT in ITA No2701/Mum/2011 for the proposition that the lower authorities were not justified in making the disallowance under section 40A (2) (b) without giving any reasons as to how the expenditure incurred was not wholly and exclusively for the business of the assessee. Further, in the case of Subhash Chander & Co 31 SOT 11 Asr) for the proposition that the co-relation of the funds contributed by the partners with the rate of interest on which the money is actually lent by the assessee for making disallowance under section 40A2)(b) is misconceived. 7. The Ld. DR, on the other hand, vehemently relied up on the orders passed by the A.O. and the CIT (A). 8. We find that in the case of Motilal Laxmichand Sanghv vs ACIT in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount paid by the assessee is excessive or unreasonable in comparison to the fair market value/price. In the case in hand, the AO has not carried out such exercise to first determine the fair value of interest rate in question by bringing any comparable instance/case So, naturally and undisputedly it would be for the business purpose only. Therefore, in our considered opinion that lower interest received on loan given to related party for business purpose cannot be subjected to provisions of section 40A(2)(b) of the Act. In the present case, having regard to the facts and circumstances referred to hereinabove, the we have arrived to a conclusion that the Assessing Officer has failed to prove by any comparable case or comparison by market rat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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