TaxTMI 
TaxTMI 
2024 (11) TMI 531
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....143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Subsequently, the case was selected under CASS for complete scrutiny under the E-assessment Scheme, 2019. Accordingly, statutory notice u/s 142(1) of the Act was issued and served on the assessee to which, the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. 3. During the course of assessment proceedings the Assessing Officer noted that the assessee has debited an amount of Rs. 51,84,792/- as interest on unsecured loans. He noted that the unsecured loans were outstanding at Rs. 5,02,96,865/- as on 31.03.2018. The assessee has further given loans and advances amounting to Rs. 1,15,67,000/- during the year und....
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....to whom interest has been paid. After considering the various details furnished by the assessee and observing that the assessee has paid interest ranging from 17% to 23% whereas the banks are charging interest ranging from 9% to 12% on business loans, he adopted the interest rate of 15% on unsecured loans as reasonable and accordingly made addition of Rs. 4,55,190/- as excess interest paid. 6. In appeal, the CIT(A) / NFAC dismissed the appeal filed by the assessee. 7. Aggrieved with such order of CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: The following grounds are taken without prejudice to each other - On facts and in law, 1] The learned CIT(A) erred in confirming the di....
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....learned CTT(A) erred in confirming the disallowance of interest of Rs. 4,55,190/- on the ground that the assessee had paid interest on the loans taken from a few persons at a rate much higher rate than the market rate. 6] The learned CIT(A) failed to appreciate that the persons to whom higher rate of interest was paid were not related with the assessee and hence, there was no question of making any disallowance of the interest amount. 7] The learned CIT(A) erred in not appreciating that in the earlier years, the learned A.O. had accepted payment of interest at a higher rate and hence, there was no reason to take a different view in the year under consideration. 8] The learned CIT(A) failed to appreciate that the assessee had taken uns....
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....lowance u/s 36(1)(iii) of the Act is called for. 10. So far as the second issue is concerned, he submitted that the assessee has paid interest on unsecured loans running from 17% to 23%. He submitted that the Assessing Officer has not doubted the genuineness of such unsecured loans but he has restricted the interest to 15%. He submitted that none of the parties are related to the assessee. Referring to the copy of the assessment order for assessment year 2016-17 placed at pages 57 to 59 of the paper book, he submitted that no such disallowance has been made in the order passed u/s 143(3) of the Act. Similarly, for assessment year 2017-18 also, the Assessing Officer has passed the order u/s 143(3) of the Act, copy of which is placed at page....
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....the assessee has given interest free loans / advances of only Rs. 94,70,000/-. The Hon'ble Supreme Court in the case of South Indian Bank Ltd. vs. CIT (supra) has held that when the assessee having sufficient interest free funds of their own greater than the investments, proportionate disallowance of interest paid is not called for. The Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities Ltd. (supra) has held that if there were funds available both interest free and overdraft and / or loans taken, then a presumption would arise that the investment would be out of interest free funds generated or available with the company, if the interest free funds are sufficient to meet the investments and accordingly upheld the decisi....