M/s Ajanta Handtex P. Ltd., Meerut V. ITO, Meerut

ITA 4573/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97988 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 18-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 10-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL SENIOR
• Assessee Lawyers: K K SAHU
• Keywords: Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.4573/DEL./2015 (ASSESSMENT YEAR : 2010-11) M/S. AJANTA HANDTEX P. LTD., VS. ITO, WARD 1 (1), C/O M.L. DHAWAN & CO., MEERUT. 326, STREET NO.4, THAPAR NAGAR, MEERUT. (PAN : AAECA2384C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. SAHU, ADVOCATE REVENUE BY : SHRI K.K. JAISWAL, SENIOR DR DATE OF HEARING : 18.11.2015 DATE OF PRONOUNCEMENT : 26.11.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DI RECTED AGAINST THE ORDER OF CIT (APPEALS), MEERUT DATED 05.06.2015 FOR THE A SSESSMENT YEARS 2010-11. 2. THE ONLY GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.8,32,696/- OUT OF INTEREST PAID TO THE PERSONS W HO COMES U/S 40A(2)(B) OF INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) BY HOL DING IT AS UNREASONABLE AND EXCESSIVE AND RESTRICTING AND CONFIRMING THE IN TEREST PAYMENT TO THEM AT 12% AS AGAINST INTEREST PAID AT 15% TO 18% PER ANNU M ON THEIR UNSECURED ITA NO.4573/DEL./2015 2 DEPOSITS AS BEING CONTINUED TO BE PAID AS IN EARLIE R YEARS AND ACCEPTED BY THE DEPARTMENT IN EARLIER YEARS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS DERIVING ITS INCOME FROM TRADING OF HANDLOOM CLOTH. THE ASSESSEE FILED ITS RETURN OF INCOME ON 22.09.2010 AT NIL. LATER, THE CASE WAS TAKEN UP FOR SCRUTINY AND NOTICE U/S 143 (2) OF THE ACT WAS ISSUED ON 23.09.2011. SUBSE QUENTLY, A DETAILED QUESTIONNAIRE ALONG WITH NOTICE U/S 142 (1) WAS ISS UED ON 24.08.2012. IN RESPONSE, THE ASSESSEE FILED THE WRITTEN SUBMISSION S, OTHER DETAILS AND ALSO PRODUCED THE BOOKS OF ACCOUNT, WHICH WERE TEST CHEC KED. THE AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAD CLAIMED TO HAVE INCURRED AN AMOUNT OF RS.40,51,854/- AS INTEREST PA ID TO LENDERS WHO HAD GIVEN THE ASSESSEE UNSECURED LOANS AS EXPENDITURE A S PER P&L ACCOUNT. HE OBSERVED THAT RATE OF INTEREST IN 15 CASES WAS PAID @ 18% AND IN ONE CASE, IT WAS PAID @ 15%. HE ALSO OBSERVED THAT IN SOME OF T HE CASES, THE INTEREST WAS ALSO PAID @ 8%, 9% AND 12%. THE AO HAD GIVEN THE D ETAILS OF 16 PERSONS WHO HAD BEEN PAID @ 18% & 15% AT PAGE 2 OF HIS ORDE R. THE AO FURTHER OBSERVED THAT AS PER SECTION 40A(2)(B) OF THE ACT, THE RATE OF INTEREST WHICH IS MORE THAN 12% ON UNSECURED LOANS WAS AT HIGHER SIDE AND ACCORDINGLY, ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE INTEREST E XPENDITURE BE NOT RESTRICTED IN THOSE 16 CASES @ 12% INSTEAD OF 18% & 15% AS TH E RATE OF 12% WAS FAIR AS PER MARKET TREND. ITA NO.4573/DEL./2015 3 3.1 THE AO CONSIDERED THE ASSESSEES REPLY AND OBSE RVED THAT THE SAME WAS NOT ACCEPTABLE. AFTER OBSERVING THAT AS PER SECTI ON 40A(2)(B) AND INTEREST RATE AVAILABLE ON UNSECURED LOAN IN THE MARKET, HE OBSER VED THAT UNSECURED LOAN WAS AVAILABLE AT THE MAXIMUM RATE OF 12% INTEREST D URING THE RELEVANT ASSESSMENT YEAR. HE OBSERVED THAT GENERALLY UNSECUR ED LOANS WERE RECEIVED BY THE ASSESSEE FROM RELATIVES VIZ. WIFE, FATHER, MOT HER, BROTHER, UNCLES, NEPHEWS, THEIR HUFS, SELF HUF, AUNTIES, BHABHIES, E TC. AND SOME OF THESE RELATIVES WERE ALSO OTHERWISE ASSOCIATED WITH THE A SSESSEE AND IN DIFFERENT MANNER ENJOYED THE PROFITABILITY THEREOF. HE FURTH ER OBSERVED THAT FOR EXAMPLE, SOME OF THEM WERE DIRECTLY EMPLOYED AND GE TTING SALARY FROM THE BUSINESS FIRM, SOME LET OUT THEIR PROPERTY AND ENJO YED RENTAL INCOME; SOME OF THEM WERE ALSO ENGAGED IN SIMILAR OR ASSOCIATED BUS INESS ACTIVITY AND ENJOYED JOB- WORK RECEIPTS OR MAKE -SALE AND PURCHASE FROM THAT BUSINESS AND THESE WERE VERY COMMON AND GENERAL FEATURES IN ALMOST ALL BUSINESS FAMILIES. HE WAS OF THE OPINION THAT IN SUCH CONDITIONS, RATE OF INTEREST OF 12% WAS NOT IN ANY WAY WAS A LESSER RATE. 3.2 THE AO ALSO CONSIDERED THE PLEA OF THE ASSESSE E THAT IN A.Y. 2006-07 & A.Y. 2007-08, THE ASSESSMENTS WERE COMPLETED UNDE R SCRUTINY AND INTEREST PAID TO THESE PERSONS @18% WAS ACCEPTED AND THE SAM E SHOULD ALSO BE ACCEPTED AS REASONABLE IN THIS ASSESSMENT YEAR. THE AO OBSERVED THAT COMPARISON COULD NOT BE MADE BETWEEN RATE OF INTER EST WHICH WERE THREE ITA NO.4573/DEL./2015 4 YEARS BEFORE WITH RATE OF INTEREST IN THIS YEAR. MO REOVER, HE OPINED THAT RES- JUDICATA IS NOT APPLICABLE IN INCOME TAX PROCEEDING S EVEN IN THE CASE OF SAME ASSESSEE FOR DIFFERENT ASSESSMENT YEARS. RELYING O N SOME JUDICIAL PRECEDENTS AND OBSERVING THAT AS NO SPEAKING ORDER WAS PASSED IN THOSE EARLIER YEARS, HE OBSERVED THAT AS FAR AS RULE OF CONSISTENCY WAS CON CERNED, IF COGENT REASONS WERE GIVEN, A DIFFERENT VIEW CAN BE TAKEN. HE OBSE RVED THAT THE FACT THAT THE ASSESSEES CLAIM WAS NOT QUESTIONED IN EARLIER YEAR , IT DID NOT ENTITLE THE ASSESSEE TO CONTEND THAT THE LAW SHOULD NOT BE APPL IED DURING CURRENT ASSESSMENT YEAR. 3.3 THE AO, AFTER OBSERVING THE SUBMISSIONS OF THE ASSESSEE IN DETAIL, MADE A DISALLOWANCE OF RS.8,32,696/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE BY OBSERVING AS UNDER :- IT IS SETTLED PRINCIPLE OF LAW THAT FOR DISALLOWI NG EXPENSES U/S 40A(2)(B) AO HAS TO GIVE HIS REASONING. AFTER DETAI LED DISCUSSION AND ANALYZING THE ISSUE IN DEPTH I FIND THAT INTEREST R ATE IN EXCESS OF 12% IS NOT REASONABLE AS PER AVAILABILITY OF SIMILAR SERVI CE AT LOWER COST. THUS EXCESS INTEREST IS DISALLOWED. TOTAL INTEREST @ 18% IS RS.24,06,583/- AND @ 15% IS RS.1,52,508/-. DISALLOWANCE OF 6% ON R S.24,06,583/- AGAINST 18% COMES AT RS.8,02,194/- AND 3% ON RS.1,5 2,508/- AGAINST 15% COMES AT RS.30,502/-. THUS TOTAL DISALLOWANCE COMES AT RS.8,32,696/- (802194 + 30502) WHICH IS ADD BACK.' 3.4 AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND THE LD. CIT (A) CONFIRMED THE DISALLO WANCE BY OBSERVING AS UNDER :- 3.4 I HAVE GONE THROUGH THE RIVAL SUBMISSION AS AB OVE. THE VARY PURPOSE OF SECTION 40A(2)(B) IS TO DISCOURAGE PAYME NT OF EXCESSIVE OR ITA NO.4573/DEL./2015 5 UNREASONABLE EXPENDITURE TO CERTAIN CLASS OF PERSON S. WHEN THE ASSESSEE IS A COMPANY, SUCH PERSON WOULD BE ANY DIRECTOR OF THE COMPANY OR ANY RELATIVE OF SUCH DIRECTOR. IT HAS NOT BEEN DISPUTED BY THE AR THAT PAYMENT OF INTEREST HAS BEEN MADE TO PERSONS SPECIF IED U/S 40A(2)(B). THE AO HAS GIVEN ELABORATE REASONS IN HIS ASSESSMEN T ORDER AND HAS COUNTERED EACH AND EVERY ARGUMENT OF THE APPELLANT MADE DURING THE ASSESSMENT PROCEEDINGS. DURING THE CASE OF APPEAL P ROCEEDINGS ALSO, THE AR OF THE APPELLANT HAS MORE OR LESS MADE THE S AME ARGUMENTS. THESE ARGUMENTS HAVE ALREADY BEEN TAKEN CARE OF BY THE AO IN HIS ASSESSMENT ORDER. THE AO HAS MADE A FINE DISTINCTIO N BETWEEN LOANS TAKEN FROM BANK AND FINANCIAL INSTITUTION AND LOAN TAKEN FROM CLOSE RELATIVES. 3.5 AS FAR AS RELYING ON JUDGMENT OF THE HON'BLE AL LAHABAD HIGH COURT IN THE CASE OF CIT-I VS NORTHERN ELECTRONICS SYSTEMS PVT. LTD. (2013) 218 TAXMAN 158 IS CONCERNED, THE SAID JUDGME NT IS DISTINGUISHABLE ON FACTS. IN THE CASE DECIDED BY TH E HON'BLE ALLAHABAD HIGH COURT, THE APPELLANT COMPANY HAD TAKEN LOAN FR OM ITS SISTER CONCERN. THUS, IN THIS CASE, THE LOAN TRANSACTIONS WERE BETWEEN TWO DIFFERENT BUSINESS ENTITIES WHICH CAN HAVE DIFFEREN T NEEDS FOR FINANCE. HOWEVER, IN THE CASE OF THE APPELLANT THE LENDERS A RE INDIVIDUALS WHO ARE RELATIVES OF THE DIRECTORS -OF THE COMPANY. IT SHOULD ALSO BE KEPT IN MIND THAT SECTION 40A BEGINS WITH A NON-OBSTANTE CL AUSE AND THE PROVISION OF THIS SECTION CONSEQUENTLY HAS TO BE GI VEN A STRICT INTERPRETATION. 3.6 BASED ON ABOVE DISCUSSION, GROUND OF APPEAL NO. 1 IS DISMISSED AND ADDITION OF RS.8,32,696/- IS CONFIRMED. 4. THE ASSESSEE, BEING AGGRIEVED, IS IN APPEAL BEFO RE US. 5. LD. AR FOR THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BEFORE THE LOWER AUTHORITIES BELOW AND CONCISED HIS SUBMISSION S AS UNDER :- (I) A COMPARABLE CHART OF INTEREST PAID ON UNSECURE D LOANS OF PERSON WHO COME U/S 40A(2)(B) OF THE ACT IN AY: 2006-07, A Y : 2007- 08, AY: 2008-09, AY: 2009-10 AND AY: 2010-11 WAS FI LED BEFORE THE AUTHORITIES BELOW. THE ASSESSMENT FOR A Y 2006-07 ITA NO.4573/DEL./2015 6 AND AY 2007-08 WERE COMPLETED UNDER SCRUTINY U/S 14 3 (3) AND THE INTEREST PAID TO THESE PERSONS WAS ACCEPTED TO BE REASONABLE AND ALLOWED BY THE AO. HE SUBMITTED THAT THE RATE OF 18% WAS NOT EXCESSIVE LOOKING TO THE MARKET RATE AND CONDIT IONS. HE SUBMITTED THAT THE CURRENT MARKET RATE OF INTEREST WAS GENERALLY AS HIGHER AS 18% TO 20% AND IT COULD NOT BE COMPARED W ITH THE BANK LENDING RATES. HE ALSO SUBMITTED THAT IT WAS VERY DIFFICULT TO GET THE LOAN FROM BANK AND INVOLVED MANY ADDITIONAL EXPENSES AND PAPER WORK AND ALSO COLLATERAL SECURITY WAS A M UST FORGETTING LOAN FROM BANK. HE SUBMITTED THAT THE ASSESSEE HAD GOT NO IMMOVEABLE PROPERTY WHICH COULD BE GIVEN AS COLLATE RAL SECURITY AND HENCE GETTING ANY LOAN FROM BANK WAS NEXT TO IM POSSIBLE AND THAT WAS THE REASON WHY THE ASSESSEE HAD NOT BE EN ABLE TO GET ANY LOAN FROM BANK. HE FURTHER SUBMITTED THAT AS TH E ASSESSEE WAS ALWAYS IN NEED OF FINANCE THE ASSESSEE COULD NO T THINK OF RETURNING THE LOAN, AS IT SHALL AFFECT THE TURNOVER OF THE BUSINESS AND THE AVERAGE MONTHLY BALANCE OF THE UNSECURED L OANS CAME TO RS.3,68,51,230/- AND INTEREST PAID ON THESE LOANS W AS 40,51,854/- WHICH CAME TO 11% ONLY. (II) HE SUBMITTED THAT THE ASSESSEE PAID INTEREST T O CLOSE RELATIONS @ 18% PER ANNUM AND AO ALLOWED INTEREST @ 12% MARKET RATE WHEREAS THE ITAT HELD IN VARIOUS CASES THAT MARKET RATE UP TO 24% WAS REASONABLE. IN THIS REGARD, HE RELIED ON T HE CASES RELIED UPON BEFORE THE LD. CIT (A). (III) LD. AR SUBMITTED THAT THE INTEREST HAD BEEN P AID AT MORE THAN 12% TO THE PARTIES WHOSE DEPOSIT WERE OLD RUNNING F ROM YEAR EARLIER THAN AY : 2006-07 AND INTEREST @ 18% WAS PA ID TO THEM ITA NO.4573/DEL./2015 7 IN ALL THE YEARS I.E. AY : 2006-07 TO AY : 2010-11. HE SUBMITTED THAT THE ASSESSMENTS FOR AY: 2006-07 & AY : 2007-08 WERE COMPLETED UNDER SCRUTINY U/S 143(3) OF THE ACT AND IN BOTH THE YEARS, THE INTEREST WAS PAID @) 18% WHICH WAS ALLOW ED AND NO DISALLOWANCE WAS MADE IN BOTH THE YEARS. HE RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS ON WHICH HE RELIED BEFORE T HE LD. CIT (A). (IV) HE SUBMITTED THAT THE AO HAS INCORRECTLY COMPA RED THE PROVISIONS OF SECTION 40(B) WITH THE PROVISIONS OF SECTION 40A(2) (B). HE SUBMITTED THAT BOTH THESE PROVISIONS ARE D IFFERENT AND RELATES TO THE DIFFERENT CATEGORIES OF THE PERSONS AND THE ACTION OF THE AO IN RESTRICTING THE INTEREST @ 12% DID NOT G ET ANY SUPPORT FROM THE PROVISIONS OF SECTION 40(B) INSTEAD IT SU PPORTED THE ASSESSEES CASE. HE SUBMITTED THAT IT IS UNIVERSAL TRUTH THAT THERE MUST BE DIFFERENCE IN INTEREST PAID TO SELF WITH TH E INTEREST PAID TO OTHER UNSECURED LOANS. (V) WITH REGARD TO THE RELIANCE PLACED BY THE AO TH AT INTEREST ALLOWED BY THE ASSESSEE ON UNSECURED LOANS IN AY : 2006-07 & AY : 2007-08 IN THE SCRUTINY ASSESSMENT CANNOT BE A CCEPTED AS RES-JUDICATA AS THE SAME IS NOT ACCEPTABLE IN INCOM E TAX PROCEEDINGS IN THE CASE OF SAME ASSESSEE FOR DIFFER ENT YEARS, THE LD. AR SUBMITTED THAT THE CONSISTENCY SHOULD BE MAI NTAINED AND IN THIS REGARD, HE RELIED ON VARIOUS JUDICIAL PRONO UNCEMENTS WHICH HE RELIED UPON BEFORE THE LD. CIT (A). IN VIEW OF THE AFORESAID SUBMISSIONS, THE LD. AR PR AYED THAT THE ORDERS OF THE AUTHORITIES BELOW BE SET ASIDE AND THE APPEAL OF TH E ASSESSEE BE ALLOWED. ITA NO.4573/DEL./2015 8 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LD. CIT (A) AND THE AO AND DOES NOT WANT US TO INTERFERE IN THE IMP UGNED ORDER. 7. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND PE RUSED THE MATERIAL ON RECORD. THE ONLY ISSUE INVOLVED IS WHETHER THE INT EREST PAID BY THE ASSESSEE AT A RATE OF MORE THAN 12% PER ANNUM ON UNSECURED LOAN S OF THE PARTIES ATTRACTS SECTION 40A(2)(B) OF THE ACT AND CAN BE HELD AS EXC ESSIVE OR NOT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND. WE FIND THA T THE ASSESSEE HAS PAID INTEREST VARIED FROM 8% TO 18% ON UNSECURED LOANS A ND OUT OF THIS, 15 PERSONS WERE PAID @ 18% AND ONE PERSON WAS PAID @ 15%. THE AO RESTRICTED THE INTEREST PAID TO THESE PERSONS @ 12% AND ACCORDINGL Y, MADE A DISALLOWANCE OF RS.8,32,696 WHICH WAS CONFIRMED BY THE CIT (A). TH E ASSESSEE CONTENDED THAT THESE UNSECURED LOANS ARE RUNNING EVEN EARLIER FROM AY 2006-07 AND A COMPARABLE CHART OF THESE LOANS FOR AY 2006-07 TO A Y 2010-11 WAS ALSO FILED DURING THE ASSESSMENT PROCEEDINGS AND HE MADE A CAT EGORICAL SUBMISSION THAT IN THOSE YEARS ALSO, THE INTEREST @ 18% WAS PAID TO SOME OF THE DEPOSITORS. WE ALSO FIND THAT IN AY 2006-07 AND 2007-08, THE AS SESSMENT WAS COMPLETED UNDER SCRUTINY U/S 143(3) AND THE INTEREST PAID @ 1 8% WAS ACCEPTED BY THE DEPARTMENT AND NO DISALLOWANCE WAS MADE IN THE SAID ASSESSMENT YEARS. IN THIS REGARD, WE HAVE ALSO GONE THROUGH THE JUDICIAL PRONOUNCEMENTS RELIED BY THE LD. AR THAT MARKET RATE UP TO 24% WAS REASONABL E. FURTHER, A PERUSAL OF CHART SHOWN BY THE ASSESSEE OF INTEREST EXPENDITURE INCURRED IN THIS YEAR AND ITA NO.4573/DEL./2015 9 EARLIER YEARS, WE NOTICE THAT THE ASSESSEE HAS NOT INCREASED THE RATE OF INTEREST TO ANY DEPOSITOR AND IN SOME OF THE CASE; THE RATE OF INTEREST HAS BEEN REDUCED AND PAID AT A LESSER RATE AS MUTUALLY AGREED BY THE DEPOSITORS. THEREFORE, AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE CON SISTENCY IS TO BE MAINTAINED WHILE COMPLETING THE ASSESSMENT, WE FIND FORCE IN H IS ARGUMENT. FURTHER, WE FIND THAT THE ASSESSEE IS NOT HAVING ANY IMMOVABLE PROPERTY WITHOUT WHICH THE BANKS WOULD NOT LEND ANY LOANS AT A LESSER RATE AS THIS IS ONE OF THE PRIMARY REQUIREMENTS FOR TAKING LOANS FROM THE BANKS. FUR THER, WE ARE OF THE OPINION THAT THE CONSISTENCY SHOULD HAVE BEEN FOLLOWED IN C OMPLETING THE ASSESSMENT PROCEEDINGS UNLESS THERE IS COGENT REASON OR JUSTIF IABLE GROUNDS FOR THE REVENUE TO DEPART FROM ITS EARLIER DECISIONS MADE U /S 143(3) OF THE ACT. 7.1 WE ALSO RELY ON CERTAIN CASE LAWS RELIED UPON B Y THE LD. AR TO SUPPORT OUR AFORESAID VIEW :- (I) HONBLE MADHYA PRADESH HIGH COURT IN THE CASE O F BIRLA GWALIOR (P) LTD. VS. CIT (1962) 44 ITR 847 HAS ST ATED THAT, IT IS FOR THE ASSESSEE TO JUDGE AS TO WHAT RATE IS REA SONABLE. IT IS FURTHER STATED THAT WHEN THE INCOME TAX AUTHORITIES HAVE FOUND THAT THE BORROWING TRANSACTIONS ARE NOT ILLUSORY OR COLORABLE AND THE CAPITAL IS BORROWED BY THE ASSESSEE FOR PURPOSE OF BUSINESS AND THE AMOUNT OF INTEREST IS PAID, THEY HAVE NO JU RISDICTION TO ITA NO.4573/DEL./2015 10 DETERMINE WHETHER THE RATE OF INTEREST TO PAY IS RE ASONABLE OR NOT AND TO DISALLOW A PORTION OF INTEREST WHICH HAS BEE N PAID. (II) ITAT AHMEDABAD BENCH THE CASE OF OMKAR MAL GAU RI SHANKER VS. ITO (1991) HELD THAT THE RATE OF 24% CANNOT BE TREATED AS UNREASONABLE OR EXCESSIVE AND THEREFORE DIRECTED AL LOWANCE OF ENTIRE INTEREST. FURTHER IT WAS HELD THAT DEPOSITS BEING OLD, INTEREST THEREUPON WAS NEVER DISALLOWED IN THE PAST . IN VIEW OF THE ABOVE, IT WAS HELD THAT THE FUND WERE USED FOR BUSINESS PURPOSE COMING OVER FROM PRECEDING ASSESSMENT YEARS , IN THE PAST IT HAD BEEN ALLOWED AT THE RATE OF 24%, INTERE ST OF 24% WAS NOT EXCESSIVE OR UNREASONABLE. (III) ITAT, RAJKOT BENCH IN THE CASE OF AC-3, JAMNA GAR VS. SURESH MAGAN LAL RAVANI (2013) 143 ITD 25 HAS HELD THAT INTEREST @ 18% IN AY 2008-09 ON UNSECURED LOANS OF FAMILY CA N NOT BE SAID TO BE EXCESSIVE OR UNREASONABLE U/S 40A(2)(B) OF THE INCOME TAX ACT, 1961. (IV) HONBLE ALLAHABAD HIGH COURT IN THE CASE OF AB BAS WAZIR (P) LTD. VS. CIT 265 ITR 77 (ALL.) HAS HELD THAT EVEN WHILE INVOKING THE PROVISIONS OF SECTION 40A(2) OF THE AC T, THE REASONABLENESS OF EXPENDITURE FOR THE PURPOSE OF BU SINESS HAS TO BE JUDGED FROM THE POINT OF VIEW OF A BUSINESSMAN A ND NOT THAT OF ITA NO.4573/DEL./2015 11 THE REVENUE. THE REASONABLENESS MUST BE LOOKED INT O FROM BUSINESSMAN POINT OF VIEW. (V) SIMILAR VIEW IS HELD BY HONBLE MADRAS HIGH COU RT IN CIT VS. COMPUTER GRAPHIC LTD. (258 ITR 84). 7.2 IN VIEW OF THE AFORESAID FACT, CIRCUMSTANCES AN D CASE LAWS ON THE SUBJECT, WE ARE OF THE OPINION THAT THE LD. CIT (A) WAS NOT RIGHT IN CONFIRMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF INTER EST PAID TO THE PERSONS U/S 40A(2)(B) BY HOLDING IT UNREASONABLE AND EXCESS IVE AND ALSO RESTRICTING THE INTEREST PAYMENT TO THEM @ 12%. ACCORDINGLY, W E ALLOW THE GROUND OF APPEAL TAKEN BY THE ASSESSEE AND ORDER DELETION OF THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 26 TH DAY OF NOVEMBER, 2015. SD/- SD/- (N.K. SAINI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 26 TH DAY OF NOVEMBER, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), KARNAL. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI. ITA NO.4573/DEL./2015 12