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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI R.S. SYAL
PER R.S.SYAL, VP :
This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals)-2, Thane on 01-06-2018 in relation to the assessment year 2014-15.
The first two grounds against the confirmation of addition of Rs.5,22,670/- u/s. 41(1) of the Income-tax Act, 1961
2 ITA No.1291/PUN/2018 M/s. Taloja Agro Foods Pvt. Ltd.,
(hereinafter called `the Act’) were not pressed by the ld. AR.
The same, therefore, stand dismissed.
The only other issue which survives in the appeal is
against the confirmation of addition u/s. 40A(2) of the Act on
account of interest paid on unsecured loans to the Directors.
Succinctly, the facts of the case are that the assessee paid
interest of Rs.40,70,119/- to its directors @15%. The
Assessing Officer (AO) observed that the assessee obtained
bank loans at 11.50% interest rate. The differential rate of
3.50% was treated as disallowable in terms of section 40A(2) of
the Act. The ld. CIT(A) sustained the addition at 3% by
accepting the legitimate rate of interest at 12%. The assessee is
aggrieved by the confirmation of the addition.
Having heard both the sides and gone through the relevant
material on record, it is observed from the impugned order itself
that the AO referred to bank interest rate which was a secured
loan as against the loans raised from Directors which were
unsecured. It is further observed from para 9.1 of the impugned
order that the bank had given concession of 2.90% for cash
credit facility and 3.40% for term loan. If both the concessions
3 ITA No.1291/PUN/2018 M/s. Taloja Agro Foods Pvt. Ltd.,
are factored in, the effective rate of interest comes to 14.40%.
In view of the fact that the assessee did not provide any security
in respect of loans taken from the directors at 15%, I am
satisfied that the provisions of section 40A(2) are not activated
in the peculiar facts and circumstances of the case. I, therefore,
order to delete the addition as sustained in the first appeal on
this score. This ground is allowed.
In the result, the appeal is partly allowed.
Order pronounced in the Open Court on 15th November, 2019. Sd/- (R.S.SYAL) उपा�य� उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� पुणे Pune; �दनांक Dated : 15th November, 2019 सतीश आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत / Copy of the Order is forwarded to : अ�ेिषत आदेश आदेश आदेश 1. अपीलाथ� / The Appellant; ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals)-2, Thane 4. The Pr.CIT- 2, Thane िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. // True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
ITA No.1291/PUN/2018 M/s. Taloja Agro Foods Pvt. Ltd.,
Date 1. Draft dictated on 15-11-2019 Sr.PS 2. Draft placed before author 15-11-2019 Sr.PS 3. Draft proposed & placed -- JM before the second member 4. Draft discussed/approved -- JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *