2018 (4) TMI 629

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....f the Revenue reads as under:- "(1) The Ld.CIT(A) has erred in law and on facts in allowing the appeal on the issue of disallowance of interest amounting to Rs. 35,90,804/- made invoking the provisions of section 40A(2)(b) of the I.T.Act without properly appreciating the facts of the case. (2) On the facts and circumstances of the case, the Ld.CIT (A) ought to have upheld the order of the Assessing Officer. (3) It is therefore prayed that the order of the Ld. CIT(A) may be set aside and that of the order of the Assessing Officer be restored to the above extent." 3. The brief facts of the case are that during the year under consideration, the assessee has engaged in the business of Money Landing and has shown in....

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.... rate of interest from related parties at a rate of 12 or above and charging interest income at lower rate of interest has given a benefit of loss of Rs. 3,26,32,132/- which in turn utilized to set off income earned by giving loans and advances. Related Party Transaction Unsecured loan   Loans and Advances No of parties Rate of interest   No of parties Rate of interest 16 12.5   17 8 6 12   2 6 1 10   1 5 8 8   1 13 3 5         8. As per ....

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....ated parties interest has been charged at the rate of 8% or lower rate. So the difference of the above rates were considered for disallowance u/s.40A(2)(b) of the I.T. Act. 11. Ld. AR stated that the rate of interest depends upon the number of factors such as amount of loan, period of loan, creditworthiness of the parties etc. Since the business of the appellant was of financing, these interest rate keeps on changing depending upon the demand and supply of fund requirements. Since the assessee first has having the surplus funds and there was no demand that is why the surplus funds given to the parties on lower rate of interest. Further also it was argued by the ld. AO that the interest rates depend upon various other factors also like th....