The ITO, 2(1), Ujjain V. Shri Babulal Jain, Ujjain

ITA 272/IND/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2215 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHMD JAVED

Judgement Text

BABULAL JAIN / I.T.A. NO.272/IND/2017/A.Y.:09-10 PAGE 1 OF 4 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER ITO-2(1), UJJAIN V. SHRI BABULAL JAIN, PROP. OF M/S RAJKAMAL ENTERPRISES, 02, VARAHA MIHIR MRG, FREEGANJ, UJJAIN, MP. / APPELLANT / RESPONDENT . . ./ PAN:ABNPJ7940E / APPELLANT BY SHRI MOHMD. JAVED, SR. (DR) / RESPONDENT BY NONE / DATE OF HEARING 24.05.2017 / DATE OF PRONOUNCEMENT 2 6 .05.2017 / O R D E R PER O.P.MEENA, ACCOUNTANT MEMBER: 1. THIS APPEAL IS FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-, UJJAIN, [IN SHORT REFERRED TO AS THE CIT (A)] DATED 06.01.2017 FOR ASSESSMENT YEAR 2009-10. . . ./ I.T.A. NO.272/IND/2017 &(( / ASSESSMENT YEAR: 2009-10 BABULAL JAIN / I.T.A. NO.272/IND/2017/A.Y.:09-10 PAGE 2 OF 4 2. THE SOLE GROUND RELATES TO RESTRICTING THE ADDITION OF RS. 1,09,993/- TO RS. 12,221/- MADE ON ACCOUNT OF I NTEREST PAID TO VARIOUS RELATIVES. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A O NOTICED THAT THE ASSESSEE HAS PAID INTEREST PAYMENT TO PERS ONS COVERED U/S 40A(2)(A) @ 18% PER ANNUM WHICH WAS CONSIDERED TO BE EXCESSIVE AS THE REASONABLE RATE OF INTEREST WAS 12 %. ACCORDINGLY, THE AO WORKED OUT EXCESS INTEREST OF RS. 1,09,993/- BY CONSIDERING THE INTEREST RATE AT 12% AND ACCORDINGL Y, DISALLOWED THE SAME. 4. BEING DISSATISFIED WITH THE ORDER, THE ASSESSEE HAS CARRIED THE MATTER BEFORE CIT(A). IT WAS CONTENDED BEFORE T HE CIT(A) THAT 16% INTEREST RATE IS REASONABLE RATE, HENCE, THE AD DITION IS MADE OVER THIS PERCENTILE I.E. 2% (18-16) IS HELD TO BE JUSTIFIED BY THE CIT(A) FOR ASSESSMENT YEAR 2010-11 IN APPEAL NO. U- 74/2013-14. ACCORDINGLY, THE CIT(A) OBSERVED THAT THE AO HAS ME RELY RELIED THAT THE APPELLANT HAS PAID HIGHER RATE OF INTEREST TO THE FAMILY MEMBERS BUT FAILED TO CONSIDER THE DIFFICULTIES IN OBTAINING THE LOAN FROM BANK OR FINANCIAL INSTITUTIONS AND LIMITE D SECURITY OPTIONS. THE BORROWING FROM MARKETS DEPENDS ON THE RELATIONS ONLY AND WHICH IS LIMITED FOR BORROWING HUGE AMOUNT . THE BABULAL JAIN / I.T.A. NO.272/IND/2017/A.Y.:09-10 PAGE 3 OF 4 APPELLANT IS PAYING INTEREST TO THE NON-SPECIFIED P ERSONS QUARTERLY WHEREAS THE INTEREST PAYABLE TO SPECIFIED PERSONS I S CREDITED TO THE ACCOUNT OF RESPECTIVE PERSONS AT THE YEAR END. THE CIT(A) HAS NOTED THAT THERE IS NO MATERIAL ON RECORD WHICH SHO WS THAT THE FUNDS ARE NOT UTILIZED FOR BUSINESS. THE CIT(A) HAS ALSO NOTED THAT THE HON'BLE JURISDICTIONAL TRIBUNAL AND MANY O THER TRIBUNALS ARE ALREADY HELD INTEREST PAYMENT @ 16% A S REASONABLE RATE OF INTEREST. ACCORDINGLY, THE CIT(A) HAS CONFI RMED THE ADDITION AMOUNTING TO RS. 12,221/- BEING INTEREST @ 2% AND ALLOWED RELIEF OF RS. 97,772/-. 5. BEING DISSATISFIED WITH THE FINDINGS OF THE CIT(A) THE REVENUE HAS FILED THIS APPEAL BEFORE US. THERE IS N ONE APPEARED FROM THE SIDE OF ASSESSEE WHEREAS THE LD. SR. DR HA S RELIED ON THE ORDER OF THE AO. 6. WE HAVE CONSIDERED AND PERUSED THE MATERIAL ON RECO RD. WE FIND THAT THE LD. CIT(A) HAS CONSIDERED THE RATE OF INTEREST @ 16% AS REASONABLE FOR SPECIFIED PERSONS IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2010-11 DECIDED IN APPEAL NO. U-74/ 2013-14. THE CIT(A) CONSIDERING THE FACTS AND RELYING THE OR DERS OF TRIBUNALS HELD THAT THE INTEREST PAYMENT RATE @ 16% AS A REASONABLE RATE OF INTEREST AND ALLOWED THE RESULTA NT RELIEF TO THE BABULAL JAIN / I.T.A. NO.272/IND/2017/A.Y.:09-10 PAGE 4 OF 4 ASSESSEE. CONSIDERING THE CIRCUMSTANCE OF FACT WE F IND NO INFIRMITY OF THE ORDER OF THE LD. CIT(A), HENCE, NO INFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). ACCORDIN GLY, SAME IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. 8. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26.05.2017 SD/- (C.M. GARG) SD/- (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26.05.2017 SB*