Priyank Narendra Gandhi, Ahmedabad V. ITO, Ward-4(2)(4), Ahmedabad

ITA 23/AHD/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8007 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 07-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.S. SHUKLA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD (through web-based video conferencing platform) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT ITA No. 23/Ahd/2019 Assessment Year : 2013-14 Priyank Narendrabhai Gandhi, 1, Manav Bungalows, Nr. Divine Park, Science City Road, Sola, Ahmedabad-380060 PAN : AINPG 7268 H Vs. Income Tax Officer, Ward-4(2)(4), Ahmedabad अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹त् 灹त् 灹त् 灹त् यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri Manthan Khokhani, AR Revenue by : Shri S.S. Shukla, Sr DR सुनवाई सुनवाईसुनवाई सुनवाई क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख/Date of Hearing : 22/11/2021 घोषणा क琉 तारीख /Date of Pronouncement: 23/11/2021 आदेश आदेशआदेश आदेश/O R D E R The assessee is in appeal before the Tribunal against the order of learned Commissioner of Income-Tax (Appeals)-4, Ahmedabad dated 16.11.2018 passed for Assessment Year 2013-14. 2. The solitary grievance of the assessee is that the leaned CIT(A) as erred in confirming the disallowance of Rs.2,33,886/-, which was made by the Assessing Officer under Section 40A(2)(a) of the Income-Tax Act, 1961 (“the Act” in short). 3. The brief facts of the case are that the assessee has filed his return of income on 19.09.2013 declaring total income of Rs.6,64,930/-. The case of the assessee was selected for scrutiny assessment and a notice under Section 143(2) of the Act was issued and served upon the assessee. According to the Assessing Officer, the assessee has unsecured loan as on 31 st March 2013 of Rs.71,38,224/-. The Assessing Officer has noticed the details which have SMC-ITA No. 23/Ahd/2019 Priyank Narendra Gandhi Vs. ITO For AY: 2013-14 2 also been reproduced by the First Appellate Authority on page no.4 of his order which reads as under:- Outside Parties Rate of Interest Interest paid in Rs Related Parties Rate of Interest Interest paid In Rs. Ambica Pipe Syndicate 12% 2636 Maya Narendra Gandhi 18% 5436 Arbuda Pipe Praders 12% 2055 Narendra K Gandhi-HUF 18% 222148 Jyotiben S. Shah 12% 43363 Narendra K. Gandhi-HUF 18% 292076 Ramanlal G. Patel -HUF 12% 63305 Priyank N Gandhi HUF 18% 68371 Nita Viresh Gandhi 18% 4358 Urmilaben G Gandhi 18% 107950 Kokilaben M Gandhi 18% 7329 Vaidehi Priyank Gandhi 18% 5677 Mahesh G Gandhi HUF 18% 39279 Gunvantlal J Gandhi HUF 24% 26730 Shrenik S Shah 18% 9952 Total Amount 199007 Total Amount 701658 4. A perusal of the above table would indicate that the assessee took loans from 15 persons /entities; out of which, these loans were taken from related parties. It has paid interest @ 12% to the non-related/outside parties and 18% to the related parties. He has also paid interest @18% to four outside parties and also paid 24% to one outside party. The interest payment is almost identical, which is ranging from Rs.5,677/- to Rs.2,92,076/-. The case of the Assessing Officer is that the interest paid @18% to the related parties is required to be disallowed with the help of Section 40A(2)(a) of the Act. 5. With the assistance of the learned representatives, I have gone through the record carefully. Section 40A(2)(b) of the Act contemplates that the list of persons who are to be treated as relatives of the assessee. The sub-clause (a) of Section 40A(2) further contemplates that if an assessee has availed the services from relatives and paid them more than the value of such services available in the market, then the Assessing Officer will be at liberty to disallow such excess payment. Thus, the issue before me is that whether the payment of interest @ 18% is higher than its market value or not. To my mind, in the case of unsecured loans, the interest rate required SMC-ITA No. 23/Ahd/2019 Priyank Narendra Gandhi Vs. ITO For AY: 2013-14 3 to be paid @ 18% is not on the higher side than the market value; because the assessee is absolved from providing collateral securities qua such loans. He was not supposed to execute any documents. In such eventuality, a little higher rate of interest can be paid. In the present case, the assessee has paid interest @18% to the outsiders also which has been accepted by the Assessing Officer. Thus, to my mind, no disallowance under Section 40A(2)(a) is required to be made. I, therefore, allow this appeal of the assessee and delete the disallowance. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 23 rd November, 2021 at Ahmedabad. Sd/- (RAJPAL YADAV) VICE PRESIDENT Ahmedabad; Dated 23/11/2021 *Bt आदेश आदेशआदेश आदेश क琉 क琉क琉 क琉 灹ितिलिप 灹ितिलिप灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴(अपील) / The CIT(A) 5. िवभागीय 灹ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड榁 फाईल / Guard file. आ आआ आदेशानुसार देशानुसारदेशानुसार देशानुसार/BY ORDER, TRUE COPY उप उपउप उप/सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Dy./Asstt. Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation- .....22.11.2021.......... 2. Date on which the typed draft is placed before the Dictating Member ....22.11.2021..... Other member ................... 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ........... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ... 5. Date on which the file goes to the Bench Clerk..................... 6. Date on which the file goes to the Head Clerk...................................... 7. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 8. Date of Despatch of the Order..................