The ITO, Ward-7(4), Ahmedabad V. Shri Harishbhai Keshavlal Patel, Ahmedabad

ITA 1494/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0322 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-08-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI T K SHARMA, JUDICIAL MEMBER AND SHRI N S SAINI, ACCOUNTANT MEMBER ITA NO.1494/AHD/2010 (ASSESSMENT YEAR:-2001-02) THE INCOME-TAX OFFICER, WARD-7(4), AHMEDABAD V/S SHRI HARISHBHAI KESHAVLAL PATEL, 23-D, AJANTA COMMERCIAL CENTRE, NR. INCOME-TAX CIRCLE, ASHRAM ROAD, AHMEDABAD PA NO. AABHH 7526 K [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI K M MAHESH, SR. DR RESPONDENT BY:- NONE O R D E R PER T K SHARMA (JM): THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 19-02-2010 OF LEARNED COMMISSIONER OF INCOME- TAX (APPEALS)-XXI, AHMEDABAD [THE CIT(A)] FOR ASS ESSMENT YEAR (AY) 2001-02. THE ONLY GROUND RAISED IN THIS A PPEAL READS AS UNDER:- THE LD. CIT(A)-XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.82,964/- ON ACCOUNT OF INTEREST PAID TO PERSONS SPECIFIED U/S 40A(2)(B). 2 AT THE OUTSET, NONE APPEARED ON BEHALF OF THE ASS ESSEE. WE, THEREFORE, DECIDED TO DISPOSE OF THE APPEAL AFTER H EARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. ITA NO.1494/AHD/2010 FOR AY 2001-02 SHRI HARISHBHAI K PATEL 2 3 BRIEFLY STATED, THE FACTS ARE THE ASSESSEE-HUF HA S PAID INTEREST TO SEVEN PERSONS COVERED U/S 40A(2)(B) OF THE INCOME-TAX ACT, 1961 [THE ACT] AT THE RATE OF 18% P.A. WHERE AS TO OTHERS, THE INTEREST WAS PAID AT THE RATE OF 12% AND 15%. T HUS, THE DIFFERENCE OF INTEREST AT THE RATE OF 12% AND 15% C OMES TO RS.82,964/-. THE AO MADE AN ADDITION OF THIS AMOUNT U/S 40A(2)(B) OF THE ACT. 4 ON APPEAL, THE LEARNED CIT(A) IN THE IMPUGNED ORD ER DELETED THE SAID ADDITION. 5 AT THE TIME OF HEARING BEFORE US, ON BEHALF OF TH E REVENUE SHRI K M MAHESH, SENIOR DR APPEARED AND RELYING ON THE REASONING GIVEN BY THE AO IN THE ASSESSMENT ORDER, CONTENDED THAT THE AO HAS RIGHTLY MADE THE DISALLOWANCE AND T HE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE SAME. 6 AFTER HEARING THE LEARNED DR, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE HO N'BLE SUPREME COURT IN THE CASE OF UPPER INDIA HOUSE (P) LTD. VS. CIT (1997) 117 ITR 569 (SC) HELD THAT SECTION 40A(2)(B) CANNOT HAVE ANY APPLICATION UNLESS IT IS FIRST HELD THAT THE EXPEND ITURE WAS EXCESSIVE OR UNREASONABLE. AT THE RELEVANT TIME, TH E RATE OF INTEREST PAID @ 18% WAS NEITHER EXCESSIVE NOR UNREA SONABLE. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT TH E LEARNED CIT(A) IS LEGALLY AND FACTUALLY CORRECT IN DELETING THE DISALLOWANCE OF INTEREST MADE BY THE AO BY INVOKING THE ITA NO.1494/AHD/2010 FOR AY 2001-02 SHRI HARISHBHAI K PATEL 3 PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. WE, TH EREFORE, DECLINE TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) AND UPHOLD THE SAME. 7 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 13-08-2010 SD/- SD/- (N S SAINI) ACCOUNTANT MEMBER (T K SHARMA) JUDICIAL MEMBER DATE : 13-08-2010 COPY OF THE ORDER FORWARDED TO: 1. SHRI HARISHBHAI KESHAVLAL PATEL, 23-D, AJANTA COMMERCIAL CENTRE, NR. INCOME-TAX CIRCLE, ASHRAM RO AD, AHMEDABAD 2. THE ITO, WARD-7(4), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XXI, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD