TaxTMI 
TaxTMI 
2012 (7) TMI 332
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....ives and connected persons without establishing the reason for paying the higher rate of interest and further erred in not considering that the assessee did not prove the nexus between the loans taken and advance and also the business exigencies. 2. During hearing, we have heard Shri Arun Dewan, learned Senior DR and Shri Anil Kamal Garg, ld. Counsel for the assessee. The crux of arguments on behalf of the Revenue is identical to the ground raised in the respective appeal whereas the ld. Counsel for the assessee defended the impugned order. 3. We have considered the rival submissions and perused the material available on the record. Since the issues involved in the respective appeal of the Revenue are identical, therefore, these appeals can be disposed of by a common and consolidated order for the sake of brevity. The facts, in brief, are that the assessee HUF is consisting of Shri Janak Gandhi, Smt. Rekha Gandhi, Shri Vijay Gandhi and Smt. Vandana B. Shah and Shri O.T. Gandhi is the Karta. The assessee family derives income from rent as well as from the business of moneylending. Moneylending business in its own name and also proprietorship concern "M/s. Vijay Finance Corpora....
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.... 5,71,100 - disallowing claim for expenses on transfer 30,000 - reducing indexed cost of acquisition (by taking the fair market value of land & building at Rs.4,96,500/- as against the same claimed by the assessee at Rs.7,60,000/-) &nb....
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.... the assertion made by the ld. respective counsel are kept in juxtaposition and analysed, we find that clearly it was not a case of disallowance u/s 36(1)(iii) of the Act based on the provisions of Sec. 40A(2)(a) of the Act because firstly, the ld. Assessing Officer has not specifically mentioned about the loans and the interest rates as to how it was excessive and at the same time, the business exigencies are to be considered by the assessee. Admittedly, it is not that in every case, the interest on borrowed loans has to be allowed but it depends on facts and circumstances of the respective case. So far as the measurement of "commercial expediency" is concerned, it has to be judged by the assessee. The expression "for the purpose of business" is wider in scope than the expression for the purpose of earning income, profit and gains. Interest and borrowals is allowable as deduction only when the borrowals are used for the purpose of business and continued as such where the assessee paid interest on borrowals for use of his business, its reasonableness is to judged by the assessee alone and the Revenue is not expected to sit on the armchair of the businessman unless and until a glari....
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....owals from banks is connected with so many formalities whereas borrowing from open market or from relatives or friends is haggle-free, though, may be on higher rate of interest. So far as establishing business exigencies are concerned, it has to be judged by the businessman and not by the Revenue unless and until some adverse material is brought on record, therefore, we find no infirmity in the conclusion drawn in the impugned orders. Same are affirmed. 4. Now, we shall take up the cross-objection of the assessee wherein it has been objected that the learned first appellate authority erred in not accepting the detailed explanation with regard to long term capital gain on the sale of the house and further not accepting the fair market value as on 1.4.1998 by rejecting the claim of loss on account of sale of the house. 4.1 During hearing of this Cross-objection, the ld. Counsel for the assessee advanced his argument which is identical to the ground raised by further explaining that one house situated at 77, Vallabh Nagar, Indore was constructed by the previous owner in the year 1960, which was sold through a registered sale deed for a consideration of Rs.30 lakhs on 6.12.2004. ....