2018 (12) TMI 1644

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....d on the facts of the case in sustaining the order of the assessing officer in making an addition of Rs. 1,18,047/- being the difference between the interest paid on the amount borrowed and interest charged on the amount lent to the firm. 2. The Ld. CIT(A) has erred in law and on the facts of the case in sustaining the order of the assessing officer capital gain of Rs. 5,75,250/- derived against sale of flats under the head "business income" instead of "capital gain". 3. Rival contentions have been heard and record perused. The brief facts of the case are that the assessee is an individual and his income consists of income from House Property and income from other sources. During the year, the assessee obtained loan and advanced....

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....d the same to the partnership firm. As per the provisions of Income Tax Act, there is a limit on interest payable to partners @ 12% whereas the loan has been raised from the bank @ 14%. The learned assessing officer has disallowed the difference on the amount borrowed and interest charged and lent to the firm. 5. It was argued by the Ld. AR that the firm had limitations in borrowing from the bank, hence, the partners borrowed money from the bank and advanced the funds to the firm. Thus, there has been commercial expediency in respect of borrowings made by the partner. Further, the firm has been able to show higher profits as under: Assessment Year Profit 2008-09 16,68,289 2009-10 16,15,469 2010-11 18,42,385 201....