TaxTMI 
TaxTMI 
2022 (2) TMI 605
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....Disallowance under section 40A(2) out of interest paid: On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in confirming the disallowance of Rs. 1,14,59,016/- u/s. 40A(2) made by the Ld. A.O., being alleged excessive interest paid to Bharat J. Patel, a Director of the appellant. Your appellant, therefore, prays that the Ld. AO be directed to delete the disallowance of Rs. 1,14,59,016/- made u/s. 40A(2) of the Act. 2. Disallowance of fees paid towards Investment Advisory Services: On the facts and in the circumstances of the case, and also in law, the Ld. CIT(A) erred in confirming the disallowance of Rs. 15,00,000/- made by the Ld. A.O. being professional fees paid by the appellant towards Investment A....
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....the assessment order is reproduced as under: Sr. No. Name of the party Closing balance Rate of Interest Interest paid 1. Hardik B. Patel 260,599 0 0 2. Bharat J. Patel 373,580,711 18% 34,377,049 3. Equitable Financial Consult Services P. Ltd. 2,225,000 0 0 4. Nirma Ltd. 644,485 15% 716,095 5. Runner Marketing P. ltd. 27,500,000 11% 1,315,478/- 6. Pasha Finance P. Ltd. 209,459,761 0 0 7. Bibgyor Investment and Dev. P. Ltd. 10,000,000 11% 729,315 On perusal of the aforesaid detail the assessing officer observed that assessee paid interest @ 18% to Shri Bharat J. Patel who was director in the assessee company, while the other parties, i.e M/s Runner Marketing Pvt. Ltd and....
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.... on the loan advance by it @ 18% to 36%, therefore, the A.O has restricted the payment of interest to Shri Bharat J. Patel @ 12% as against 18% of rate of interest paid by the assessee. The difference of interest amount of Rs. 1,14,59,016/- was added to the total income of the assessee. 4. Aggrieved, assessee carried the matter in appeal before the CIT(A). The ld. CIT(A) had dismissed the appeal of the assessee. 5. During the course of appellate proceedings before us the ld. Counsel referred Page No. 37 of the paper book submitted before us during the course of appellate proceedings, he submitted that the average prevailing rate of secured loan charged by the bank was about 15%. The ld. Counsel has further contended that because of risk f....
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....960/Mum/2018 of the Bombay ITAT, wherein it is held that in the absence of any material to indicate that the interest rate paid by the assessee is excessive or unreasonable, the unsecured loan taken @ 18% or even @ 20% is quite in consonance with the ground reality in business. During the course of assessment proceedings the assessee has also brought to the notice of the lower authorities that the transaction between the assessee and its director Bharat J. Patel was tax neutral since return of income of Bharat J. Patel for assessment year 2014-15 was of Rs. 3,86,04,868/- and there was no any attempt of tax evasion made by the assessee. On this issue of tax neutrality the ld. CIT(A) has stated that assessee has not filed supporting document....
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....notice that assessee has claimed an amount of Rs. 26,00,000/- under the head administrative and selling expenses on account of loan syndication fees. On query, the assessee explained that an amount of Rs. 9,00,000/- and Rs. 2,00,000/- was paid to M/s Dev D. Developers P. Ltd, and Deepak Vora for arranging loan and balance amount of Rs. 7,50,000/- each was paid to M/s Moncon Exports Pvt. Ltd, and M/s Niyoshi Trading and Investment P. ltd. for Investment Advisory Services. On the basis of supporting detail and evidences filed the assessing officer has allowed the claim of 11 lac amount paid to M/s Dev D. Developer Pvt. Ltd, and Deepak Vora for arranging of loan. However, the remaining amount of Rs. 7,50,000/- each to Moncon Exports Pvt. Ltd, ....