TaxTMI 
TaxTMI 
2017 (9) TMI 571
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....ddition made by the AO u/s 40A(2)(b) of the Income Tax Act, 1961 since the payment is neither excessive nor unreasonable under the peculiar facts and circumstances of the case. 2. In law and in facts and circumstances of the case, the CIT (A) ought to have further held that since the AO having failed to bring any cogent evidences to justify that interest paid at 15% is excessive or unreasonable, the condition precedent for invoking section 40A(2) is not satisfied. 3. In law and in facts and circumstances of the case, the CIT (A) ought to appreciated from the details submitted before the AO that the appellant having also paid interest @ 14.4% to outsiders, the interest payment commensurate with the prevailing industry norms. The impugn....
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....l against the addition of Rs. 26,811/- under section 40A(2)(b) of the Act. 3.1. The ld. Counsel for the assessee reiterated the submissions as made in the written submissions. The ld. Counsel submitted that firstly the AO was not justified in invoking the provisions of section 40A(2)(b). He submitted that the payment is not made to the Director of the company but the company itself. 3.2. On the contrary, the ld. D/R supported the orders of the authorities below. 3.3. We have heard rival contentions, perused the material on record and gone through the orders of the authorities below. The AO has decided this issue in para 4.3 of his order as under :- " 4.3. I have considered the reply of the assessee carefully and not found sat....
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....er concern at lower interest rate. Therefore it is clear that the assessee made payment of interest on higher side to the above person specified under section 40A(2)(b) which is allowable to extent of 12.50% as prevailing in the market and the assessee company itself received interest @ 12.50%. Hence interest calculated @ 12.50% per annum on interest paid to Shri Udai Kant Mishra is allowed and balance interest paid to them is disallowed and added back to the total income of the assessee. This would result an addition of Rs. 26,811/- which is worked out as under :- S.No. Name of the persons to whom interest paid Amount of Interest Paid Rate of interest paid Amount of interest allowable to the extent of 12.50% Disallowance ....
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....Guj) * Enviro Control Associated (P) Ltd * Ramavatar Garg (ITAT Jaipur) * Udaipur Distillery Co. Ltd (Rajasthan) * Subhash Chandra (SOT ASR) * SA Builders Ltd (C) * Bansilar Gupta (SOT ASR) * Alfa rubber Industries (ASR) * Chamba Mal Roopchand (ASR) * Hynoup Food & Oil Industries Pvt Ltd(AHD) It has been repeatedly held by Hon'ble Apex Courts that the expression "for the purpose of business" is wider in scope than the expression " for the purpose of business" for earning profit. Therefore, it is required to be examined the purpose for which the assessee advanced money to its sister concerns, and what the sister concern did with the money, in order to decide whether it was for commercial expediency. But here it ....