2013 (7) TMI 36

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....s wherein grounds No.1.2, 1.3, 2.1, 3 and 4 are general in nature and do not survive for adjudication. Surviving grounds No.1.0 and 2.0 are reproduced herein under for reference:- "1.0 The Ld. CIT(A)-XX, Ahmedabad has erred in law and on facts in deleting the addition of Rs.3,70,753/- made by the A. O. u/s. 40A (2) (b) of the I. T. Act, 1961 without properly appreciating the facts of the case and the material brought on record by the A. O. 2.0 The Ld. CIT(A)-XX Ahmedabad has erred in law and on facts in deleting the addition of Rs.4,56,197/- made by the A. O. on account of disallowance of interest u/s. 36 (1) (iii) of the I. T. Act, 1961 without properly appreciating the facts of the case and the material brought on record by the A. O....

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....40A (2) of the Act to be unreasonable or excessive in the facts and circumstances of the case. The borrowing at higher rate of interest is business decision of the appellant and the expenses cannot be disallowed on the ground of payment of interest at differential rate to different depositors. It has been clarified that the surplus funds have been advanced to certain parties on short term basis recoverable on notice. The interest @ 15% has been paid on substantial deposits which were utilized by the appellant for long term business activities. Also the interest rate of 15% is not abnormal. It shows business expediency and hence does not warrant any disallowance as has been made by the A. O. In view of the above, the disallowance made by the....

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....arned income on these idle funds and thus earned income which has been shown in the return of income and paid tax thereon. In view of the above, the Assessing Officer is not justified in disallowing the interest, without any specific findings and making addition of Rs.4,56,197/-. Further, the Punjab and Haryana High Court in the case of Amrit Soap Co. (2009) reported at 308 ITR 287 has held that interest paid to close relates at 18% is covered under section 40A (2) (b) of the Act. This ground is therefore allowed and the addition made of Rs.4,56,197/- is directed to be deleted." 4. Against the above findings of the learned CIT(A), the revenue is in appeal before us. 5. None appeared on behalf of the assessee on the date of hearing des....