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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-2’, NEW DELHI
Before: SHRI J. SUDHAKAR REDDY
This is an appeal filed by the assessee against the order dt. 07.07.2014 of Ld.CIT(A), Meerut for Assessment Year 2009-10. There is a delay of 01 day for filing of the appeal, the same is condoned and appeal admitted.
The sole issue that has to be adjudicated by me is the disallowance of 6% interest paid, u/s 40A(2)(b) of the Income Tax Act, 1961 (the Act). The assessee paid 18% interest on loans taken from two persons who are admittedly covered within the ambit of S.40A(2) of the Act. The A.O. was of the view that interest rate of 12% is the fair market value for interest on loan and hence he disallowed 6% of the interest claimed as excessive payment. The Ld.CIT(A) upheld the same.
I am of the considered view that the disallowance is not called for, as the interest rate of 18% on unsecured loans is fair and reasonable.
ITA 5111/Del/2014 A.Y. 2009-10 DK Col Storage & General Mills Borrowing from banks carries interest costs of around 15% to 18%. Under these circumstances the claim of the assessee is justified. In the result the disallowance is deleted and the appeal of the assessee is allowed.
In the result, the appeal by the assessee stands allowed.
Order pronounced in the Open Court on 14th October,2015.