Asian Mills Pvt. Ltd., Ahmedabad V. The Addl.CIT.,Circle-1., Ahmedabad

ITA 2161/AHD/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1299 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGHSR D R
• Assessee Lawyers: GAURAV NAHATA
• Keywords: Fair market value; Commercial expediency

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.1382/AHD/2012 AY 2009-10 2. ./ I.T.A. NO.2161/AHD/2011 AY 2008-09 1. ASIAN MILLS P.LTD. 104, SAKAR-III OPP. OLD HIGH COURT OFF ASHRAM ROAD, AHMEDABAD-380 014 2. DO- / VS. 1. THE DY.CIT CIRCLE-1 AHMEDABAD 2. THE ADDL.CIT RANGE-1 AHMEDABAD ./ ./ PAN/GIR NO(S). : AABCA 8236 G ( ' / APPELLANT ) .. ( #' / RESPONDENTS ) ASSESSEE BY : SHRI GAURAV NAHATA, AR REVENUE BY : SHRI NARENDRA SINGH, SR.DR $%& ' ( / DATE OF HEARING 10/09/2015 )*+ ' ( / DATE OF PRONOUNCEMENT 27/10/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TA X(APPEALS)-6, AHMEDABAD [CIT(A) IN SHORT] DATED 21/05/2012 & 21/06/2011 PERTAINING TO ASSESSMENT YEARS (AY) 2009-10 & 2008- 09 RESPECTIVELY. ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 2 - SINCE BOTH THESE APPEALS RELATE TO SAME ASSESSEE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA N O.2161/AHD/2011 FOR AY 2008-09. THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. THE LD.CIT APPEALS VI AHMEDABAD HAS ERRED IN LA W AND ON FACTS IN PASSING APPELLATE ORDER DATED 20/06/2011 FOR A.Y. 2 008-09 IN THE CASE OF APPELLANT BY CONFIRMING DISALLOWANCE OF RS.18,77 ,302/- ON ACCOUNT OF INTEREST EXPENSES U/S.40A(2)(B) OF THE ACT. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY CONFIRMING THE DISALLOWANCE OF RS.15,29,863/- ON ACCOUNT OF BUSIN ESS DEVELOPMENT EXPENSES. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL ON OR BEFORE OF THE FINAL HEA RING OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 07/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE DISALLOWANCE OF UNPAID GRATUITY OF RS.1,69,515/-, D ISALLOWANCE OF INTEREST EXPENDITURE OF RS.18,77,302/- BY INVOKING THE PROVI SIONS OF SECTION 40A(2)(B) OF THE ACT AND DISALLOWED THE BUSINESS DE VELOPMENT EXPENSES OF RS.15,29,863/-. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 3 - ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WH O AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEA L. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. FIRST GROUND OF APPEAL IS AGAINST CONFIRMATION O F DISALLOWANCE OF RS.18,77,302/- ON ACCOUNT OF INTEREST EXPENDITURE B Y INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. THE LD .COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE ADDITION AND CONFIRMING THE SAME. HE SUBMITTED THAT THE AO AS WELL AS THE LD.CIT(A) ARE FACTUALLY INCORRECT WHEN THEY SAY THAT AS THERE WAS BOTH DEBIT AND CREDIT IN THE ACCOUNT SO THE AMOUNT WAS REPAYABLE ON DEMAND AS IT CAN BE SEEN FROM THE COPY OF THE BALAN CE SHEET THAT THE AMOUNT OF UNSECURED LOANS HAVE INCREASED FROM RS.8. 63 CRORES TO RS.10.76 CRORES. TO BUTTRESS HIS CONTENTION, HE DR EW OUR ATTENTION TOWARDS PAGE NO.28 OF PAPER-BOOK. THE LD.COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THE FACT THAT SECURED AND UNSECURED LOANS CANNOT BE PLACED ON THE SAME FOOTING. HE SUBMITTED THAT THE LOANS TAKEN FROM THE RELATED PAR TIES WERE UNSECURED, WHEREAS THE LOAN TAKEN FROM BANKS CARRY SECURITY. HE SUBMITTED THAT SUCH HUGE AMOUNT OF UNSECURED LOANS IS NOT AVAILABL E FROM BANKS WITHOUT ANY SECURITY AND COST OF MORTGAGE AND OTHER DOCUMEN T CHARGES MADE SECURED LOANS MORE CUMBERSOME. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NORMAL RATES INTEREST CHARGED BY THE NBFC WERE ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 4 - AROUND 20 TO 22% DURING THAT PERIOD FOR UNSECURED L OANS. HE SUBMITTED THAT THE PAYEES WERE ASSESSED TO TAX AT THE HIGHEST RATE. THEREFORE, THE AUTHORITIES BELOW OUGHT NOT TO HAVE DISALLOWED THE EXPENDITURE. IN SUPPORT OF THIS CONTENTION, THE LD.COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS.GLAXO SMITHKLINE ASIA (P) LTD. REPORTED AT 236 C TR (SC) 113 :: (2010) 195 TAXMAN 35 :: (2010) 47 DTR 65. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CASE-LAWS RELIED BY THE LD.CIT(A) ARE NOT APPLICABLE AS ALL THE CASES ARE PERTAINING TO AYS 1 988-89, 1988-89 AND 1988-89 AND 1978-79 RESPECTIVELY WHICH IS A VERY OL D PERIOD AND INTEREST RATES OF THAT PERIOD CANNOT BE COMPARED WITH THE RA TES OF AY 2009-10. THE LD.COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF AFLON ALPLAST PVT.LTD. VS. ITO (ITAT D BENCH AHMEDABAD) IN ITA NO.1186/AHD/2012 FOR AY 2008-09, DATED 30/01/2015. HE RELIED ON THE DECISION OF THE COORDINATE BENCH (ITAT B BENCH AH MEDABAD) IN THE CASE OF ACIT VS. SH.LAXMI BIDI TRADING CO. IN ITA N OS.414 TO 417 & 1952/AHD/2009 & 2461/AHD/2010, DATED 29/11/2013. T HE LD.COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF HONBLE HIG H COURT OF GUJARAT IN THE CASE OF CIT VS. ADITYA MEDISALES LTD. IN TAX AP PEAL NO.559 OF 2009, DATED 04/05/2010. HE RELIED ON THE DECISION OF THE COORDINATE BENCH (ITAT C BENCH AHMEDABAD) IN THE CASE OF ACIT VS. SAUMYA CONSTRUCTION P.LTD. IN ITA NO.1129/AHD/2008 FOR AY 2005-06, DATED 13/08/2010. HE ALSO RELIED ON THE JUDGEMENT OF HON BLE APEX COURT IN ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 5 - THE CASE OF CIT VS. GLAXO SMITHKLINE ASIA (P) LTD. REPORTED AT (2010) 236 CTR (SC) 113. HE FURTHER RELIED ON THE JUDGEMENT OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. LAXMI BIDI TRADING CO. IN TAX APPEAL NOS. 851 TO 856 OF 2014, DATED 01/09/2014. 3.1. ON THE OTHER HAND, THE LD.SR.DR OPPOSED THE SU BMISSIONS OF THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE HAS NOT DE MONSTRATED AS TO HOW THE RATE OF INTEREST PAID IS REASONABLE AS ALSO NOT DEMONSTRATED THE COMMERCIAL EXPEDIENCY FOR SUCH UNSECURED LOANS AT A HIGHER RATE OF INTEREST. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS/JUDGEMENT RELIED UPON BY T HE LD.COUNSEL FOR THE ASSESSEE. WE FIND THAT THERE IS NO DISPUTE WITH RE GARD TO THE FACT THAT THE ASSESSEE HAS TAKE UNSECURED LOAN FROM THE RELATED P ARTIES. AS PER SECTION 40A(2) OF THE ACT, IF THE AO OF THE VIEW THAT THE P AYMENT OF INTEREST MADE TO THE RELATED PARTIES IS EXCESSIVE OR UNREASO NABLE HAVING REGARD TO THE FAIR MARKET VALUE, HE CAN DISALLOW SUCH EXPENDI TURE. THEREFORE, THE ISSUE TO BE EXAMINED WHETHER THE PAYMENTS ARE UNREA SONABLE OR NOT. THE AO MADE DISALLOWANCE ON THE BASIS THAT THE ASSESSEE ITSELF HAS PAID LESSER INTEREST TO THE UNRELATED PARTIES @15%, WHEREAS IN THE CASE OF RELATED PARTIES, THE ASSESSEE HAS MADE PAYMENT OF 18%. THE REFORE, THE AO ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 6 - DISALLOWED THE EXPENDITURE TO THE EXTENT OF 3% AND THE SAME WAS CONFIRMED BY THE LD.CIT(A) HOLDING THAT THE INTERES T WAS EXCESSIVE. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGEMENT OF THE HONBLE HIGH COURT OF GUJARAT AND DECISIONS OF THE COORDINATE BENCHES OF THIS TRIBUNAL TO BUTTRESS THE CONTENTION THAT TH E AMOUNT IS REASONABLE. WE FIND THAT THE EXPLANATION FOR MAKING PAYMENT OF THE INTEREST AT THE HIGHER RATE TO THE RELATED PARTIES WAS ON THE GROUN D THAT THE AMOUNT RECEIVED FROM THE RELATED PARTIES WAS FOR A LONGER PERIOD OF TIME AND THE RE-PAYMENT OF THE LOAN WAS NOT TO BE MADE ON DEMAND . WE FIND THAT THE AUTHORITIES BELOW HAVE NOT DOUBTED THE FACT THAT TH E UNSECURED LOAN WAS TAKEN FOR BUSINESS PURPOSE. THE ONLY DISPUTE WITH REGARD TO THE RATE ON WHICH THE INTEREST WAS PAID. IN THE CASE OF AFFON ALPLAST PVT.LTD. VS. ITO IN ITA NO.1186/AHD/2012(SUPRA), THE COORDINATE BENCH DELETED THE DISALLOWANCE OF INTEREST EXPENDITURE. IN THAT CASE , THE INTEREST WAS PAID @24% TO THE RELATED PARTIES. THE ASSESSEE HAS FUR THER RELIED ON THE DECISION OF THE COORDINATE BENCH IN ITA NOS.414 TO 417 & 1952/AHD/2009 & 2491/AHD/2010 IN THE CASE OF ACIT V S. SH.LAXMI BIDI TRADING CO.(SUPRA), WHEREIN THE TRIBUNAL HELD THAT THE REVENUE HAS NOT BROUGHT ANY EVIDENCE AS TO WHAT WAS THE PREVAILING RATE OF INTEREST IN THE MARKET EXCEPT THE BANK RATE, THEREFORE DELETED THE DISALLOWANCE. IN THAT CASE, THE PAYMENT OF INTEREST WAS MADE AT 18%. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. ADITYA MEDISALES LTD. IN TAX APPEAL NO.559 OF 2009, DATED 04/05/2010(SUPRA), THE HONBL E HIGH COURT ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 7 - UPHELD THE FINDING OF THE TRIBUNAL, WHEREIN THE PAY MENT TO SUN PHARMACEUTICALS INDUSTRIES LTD. @24% P.A. WAS TREAT ED TO BE REASONABLE. RELIANCE IS ALSO PLACED ON THE DECISION OF THE COOR DINATE BENCH IN THE CASE OF ACIT VS. SAUMYA CONSTRUCTION PVT.LTD.(SUPRA ), IN THAT CASE, THE INTEREST PAID @36% WAS HELD TO BE REASONABLE. THE L D.COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH (ITAT B BENCH AHMEDABAD) IN THE CASE OF ITO VS. A MBICA GINNING & PRESSING (P) LTD. IN ITA NO.570/AHD/2011 FOR AY 200 7-08, DATED 18/11/2011, WHEREIN THE TRIBUNAL HELD THAT THE INTE REST PAID @18% SHOULD NOT HAVE BEEN DISTURBED AS THE INTEREST PAID @24% HAD BEEN ACCEPTED BY THE DEPARTMENT IN EARLIER YEARS. RELI ANCE IS PLACED BY THE LD.COUNSEL FOR THE ASSESSEE ON THE JUDGEMENT OF HON BLE APEX COURT RENDERED IN THE CASE OF CIT VS. GLAXO SMITHKLINE AS IA (P) LTD. REPORTED AT (2010) 236 CR (SC) 113 [SUPRA], WE FIND THAT THI S RATIO LAID DOWN IN THE CASE WOULD NOT BE APPLICABLE ON THE FACTS OF TH E PRESENT CASE AS IN THAT CASE, THE COMPANIES WERE NOT RELATED PARTIES. RELI ANCE IS PLACED BY THE LD.COUNSEL FOR THE ASSESSEE ON THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LAXMI BIDI TRADIN G CO. IN TAX APPEAL NOS.851 TO 856 OF 2014(SUPRA), WHEREIN THE HONBLE HIGH COURT OF GUJARAT CONFIRMED THE FINDING OF THE TRIBUNAL THAT THE INTEREST PAID @18% IS REASONABLE. IN THE CASE IN HAND, THE ASSES SEE HAS PAID THE INTEREST @18% TO THE RELATED PARTIES AND 15% TO UNR ELATED PARTIES. THE CONTENTION OF THE ASSESSEE IS THAT THE INTEREST PAI D AT LESSER RATE WAS PAID ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 8 - TO THE UNRELATED PARTIES, IN THOSE CASES, THE UNSEC URED LOAN WAS REQUIRED TO BE PAID ON DEMAND, BUT IN THE CASE OF RELATED PA RTIES THERE WAS NO SUCH CONDITION. IN THE LIGHT OF THE VARIOUS JUDICIAL P RONOUNCEMENTS AS DISCUSSED HEREINABOVE, WE ARE OF THE CONSIDERED VIE W THAT THE INTEREST @18% IS REASONABLE, THEREFORE WE DIRECT THE AO TO DELETE DISALLOWANCE. THUS, GROUND NO.1 OF THE ASSESSEES APPEAL IS ALLOW ED. 5. GROUND NO.2 IS AGAINST CONFIRMING THE DISALLOWAN CE OF RS.15,29,863/- MADE ON ACCOUNT OF BUSINESS DEVELOPM ENT EXPENSES. THE LD.SR.DR POINTED OUT THE FACTS THAT A SIMILAR DISAL LOWANCE WAS MADE BY THE AO IN THE AY 2006-07 AND THE MATTER TRAVELLED U PTO THE STAGE OF COORDINATE BENCH (ITAT B BENCH AHMEDABAD) BY WAY OF ITA NO.3235/AHD/2010 (IN ASSESSEES OWN CASE), WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 23/08/2013 HAS CONFIRMED THE FINDIN G OF THE LD.CIT(A). THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) HAS FOLLO WED THE ORDER PASSED IN THE AY 2006-07, THEREFORE THIS GROUND OF ASSESSE ES APPEAL DESERVES TO BE DISMISSED. 5.1. THE LD.COUNSEL FOR THE ASSESSEE FACTUALLY CONC EDED THE SUBMISSION MADE BY THE LD.SR.DR. 6. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT THE TRIBUNAL IN ITA NO.3235/AHD/2010 FOR AY 2006-07 IN ASSESSEES OWN C ASE(SUPRA), HAS DECIDED THE ISSUE REGARDING BUSINESS DEVELOPMENT EX PENSES IN FAVOUR OF REVENUE IN PARA-14 OF ITS ORDER DATED 08/07/2013 BY OBSERVING AS UNDER:- ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 9 - 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND P ERUSED THE MATERIALS ON RECORD. THE ASSESSEE INCURRED THE EXPENSES ON TR AINING OF MR. ADITYA AGARWAL, SON OF THE DIRECTOR OF THE ASSESSEE COMPA NY. THE ASSESSEE HAD ONLY ARGUED THE CASE ON THE BASIS OF LEGAL ASPECT B UT DETAILS OF BUSINESS DEVELOPMENT ACCOUNT SHOWS THAT THE ASSESSEE HAD PAI D FEES OF UK UNIVERSITY OF SOUNTHAMTION, TRAVELING EXPENSES AND CREDIT CARD EXPENSES. THE SON OF THE DIRECTOR WAS NOT EMPLOYEE OF THE ASSESSEE COMPANY AND THE SAID FOREIGN STAY EXPENSES WERE PER SONAL EXPENSES. THE ASSESSEE COULD NOT ESTABLISH ANY BUSINESS PURPO SES OUT OF SUCH PERSONAL EXPENSES OF THE DIRECTOR. THE BURDEN OF PR OOF LIES UPON THE ASSESSEE THAT THE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE ASSESSEE'S BUSINESS. THE HON'BLE KAR NATAKA HIGH COURT IN THE CASE OF MAC EXPLOTEE P. LTD. VS CIT (KAR), 2 86 ITR 378, THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SILICON (I NDIA) LTD. VS DCIT (MAD), 295 ITR 422, THE HON'BLE BOMBAY HIGH COURT I N THE CASE OF ECHJAY FORGINGS LTD. VS ACIT (BOM), 328 ITR 286 AND THE HON'BLE DELHI HIGH COURT IN THE CASE OF ENKAY (INDIA) RUBBE R CO. PVT. LTD. VS CIT(DEL), 263 1TR 521 HELD THAT EDUCATION EXPENSES OF A SON OF THE DIRECTOR WAS INCURRED FOR PERSONAL GAIN AND NOT FOR THE BUSINESS PURPOSE. KEEPING IN VIEW OF THE FACTUAL POSITION AS WELL AS LEGAL POSITION ON THIS ISSUE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 6.1. SINCE THERE IS NO CHANGE INTO THE FACTS AND CI RCUMSTANCES OF THE PRESENT CASE, THEREFORE TAKING A CONSISTENT VIEW, T HIS GROUND OF ASSESSEES APPEAL IS DISMISSED. AS A RESULT, ASSESSEES APPE AL IN ITA NO.2161/AHD/2011 FOR 2008-09 IS PARTLY ALLOWED. 7. NOW, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 1382/AHD/2012 FOR AY 2009-10. THE ONLY EFFECTIVE GROUND RAISED I N THIS APPEAL IS AGAINST CONFIRMING THE DISALLOWANCE OF RS.69,88,205 /- MADE ON ACCOUNT OF INTEREST EXPENSES U/S.40A(2)(B) OF THE ACT. ITA NOS.1382 /A HD/12 AND ITA NO.2161/AHD/2011 ASIAN MILLS PVT.LTD. VS. DCIT/ACIT ASST.YEARS 2009-10 & 2008-09 RESPECTIVELY - 10 - 7.1. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED INTEREST @22% TO THE RELATED PARTIES. THE AO MADE DISALLOWANCE T REATING THE SAME AS EXCESSIVE ON THE BASIS THAT THE INTEREST PAID TO TH E THIRD PARTIES @15%. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A ), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DISMIS SED THE APPEAL. NOW THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 8. BOTH THE REPRESENTATIVES OF THE PARTIES HAVE ADO PTED THE ARGUMENT AS WERE RAISED IN ASSESSEES OWN CASE IN ITA NO.216 1/AHD/2011 FOR AY 2008-09(SUPRA). WE FIND THAT THE FACTS ARE IDENTIC AL TO THE FACTS AS WERE IN ITA NO.2161/AHD/2011 FOR AY 2008-09. IN THE PRE SENT CASE, THE ASSESSEE HAS NOT GIVEN ANY REASON AS TO HOW IT IS C LAIMING THE INTEREST @22% WHILE IN THE PRECEDING ASSESSMENT YEAR THIS RA TE WAS AT 18%. AS IN THE AY 2008-09, IN ASSESSEES OWN CASE, WE HAVE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE RATE AT 18% IS REASONABLE, THEREFORE IN THIS YEAR ALSO THERE IS NO CHANGE INTO THE FACTS AN D CIRCUMSTANCES OF THE CASE, THEREFORE, LOOKING TO THE TOTALITY OF THE FAC TS OF THE CASE, WE HOLD THAT THE INTEREST PAID @18% IS REASONABLE. WE ALSO HOLD THAT THE PAYMENT OF INTEREST @18% IS REASONABLE AND BEYOND 18% IS EX CESSIVE, THEREFORE THE GROUND OF ASSESSEES APPEAL IS PARTLY ALLOWED. THE AO IS HEREBY DIRECTED TO RE-COMPUTE THE DISALLOWANCE BY TAKING T HE INTEREST @18% AS REASONABLE AND IN EXCESS OF THE SAME IS TO BE DISAL LOWED.