ABHAY KANTILAL TATED,NASHIK vs. ITO WARD 2(1), NASHIK, NASHIK

The captioned appeal at the instance of assessee pertaining to A.Y. 2020-21 is directed against the order dated 05.12.2025 framed by National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 20.09.2022 passed u/s.143(3) r.w.s.144B of the Income Tax Act, 1961 (in short ‘the Act’).

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being selected for scrutiny for various reasons mentioned in the assessment order valid statutory notices were served. So far as the issue under consideration is concerned, ld. Assessing Officer during the course of assessment proceedings observed that under the head ‘Income from other sources’ assessee has shown interest received and interest paid. The interest received ranges from 6% to 15% whereas the interest paid ranges from 8% to 15%. Ld. Assessing Officer specifically took note of two parties namely Pancharatna Buildcon Pvt. Ltd. and Bafna Realtors Pvt. Ltd. from which major amount of interest was received @6%. Assessee stated that the above referred companies are related parties as the assessee is Director in both these companies and therefore less rate of interest has been charged. However, ld. Assessing Officer was not satisfied and he took the benchmark of 6% interest rate and recomputed interest payment by applying 6% thereby reducing the claim of expenditure at Rs.21,97,114/-. Assessee carried the matter before ld.CIT(A) and pleaded that loans were to the related parties and also contended that assessee has sufficient interest free funds available to cover up the loans and advances given to the alleged related parties. However, assessee failed to get any relief. Now the assessee is in appeal before this Tribunal.

Rs.22.24 crore. Interest bearing funds are Rs.40.21 crore and interest bearing loans and advances are Rs.17.21 crore. I find that the two parties namely Pancharatna Buildcon Pvt. Ltd. and Bafna Realtors Pvt. Ltd. are related to the assessee as he is a Director in both these companies and the loans have been given for commercial expediency purposes and therefore even if low rate of interest has been charged the same should be accepted. I also take note of the funds available with the assessee and note that the interest free funds available are more than the funds advanced to both the two parties. On this ground itself, assessee’s claim of receiving 6% interest income is to be accepted and therefore reverse working made by the Assessing Officer denying the claim of rate of interest actually paid by the assessee ranging from 8-15% and applying average rate of 6% is uncalled for and is not in accordance with law. Therefore, finding of ld.CIT(A) is set aside and disallowance of Rs.21,97,114/- stands deleted. Grounds raised by the assessee are allowed.

Order pronounced on this 30th day of April, 2026. (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; दिन ांक / Dated : 30th April, 2026. Satish

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Satish Kumar Madishetty आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

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