2016 (7) TMI 1657

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.... of interest on unsecured loans paid in excess of 18% to the persons specified u/s 40A(2)(b) of the IT Act. 2. The ld. CIT (A) has erred on facts and in law in confirming the disallowance of Rs. 93,668/- on account of interest paid on delayed payment of income tax. 3. The assessee craves to amend, alter and modify any of the grounds of appeal. 4. The appropriate cost be awarded to the assessee. 2. At the outset, the ld. Counsel for the assessee submitted that he does not wish to press ground no. 2 of the appeal. Accordingly, ground no. 2 is dismissed a not pressed. 3. Ground no. 3 is general in nature, needs no separate adjudication. 4. Ground no. 4, no arguments are addressed, therefore, the same is reje....

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....ein below for better appreciation :- ^56[Expenses or payments not deductible in certain circumstances. ^57"40A. ^58(2)(b) The persons referred to in clause (a) are the following, namely :- (i) where the assessee is an individual any relative of the assessee; (ii) where the assessee is a company, firm, association of persons or Hindu un-divided family any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member; (iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family ....

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....th or without a right to participate in profits) carrying not less than twenty per cent of the voting power; and (b) in any other case, such person is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the profits of such business or profession." There is no dispute with regard to the fact that the amount was borrowed for the purpose of business and the assessee has claimed payment of interest @ 24% per annum. However, the AO considering the same as unreasonable and excessive, restricted @ 18%. The revenue has not placed any material under the identical facts and circumstances that the fair market rate of interest is lower than what the assessee has claimed. As per section 40A(2)(b),....