2015 (10) TMI 70

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....led for, excessive and not justified in accordance with law. 2. That the disallowance of interest to a tune of Rs. 2,01,991 is illegal, excessive and against the facts on record because the assessee had given advance loan out of his capital." 3. Brief facts of the case are that the assessee, an individual, derived income from wholesale of iron and steel and G. C. sheets. He had filed return of income declaring total income at Rs. 3,64,740. The assessment was completed at a total income of Rs. 13,36,843, inter alia, making following disallowances : "1. Disallowance under section 40A(3) : Rs. 55,157 2. Charge of interest on interest-free loan : Rs. 2,01,991." 4. The learned Commissioner of Income-tax (Appeals), while partly all....

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....fore the learned Commissioner of Income-tax (Appeals). 9. The learned Departmental representative pointed out that the assessee's case does not fair within any of the exception of clauses provided under rule 6DD. 10. Having heard both sides, we find that the assessee's claim is not covered by any of the exceptions provided under rule 6DD. However, the first proviso below section 40A(3) clearly takes into consideration the nature of expenses, banking facilities, consideration of business expediency and other relevant factors. Rule 6DD in intent and purpose takes into consideration all these aspects for prescribing various exceptional circumstances. Therefore, rule 6DD cannot be mechanically applied and we have to consider the o....

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....he decision of the hon'ble Supreme Court in the case of S. A. Builders Ltd. v. CIT [2007] 288 ITR 1 (SC), wherein, it has been held that interest on money borrowed from bank lent to sister concern without charging interest is an allowable expenditure if used for the purpose of business-commercial expediency. The Assessing Officer after considering the assessee's submission pointed out that though the assessee was closely related in personal life but there was no business nexus between the two business concerns. He, accordingly, computed the interest at 12 per cent. as applicable for cash credit loans and made disallowance amounting to Rs. 2,01,991. 12. Before the learned Commissioner of Income-tax (Appeals), the assessee reiterat....