TaxTMI 
TaxTMI 
2023 (5) TMI 686
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....on expenses and Rs.6,95,816/- out of interest expenses made by AO is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. NFAC has grievously erred in law and or on facts in not considering fully & properly the explanation and evidence produced repeatedly with regard to the impugned disallowances. The NFAC has erred in not seeking remand report in respect of additional evidence produced by the appellant. Hence there is gross violation of principles of natural justice. 3.1 The ld. NFAC has grievously erred in law and or on facts in upholding the disallowance of Rs.5,99,300/- out of commission expenses and Rs.6,95,816/- out of interest expenses made by A.O. and thereby making addition of Rs.12,95,116/-. ....
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....al was at Rs.7,19,795/-. The Assessing Officer noticed that the assessee firm has paid interest at the rate of 18% on the unsecured loan received and, therefore, called the details. The Assessing Officer observed that there is diversion of the higher interest bearing fund to the loans given at a lower rate and, therefore, made addition of Rs.6,95,816/- as interest expenses. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A) and the CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that as regards to commission expenses claimed to the extent of Rs.10,44,397/- out of which commission of Rs.5,99,300/- was paid to four parties and the assessee has given the details of their copy of retur....
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....e disallowance and interest expenses which is second issue to the extent of Rs.6,95,816/-, the Assessing Officer failed to take cognisance that the rate of interest paid on unsecured loans depends upon number of factors such as availability of funds, market condition, urgency, terms of repayment, period of repayment etc. The list of parties to whom interest was paid at 18% is pointed out by the Ld. AR through ledger account vis-à-vis the nature of transactions with M. Kumar Enterprise whereas most of the parties of unsecured loans had a few/Nil transactions during the year and C/F balances. Thus, the Ld. AR submitted that in the light of CBDT Circular No. 6P dated 06.07.1968 which was considered in the case of Gujarat Gas Financial S....