TaxTMI 
TaxTMI 
2022 (10) TMI 338
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..../Asr/2019 has one different ground which will be adjudicated end of the order. 2. The assessee has raised the following grounds which is reproduced as below:- "1. That the order of Learned C.I.T. (Appeals) is bad and against the facts and Law. 2. That the Learned C.I.T. (Appeals) has wrongly upheld addition of Rs. 3,49,750/- out of Interest expense. 3. That the Learned C.I.T. (Appeals) has wrongly upheld Rs. 416256/- u/s 40A(3). 4. That the Learned C.I.T. (Appeals) has wrongly upheld addition of Rs. 10,00,000/- on account of share application money. 5. That the Learned C.I.T. (Appeals) has wrongly upheld disallowance of telephone expense and car/scooter expense amounting to Rs. 32,995/-. 6. That the appellant craves leave to add, alter, amend or withdraw any grounds of appeal before the final hearing." 3. The brief fact of the case is thatthe assessment was completed, and the addition was made in different heads. The assessee had paidinterest related to the unsecured loan creditors @18%. The ld. AO reduced it to @12% & also, the ld. AO disallowed balance interest u/s 36(1)(iii) of the Act @ 6% on the reason that assessee w....
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....ave loan @ 9% interest. Otherwise, rate of interest of Bank was more than 18% on unsecured loans given without security. The CIT(A) allowed 15% of interest and disallowed 3% of the interest paid. Interest @18% is paid for all the years & accepted by the department in the Assessment completed under section 143(3) for Assessment year 10-11, Paper Book Page no. 34-36. Also, during Assessment year 11-12 & 13-14, the same rate of interest was accepted in assessment &completed under section 143(1) of the act. Therefore, concept of consistency has not been followed. 6.1. In this context Mr Singla respectfully relied of the following judgments which are placed before the bench:- i) M/s Raj Traders vs. ITO, Ward-1(3), Jabalpur, ITA No-91/JAB?2013 date of order-04/04/2016. The relevant paragraph is extracted as below:- "12.............We find that the disallowance has been made by the Assessing Officer on account of interest paid to relatives under sec. 40A(2) of the Act. We find that the Assessing Officer has brought no material on record to show that howthe interest paid by the assessee was excessive by comparing it with the market rate of interest on loan on the date of tak....
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....icable in this case as no oral or written agreement or contract was there. 7.1. Mr Singla has respectfully relied on judgement of High Court of Punjab and Haryanain the case of Commissioner of Income-tax, Chandigarhv.BhagwatiSteels[2011] 198 Taxman 275 (Punjab & Haryana); "Re: Question No. 1. On the first question, the Tribunal recorded a categorical finding of fact that there was no material on record to prove any written or oral agreement between the assessee and the recipients of goods for transportation or carriage thereof. The Tribunal had further observed that there was no material to show that the payments of freight had been made in pursuance to a contract of transportation of goods for a specific period, quantity or price. The aforesaid fact being an essential feature to test the applicability of section 194C of the Act as considered by Division Bench of this Court in the case of CIT (TDS) v. United Rice Land Ltd.[2010] 322 ITR 594 1. A further finding of fact is that the freight payment is Rs. 1,72,723 and none of the individual payment exceeded Rs. 20,000. It was also not disputed that the payments were made on the basis of individual GRs issued by the truck ....
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..... We heard the rival submission and considered the documents available in the record and respectfully observed the orders of the different Courts. As per ground No-2, the assessee in his business availed unsecured loan with interest @ 18%. The ld. AO compared this loan transaction with the HDFC Bank. But this comparable is not accepted because this is related to secured loan. The comparison should be in same entity level and same circumstances. Accordingly, the interest payment in the loan creditors @ 18% is accepted. During assessment the ld. AO disallowed interest u/s 36(1)(iii) @ 6 % but the 36 (1) (iii) will be applicable only for the loan debtors or advanced debtors in comparison with utilisation of loan fund, not for loan-creditors. So, the entire addition in this head is quashed. 10.1. With regard toGround-3, the assessee paid the freight for purchasing agricultural product. The freight is included in the bill amount and related with the purchase value. Also, the assessee submitted the certificate from Panchayat where it is clear that there is no bank for completing the banking transaction for payment to the transporter. This cash payment is covered under Rule 6DD(J) of t....