TaxTMI 
TaxTMI 
2022 (4) TMI 176
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.... scrutiny and thereafter the assessment was framed under section 143(3) of the I.T. Act, 1961 vide order dated 30.12.2016 wherein the total income was determined at Rs.,3,63,63,281/-. 2.2. Aggrieved by the order of the A.O. assessee carried the matter in appeal before the Ld. CIT(A) who vide order dated 3rd July 2018 in Appeal No.594/16-17 dated 03.07.2018 has allowed the Appeal of the assessee. 3. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal and has raised the following Grounds : 1. On the facts and circumstances of the case the learned CIT(A) has erred in deleting the addition u/s 2(22)(e) of Rs. 85,45,000/- without appreciating the detailed reasons given in the assessment order and without appreciating the fact that even if the payments have been transferred from M/s Samara India Pvt. Ltd. to the assessee company on the instruction of Sh. Rajnish Wadhawan as held by the Ld. CIT(A) then also the transaction between M/s Samara India Pvt. Ltd. and the assessee company was loan transaction and thus the provision u/s 2(22)(e) was applicable. 2. On the facts and circumstances of the case the Ld.CIT(A) erred in delet....
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....t since M/s. Samara India Private Limited and assessee were both Private Limited companies, they cannot be treated as company in which public are substantially interested. In view of his aforesaid observations, the A.O. asked the assessee to show cause as to why the amount of Rs. 80,45,000/- received by the assessee from Samara India Private Limited not be treated as deemed dividend under section 2(22)(e) of the Income Tax Act 1961. 5.3. The assessee inter alia, submitted that there was no transaction between M/s. Samara India Private Limited and the assessee company. It was submitted that Shri Rajnish Wadhwan, Director had given loan to M/s. Samara India Private Limited and Samara India Private Limited was directed to issue a cheque by debiting his loan account. The submissions of the assessee were not found acceptable to A.O. The A.O. held that the provisions of section 2(22)(e) were attracted in the present case. He accordingly made addition of Rs. 85,45,000/- as deemed dividend under section 2(22)(e) of the Income Tax Act 1961. 5.4. Aggrieved by the order of the A.O. assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A) it was inter alia submitted that ....
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....thus, supported the order of the Ld. CIT(A). 9. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the deletion of addition of the deemed dividend made by the A.O. under section 2(22)(e) of the Income Tax Act 1961. The A.O. had made addition under section 2(22)(e) of the I.T. Act, 1961 on account of the loan received by the assessee from M/s. Samara India Private Limited. The Ld. CIT(A) after considering the submissions of the assessee, the bank account, the ledger account of the loan balances in the books of the assessee as well as the related company, has given a finding that the transaction involved was not in the nature of loan from M/s. Samara India Private Limited to assessee, but, rather it was a loan transaction between Shri Rajnish Wadhwan and the assessee wherein the funds were transferred on his direction from his loan account with M/s. Samara India Private Limited to the assessee company and, therefore, the provisions of section 2(22)(e) of the Income Tax Act, 1961 are not applicable. Before us no fallacy in the findings of the Ld. CIT(A) has been pointed out by the Revenue. In such cir....
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....relevant year was in the range of 14.45% to 14.75% per annum for secured loans and the interest rate for the concerns in real estate business was around 20% per annum and considering the business exigency, the interest paid by the assessee was not excessive. 10.2. The Ld. CIT(A) agreed with the view of the assessee that the interest rate of secured loan cannot be compared with that of the unsecured loan, but, however held that Benchmark Prime lending rate of the bank was the most appropriate tool to determine whether interest paid was in excess or not. He accordingly held that the assessee can be given the benefit of interest payment at a maximum BPLR rate at 14.5% to 15% applicable during the year and the difference may be disallowed. He accordingly directed the A.O. to re-compute the disallowance at the rate difference between the prime lending rate vis-à-vis the rate on which the assessee paid interest. He thus accordingly granted partial relief to the assessee. 11. Aggrieved by the order of the Ld. CIT(A), the Revenue is now before us and to the extent of addition upheld by CIT(A), Assessee is before us in the CO. 12. Before us, the Ld. D.R. took us to go throug....
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....r unreasonableness. The Assessing Officer must establish that the payment is excessive or unreasonable. The authorities cannot proceed merely on the basis of surmises and conjectures. 14.2. It is an undisputed fact that assessee had obtained the secured loan from Bank at 9.56% whereas the loan received from M/s. Samara Automax Private Limited, a related party, was an unsecured loan at 16.34%. 14.3. It is a universally accepted fact that the rate of interest at which secured loans are available are lower than the rates at which the unsecured loans are available in view of the basic underlying nature of the loan. It is a well-known fact that the interest charged on unsecured loans are higher than the interest charged on secured loans in view of the fact that secured loans as the name suggests, are secured and are generally secured either by a mortgage or hypothecation of certain properties, whereas on the other hand, unsecured loans are not secured and therefore the lender carries much more risk and therefore the rates at which the amount lent on secured loans are lower than the rates at which the unsecured loans are lent. Before us, the Learned AR has pointed to the State Bank....
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....of the view that assessee has failed to prove the primary source of its fund, the creditworthiness in respect of the loan. He, therefore, out of the total loans of Rs. 15,78,79,446/- received from various parties, considered the loan to the extent of Rs. 2 crores only received from Shri Avinash Wadhwan to be unexplained and made its addition under section 68 of the Income Tax Act 1961. 15.3. Aggrieved by the order of the A.O, the assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A) the assessee reiterated that Shri Avinash Wadhwan was a non-resident based out of Kuwait since more than 45 years and he was engaged in the business of trading of Automobile parts and all the investments made by him in the past were out of the foreign remittances through proper banking channels. In support of his aforesaid contentions, assessee also filed the copies of the PAN, ITR, bank statements, audited financial statements of M/s. Samara India Private Limited and M/s. Samara Automax India Private Limited and statement of accounts. It was further submitted that the income tax return filed in India reflected only the income that accrued in India. The Ld. CIT(A) after considering....
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....ores and fixed assets of 97.3 lakhs. As noted earlier, Mr. Avinash Wadhawan being a non resident Indian i.e NRI who is residing in Kuwait since long has also been assessed for his Indian income. Assessment has been made without any adverse finding by the AO in the AY 2013-14 wherein his returned income at Rs. 18.60 lakhs has been accepted whereas in the assessment year 2014-15 his income has been accepted under 143(1) of the Act. 5.17 Thus, from the details and documents filed before the AO and also submitted before the undersigned being called for, the appellant company is found to have discharged its onus of proving identity, creditworthiness and genuineness of transaction. The details of financial facts do not leave any scope of adverse interpretation in terms of S. 68 of the Act. Resultantly, the loan of Rs. 2 crores provided by the Sh. Avinash Wadhawan to the appellant company is found a bonafide and explained transaction. Hence, the impugned addition is directed to be deleted. The appellant succeeds in this ground of appeal." 16. Aggrieved by the order of the Ld. CIT(A), the Revenue is now before us. 17. Before us, the Ld. D.R. supported the order of the A.O. ....
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....her interest. He also noticed that assessee had advanced money to different parties for booking or purchases of properties and balances of these advances outstanding as on 31st March 2014 were Rs. 7,41,53,685/-. The assessee was asked to prove the nexus between the borrowings for which financing charges were paid and the business activities carried out by it. 20.2. The assessee inter-alia, submitted that the assessee had paid interest amounting to Rs. 93,74,077/- on loan taken from M/s. Samara Auto Max Private Limited and Rs. 1,44,16,341/- on the overdraft loan taken from Punjab and Sind Bank. It was further submitted that the loan from M/s. Samara Auto Max Private Limited was taken for purchase of shop at Vasant Kunj Mahal and the overdraft facility from Punjab and Sind Bank was taken against the security on fixed deposit. It was further submitted that the loan was for the purpose of business. The submissions of the assessee were not found acceptable to A.O. The A.O. noted that the assessee had utilized the aggregate loan amounting to Rs. 14.53 crores for giving advance for purchase of shops, for which, no possession has been received by assessee till date. He noted that since ....