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TMI Blog2022 (11) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee is dismissed in terms of the aforesaid observations. Disallowance u/s 40A(2)(A) of interest charges that were paid by the assessee to her seven family members - AO had while making the aforesaid disallowance resorted to the comparison between the unlikes i.e. comparison between interest rate paid on unsecured loan, as against that paid on loans raised from a bank. As Section 40A(2)(a) of the Act presupposes a comparison between likes on the basis of which it could be gathered that the expenditure booked by the assessee as being excessive or unreasonable, therefore, the very basis leading to the aforesaid disallowance does not find favour for the reason that as in comparison to the loans raised from a bank which involves substantial formalities, hidden charges and offering of collateral securities etc., the raising of unsecured loan from a family member involves neither of such issues. Thus we are unable to concur with the very basis leading to drawing of adverse inference by the lower authorities, and thus, is of the considered view that the matter in all fairness requires to be restored to the file of the A.O, with a direction to re-adjudicate the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2013, declaring an income of Rs.7,62,630/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment proceedings, it was, inter alia, observed by the A.O that the assessee had in her capital account credited an amount of Rs.23,15,025/- towards value of a Mercedes Benz Car. On being queried about the source of acquisition of the aforesaid car, it was submitted by the assessee that the same was received by her as a gift out of natural love and affection from the owner of M/s. J.K Tyres Industries Ltd. It was the claim of the assessee that the aforesaid car was first purchased and registered in the name of M/s. J.K Tyres Industries Ltd., and thus, was a second hand car that was gifted to her. In order to substantiate the aforesaid gift transaction the assessee filed with the A.O a copy of the gift deed in support thereof. On being queried as to why the value of the said car of Rs.23,15,025/- credited in the capital account may not be treated as her income u/s. 28(iv) of the Act, the assesee failed to come forth with any reply. In order to verify the factual position the A.O made necessary veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,84,137/- 18% Apart from that, it was observed by the A.O that though the assessee had paid interest @18% to Mrs. Chandra Khatuja alias Sarita Khatuja of Rs.1,46,927/-, but the latter person had not disclosed the said interest income in her income tax return. It was observed by the A.O that the assessee was availing Cash Credit Account with SBI with a limit of Rs.80 lacs on which interest was being charged by the bank @12.35%. It was also observed by the A.O that the assessee had not utilized its Cash Credit Account to its maximum limit of Rs.80 lacs through out the year. In reply, it was the claim of the assessee that the cash credit limit of Rs.47 lacs was increased to Rs.80 Lacs only in February, 2013. Considering the fact that loans were easily available in the market from financial institutions and private parties @ 12% to 15%, the A.O was of the view that the interest paid by the assessee to the aforementioned persons and to Smt. Chandra Khatuja @18% was excessive. Accordingly, the A.O restricted the assessee s claim for deduction of interest charges to 15% and made a disallowance of the excess interest charges of Rs.3,22,898/- (o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs.23,15,025/- (supra) towards value of a Mercedez Benz car that was credited in the capital account of the assessee, and was claimed to have been received as a gift from the owner of M/s. J.K Tyres Industries Ltd. As per the records, it was gathered by the A.O that the aforesaid vehicle was gifted by M/s J.K Tyres Industries Ltd. to the assessee on having achieved its sale targets. Considering the aforesaid fat the A.O called upon the assessee to explain as to why the value of the aforesaid car may not be brought to tax in her hands u/s 28(iv) of the Act, which, we find was accepted by the assessee. Before proceeding any further, I deem it fit to cull out sub-section (iv) of Section 28 of the Act, as under: 28. The following income shall be chargeable to income-tax under the head profits and gains of business or profession,- .. (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession; As confirmed by M/s. J.K Tyres Industries Ltd., the aforesaid car was given to the assessee for achievement of prescribed sales target. Also, there is no denying of the fact that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember involves neither of such issues. Considering the aforesaid facts, I am unable to concur with the very basis leading to drawing of adverse inference by the lower authorities, and thus, is of the considered view that the matter in all fairness requires to be restored to the file of the A.O, with a direction to re-adjudicate the issue after considering the rates at which unsecured loans at the relevant point of time would be available. Needless to say, the A.O in the course of setaside proceeding shall grant a reasonable opportunity of being heard to the assessee, who will remain at a liberty to place on record supporting documentary evidence to substantiate her claim. Thus, the Ground of appeal No.2 raised by the assessee is allowed for statistical purposes in terms of the aforesaid observation. 11. Adverting to the addition of Rs.84,958/- qua the difference in the account of MRF Tyres Industries Ltd., I am of the considered view that as the assessee had not only failed to reconcile the aforesaid discrepancy before the lower authorities, but also adopting callous approach had not placed on record anything to substantiate the same in the course of the proceedings before me, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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