Shri Moresh D Mahajan Saoji Gin , Buldhana V. Income Tax Officer Ward -2, Khamgaon

ITA 192/NAG/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1582 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-10-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 13-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, NAGPUR (AT e-Court, PUNE) BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA No.192/NAG/2019 निर्धारण वषा / Assessment Year : 2013-14 Shri Moresh D. Mahajan Saoji Gin, Nandura Road, At Post & Tq. Malkapur, Dist. Buldhana, Maharashtra – 443101 PAN: AGWPM8888Q Vs. ITO, Ward-2, kHAMGAON Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee is directed against the order dated 03-06-2019 passed by the CIT(A)-1, Nagpur, in relation to the assessment year 2013-14. 2. The only issue raised in this appeal is against upholding the denial of deduction of Rs.5,26,132 made by the Assessing Officer (AO) on account of interest u/s 36(1)(iii) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Assessee by None Revenue by Shri G.J. Ninawe Date of hearing 04-10-2022 Date of pronouncement 04-10-2022 ITA No.192/NAG/2019 Shri Moresh D Mahajan 2 3. The factual scenario of the case is that the assessee has been trading in Maize and Jawar. During the course of assessment proceedings, the AO observed that the assessee charged interest @ 10% on loans given to three relatives, viz., Shri D.G. Mahajan, Shri Rajesh D. Mahajan and Shri N.D. Mahajan. As against that, the assessee had paid interest to bank @ 15%. The AO, therefore, made disallowance of interest at the differential rate of 5% on the amounts advanced, which resulted into disallowance of Rs.5,26,132. The ld. CIT(A) sustained the addition. 4. I have heard the ld. DR and gone through the relevant material on record. It is seen that the assessee did charge interest from three individuals on loans advanced @ 10%. Simply because the assessee paid interest on the loans advanced by bank at higher rate does not justify charging interest from the borrowers at equal rate. There can be a variety of reasons for different rates of interest. The assessee has mentioned the rationale in giving advances to the above three persons at 10% rate of interest as they were regularly assisting the assessee in the past. It is further observed from the impugned order that the loans to these relatives were advanced in the year 2010-11 and the assessee has been consistently charging ITA No.192/NAG/2019 Shri Moresh D Mahajan 3 interest @10% on such advances. The AO did not dispute or disallow the interest payment over and above 10% in any of the earlier years. In view of the foregoing discussion, it is held that the authorities below were not justified in making and sustaining the disallowance simply on the ground that the interest charged by the assessee was at a lower rate than that paid to the bank. I, therefore, order to delete the addition of Rs.5,26,132. 5. In the result, the appeal is allowed. Order pronounced in the Open Court on 4 th October, 2022. - Sd/- (R.S.SYAL) VICE PRESIDENT प ु णे Pune; ददिधांक Dated : 4 th October, 2022 GCVSR आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: 1. अपीऱधर्थी / The Appellant; 2. प्रत्यर्थी / The Respondent; 3. The CIT(A)-1, Nagpur 4. 5. The Pr.CIT-1/2/3, Nagpur विभागीय प्रविविवि, आयकर अपीलीय अविकरण, Nagpur / DR, Nagpur 6. गार्ड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune ITA No.192/NAG/2019 Shri Moresh D Mahajan 4 Date 1. Draft dictated on 04-10-2022 Sr.PS 2. Draft placed before author 04-10-2022 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.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. *