2019 (10) TMI 184

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....ese appeals pertaining to the same assessee and involving common issues, except variation in figures, are arising out of identical set of facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed of by way of this consolidated order. 3. Ground no.1, in all these appeals is general in nature, hence, does not require adjudication. 4. In ground no.2, the assessee has challenged the disallowance of interest expenditure under section 40A(2)(b) of the Income Tax Act, 1961 (for short "the Act"). 5. Brief facts are, the assessee is a partnership firm engaged in the business of trading in iron and steel, tubes and pipes, etc. For the assessment years under dispute, the assessee ....

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....dingly, the Assessing Officer restricted assessee's claim with regard to interest expenditure on unsecured loans to 12% per annum by invoking the provisions of section 40A(2)(b) of the Act. As a result, the following disallowances out of interest expenditure were made in different assessment years under appeal:- A.Y. 2012-13 Rs. 7,60,187 A.Y. 2013-14 Rs. 13,51,383 A.Y. 2014-15 Rs. 17,08,235 6. Being aggrieved with the aforesaid disallowances, though, the assessee preferred appeals before learned Commissioner (Appeals), however, it did not succeed. 7. The learned Authorised Representative submitted, before invoking the provisions of section 40A(2)(b) of the Act, the Assessing Officer has not recorded any satisfaction ....

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.... the assessee in respect of payment made to any related party/associated concern is excessive or unreasonable having regard to the fair market value, disallowance has to be made under the said provision. Therefore, before making any disallowance under the said provision, two conditions have to be satisfied. Firstly, the payment in respect of which deduction has been claimed must have been made to a related party and secondly, such payment must be excessive and unreasonable having regard to the market rate. Therefore, the Assessing Officer must form an opinion objectively on the basis of material brought on record to demonstrate that the payment made by the assessee is excessive and unreasonable having regard to the market rate. No doubt,....

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....cordingly, we delete the disallowances made by the Assessing Officer in all the assessment years under appeal. Grounds are allowed. 10. In ground no.3 in all the appeals, the assessee has challenged ad-hoc disallowance made out of various expenses debited to the Profit & Loss account. 11. During the assessment proceedings, the Assessing Officer noticed that the assessee had debited expenditure to the Profit & Loss account under various heads such as telephone expenses, motor car expenses, sales promotion expenses, travel expenses, etc. Therefore, he called upon the assessee to furnish the supporting details to prove its claim. Further, he called upon the assessee to substantiate that no personal element is involved in such expenses. A....