The DCIT, Circle-3(1)(1), Ahmedabad V. M/s. P.C. Snehal Engineers Pvt.Ltd., Ahmedabad

ITA 2099/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5926 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANOJ ACHARYA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 2099/AHD/2016 (ASSESSMENT YEAR: 2012-13) DCIT, CIRCLE-3(1)(1), AHMEDABAD V/S M/S. P. C. SNEHAL ENGINEERS PVT. LTD. 9 TH FLOOR, CITY CENTRE, C.G. ROAD, NAVRANGPURA, AHMEDABAD- 380009 (APPELLANT) (RESPONDENT) PAN:AACCP2051P APPELLANT BY : SHRI ALOK KUMAR, SR. D.R. RESPONDENT BY : SHRI MANOJ ACHARYA, A.R. ( )/ ORDER DATE OF HEARING : 13 -03-201 8 DATE OF PRONOUNCEMENT : 14 -03-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-9, AHMEDABAD DATED 17.06.2016 PERTAINING TO A.Y. 2012- 13. ITA NO. 2099 /AHD/2016 . A.Y. 2012-1 3 2 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE ADDITION OF RS. 37,87,020/- MADE ON ACCOUNT OF EXCE SS INTEREST TO THE PERSONS SPECIFIED U/S. 40A(2)(B) OF THE ACT. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN INTEREST PAYMENT ON LOA N TO VARIOUS PARTIES. THE A.O. FOUND THAT THESE PERSONS WERE IN RELATION TO T HE DIRECTORS OF THE ASSESSEE COMPANY. THE INTEREST HAS BEEN PAID TO THE FOLLOWIN G PARTIES:- SR. NO. NAME OF THE LENDERS UNSECURED LOAN AS ON 31/03/2012 INTEREST PAID RATE OF INTEREST EXCESS PAYMENT OF ABOVE 12% 1 SNEHAL M PATEL 750000 394355 12% 0 2 CHIRAG M PATEL 750000 508409 12% 0 3 CHIRANJIV M PATEL 1750000 487575 12% 0 4 SAMRAT S PATEL 735900 72309 15% 14462 5 DHIRAAJ S PA TEL [phone]% 0 6 BHARGAV H DESAI 1666667 682050 12% 0 7 DEEPAK G JAISINGH 1666666 360858 12% 0 8 HARSHAD K PATEL 6486100 1035346 12% 0 9 DAKSHA C PATEL 3534210 602880 18% 200960 10 ASHA S PATEL 2322632 446804 18% 148935 11 PURVA C PATEL 1261811 18% 420604 12 ANUJA B DESAI 970986 277140 18% 92380 13 P. C. SNEHAL CONST. CO. 13873959 6431768 18% 2143922 14 RANJANBEN M PATEL 739243 18% 246414 15 VANDANA D JAISINGH 1560804 147090 18% 49030 16 RATNA H PATEL 831600 214867 18% 71622 ITA NO. 2099 /AHD/2016 . A.Y. 2012-1 3 3 17 HARSHAD K PATEL (HUF) 593040 87315 15% 17463 18 BHARGAV H DESAI 2222800 338520 15% 67704 19 HEMA NT C PATEL 2309775 377899 18% 125966 20 CHIRAG M PATEL (HUF) 4599994 6 40559 15% 128112 21 SNEHAL M PATEL (HUF) 2119165 297230 15% 59446 3787020 4. THE A.O. WAS OF THE FIRM BELIEF THAT THE REASONABLE RATE OF INTEREST IS 12% AND ACCORDINGLY DISALLOWED THE INTEREST PAID OVER AND A BOVE THE RATE OF 12% AND MADE THE ADDITION OF RS. 37,87,020/-. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND VEHEMENTLY CONTENDED THAT INTEREST @ 12% WAS PAID FOR LONGER DURATION AN D INTEREST @ 15% TO 18% WAS PAID ON TEMPORARY/CURRENT LOANS. IT WAS ALSO BR OUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE ASSESSEE HAS BORROWED MONEY FRO M BANKS @ 15% PER ANNUM. IT WAS EXPLAINED THAT THE BANKS TAKE COLLATE RAL SECURITIES WHICH IS NOT THERE WITH THE PRIVATE PARTY. THEREFORE, THE RATE O F INTEREST CANNOT BE CONSIDERED AS EXCESSIVE. THE LD. CIT(A) AFTER CONSI DERING THE FACTS AND THE SUBMISSIONS WAS CONVINCED WITH THE CONTENTIONS OF T HE ASSESSEE AND DIRECTED THE A.O. TO DELETE THE IMPUGNED DISALLOWANCE. 6. BEFORE US, THE LD. D.R. STRONGLY SUPPORTED THE FIND INGS OF THE A.O. AND THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION O F THE LD. CIT(A). 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT THE ASSESSEE HAS PAID INTERE ST @ 12% TO SOME PARTIES, @ ITA NO. 2099 /AHD/2016 . A.Y. 2012-1 3 4 15% TO SOME OTHER PARTIES AND @ 18% TO NINE PARTIES . IT IS TRUE THAT THE A.O. HAS INVOKED THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT BUT NOWHERE THE A.O. HAS BROUGHT ANY COMPARABLE CASE TO DISLODGE TH E CLAIM OF THE ASSESSEE THAT THE RATE OF INTEREST IS UNREASONABLE. THE A.O. HAS SIMPLY COMPARED THE RATE OF INTEREST INTER SE AND NOT BY BRINGING ANY COMPA RABLE CASE ON RECORD. IN OUR CONSIDERED OPINION, WHEN THE BANK RATE IS AROUND 15 %, PAYMENT OF INTEREST @ 18% CANNOT BE CONSIDERED TO BE UNREASONABLE. KEEPIN G IN MIND THAT FOR TAKING LOANS FROM THE BANK, THERE ARE MANY STATUTORY FORMA LITIES WHICH ARE NOT THERE WHEN THE LOANS ARE TAKEN FROM PRIVATE PARTIES. IN A NY CASE FOR WANT OF COMPARABLE CASES, THE A.O. CANNOT SAY THAT THE INTE REST RATE OF 15% OR 18% IS UNREASONABLE. 8. CONSIDERING THE FACTS OF THE CASE IN TOTALITY, WE D O NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). APPE AL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14 - 03- 20 18 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 14 /03/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD