ITO, Madikeri V. Kodagu Academy for Education and Culture, Gonikoppa

ITA 644/BANG/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7759 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Fair market value
• Section: 234B; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.644/BANG/2011 (ASSESSMENT YEAR : 2007-08) INCOME TAX OFFICER, WARD 1, MADIKERI. . APPELLANT. VS. M/S. KODAGU ACADEMY FOR EDUCATION & CULTURE, COORG PUBLIC SCHOOL, GONIKAPPAL-571 213. .. RES PONDENT. PAN AAATC 4651P C.O. NO.51/BANG/2011 (ASSESSMENT YEAR 2007-08) (IN ITA NO.644/BANG/2011) (BY ASSESSEE) REVENUE BY : DR. SATYA SAI RATH . CROSS OBJECTOR / ASSESSEE BY : SHRI V. SRINIVASAN. DATE OF HEARING : 04.06.2012. DATE OF PRONOUNCEMENT :12.06.2012. O R D E R PER SHRI JASON P. BOAZ, A.M . : THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), MYSORE DATED 15.03.2011 FOR ASSESSMENT YEAR 2007-08. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE IS A REGISTERED TRUST MANAGIN G A RESIDENTIAL SCHOOL CALLED COORG PUBLIC SCHOOL AT GONIKOPPAL, KODAGU DISTRICT. THE ASSESS EE TRUST IS NOT REGISTERED UNDER SECTION 2 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 12 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERR ED AS 'THE ACT') AND IT IS NOT CLAIMING EXEMPTION UNDER SECTION 11 OR 10(23) OF THE ACT. TH E ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 20.9.2007 IN THE STA TUS OF AN AOP DECLARING A LOSS OF RS. 5,12,445. IN THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER FOUND THAT THE MAJOR EXPENDITURE CLAIMED BY THE ASSESSEE WAS T HE PAYMENT OF INTEREST TO THE TRUSTEES AND THEIR RELATIVES. THE ASSESSING OFFICE R APPLIED THE PROVISIONS OF SECTION 40(BA) OF THE ACT AND DISALLOWED THE INTEREST PAID TO THE DIRECTORS / TRUSTEES AMOUNTING TO RS. 21,51,418 HOLDING THAT SINCE THE ASSESSEE IS LIABLE TO BE ASSESSED AS AN AOP, THE INTEREST PAID CANNOT BE ALLOWED AS A DEDUCTION. TH E ASSESSING OFFICER ALSO MADE A DISALLOWANCE OF RS. 1,81,132 UNDER SECTION 40A(2)(B ) IN RESPECT OF THE INTEREST PAID TO THE RELATIVES OF THE TRUSTEES HOLDING THAT THE INTEREST PAID BY THE ASSESSEE AT 18% PER ANNUM WAS EXCESSIVE. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER FILED AN APPEAL BEFORE THE CIT(A), MYSORE. THE LEARNED C IT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE DISALLOWANCE UNDER SECTIO N 40(BA) OF THE ACT CANNOT BE MADE. THE LEARNED CIT(A) HOWEVER UPHELD THE DISALLOWANCE OF INTEREST MADE UNDER SECTION 40A (2)(B) OF THE ACT. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE REVENUE IS N APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS-O BJECTIONS. 3.1 REVENUES GROUND OF APPEAL ARE AS UNDER : 1. WHETHER THE CIT(A)S ORDER THAT THE ASSESSEE TRUST CANNOT BE ASSESSED AS ASSOCIATION OF PERSONS IS CORRECT OR NOT, GIVE N THE FACTS AND CIRCUMSTANCES OF THE CASE ? 2. WHETHER THE RELIANCE PLACED BY THE CIT(A) ON TH E CASE LAW SHARADABEN BHAGUBHAI MAFATLAL PUBLIC CHARITABLE TRUST VS. CIT (247 ITR 1) IS CORRECT, GIVEN THE SAID DECISION WAS RENDERED IN A DIFFERENT CONTEXT ? 3 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 3. WHETHER THE PROVISIONS OF SECTION 40(BA) IS AP PLICABLE OR NOT SINCE THE ASSESSEES INCOME IS OFFERED AND ASSESSED UNDER THE HEAD BUSINESS OR PROFESSION ? 4. WHETHER THE TRUSTEES CAN OR CANNOT BE TREATED A S MEMBERS OF THE ASSOCIATION OF PERSONS ? 5. WHETHER THE PROVISIONS OF SECTION 40(BA) ARE AP PLICABLE OR NOT GIVEN THAT THE FUNDS OF THE TRUST HAVE BEEN HELD TO BE MISUSED BY THE TRUSTEES ? 6. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 3.2 THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE CROSS OBJECTOR/RESPONDENT ARE OPPOSED TO LAW, EQUITY, WE IGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT ARE APPLICABLE IN RESPECT OF T HE INTEREST PAID BY THE CROSS OBJECTOR TO THE TRUSTEES AND FAMILY MEMBERS OF THE TRUSTEES AND DIRECTING THE LEARNED ASSESSING OFFICER TO MAKE A DISALLOWANCE UN DER THE FACTS AND IN THE CIRCUMSTANCES OF THE CROSS OBJECTORS CASE. 3. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH THE HON'BLE CCIT/DG, THE CROSS OBJECTOR / RESPONDENT DENIES ITSELF LIABL E TO BE CHARGED TO INTEREST UNDER SECTION 234B OF THE ACT, WHICH UNDER THE FACT S AND IN THE CIRCUMSTANCES OF THE RESPONDENT / CROSS OBJECTORS CASE DESERVES TO BE CANCELLED. 4. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING OF THE CROSS OBJECTION, YOUR CROSS OBJECTOR HUMBLY PRAYS THAT THE CROSS OBJECTION MAY BE ALLOWED AND JUSTICE RENDERED. 4.1 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE STATUS OF THE ASS ESSEE HAS TO BE CONSIDERED AS INDIVIDUAL. HE SUBMITTED THAT THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF SHARDABEN BHAGUBHAI MAFATLAL PUBLIC CHARITABLE TRUS T VS. CIT (247 ITR 1) RELIED UPON BY THE LEARNED CIT(A) WAS ON A DIFFERENT ISSUE VIZ. RE LATING TO RELIEF UNDER SECTION 80L OF THE ACT. THE SAID JUDGMENT, IT WAS SUBMITTED, WAS DIST INGUISHABLE AND CANNOT BE APPLIED TO THE ASSESSEES CASE. THE LEARNED DEPARTMENTAL REPRESEN TATIVE FURTHER POINTED OUT THAT IT WAS THE ASSESSEE ITSELF WHO FILED ITS RETURN OF INCOME IN THE STATUS OF AOP AND THEREFORE IT 4 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 CANNOT CLAIM TO BE ASSESSED IN THE STATUS OF INDIVI DUAL. HE PRAYED THAT THE ORDER OF THE LEARNED CIT(A) ON THIS POINT BE REVERSED. 4.2 THE LEARNED AUTHORISED REPRESENTATIVE ON TH E OTHER HAND, SUPPORTED THE ORDER OF THE LEARNED CIT(A). HE SUBMITTED THAT THE JUDGMENT OF THE HON'BLE HIGH COURT OF BOMBAY REPORTED IN 247 ITR 1 RELIED ON BY THE LEARN ED CIT(A) LAID DOWN THE PRINCIPLES FOR THE ASSESSMENT OF THE INCOME OF A CHARITABLE TRUST WHEN EXEMPTION STANDS FORFEITED. HE ALSO RELIED ON THE DECISION OF THE HON'BLE HIGH COU RT OF KARNATAKA IN THE CASE OF CIT VS. K. SHYAMARAJU & OTHERS REPORTED N 189 ITR 392 TO CO NTEND THAT THE TRUSTEES OF THE TRUST CANNOT BE ASSESSED AS AOP. HE DREW OUR ATT ENTION TO THE FINDINGS OF THE LEARNED CIT(A) AT PARA 4 OF HIS ORDER WHERE HE HAS HELD THA T THE TRUSTEES CANNOT BE TREATED AS MEMBERS OF AOP, EVEN IF THE TRUST IS TO BE ASSESSED AS AN AOP FOR RATE PURPOSES. HE SUBMITTED THAT THE PROVISIONS OF SECTION 40(BA) OF THE ACT HAVE NO APPLICATION TO THE CASE OF THE ASSESSEE AND THEREFORE, THE LEARNED CIT(A) W AS JUSTIFIED IN DELETING THE SAID DISALLOWANCE. 5.1 ON THE CROSS OBJECTIONS, IT WAS CONTENDED B Y THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLD ING THE DISALLOWANCE UNDER SECTION 40A(2)(B) OF THE ACT. HE SUBMITTED THAT THE PROVIS IONS OF SECTION 40A(2)(B) WILL NOT BE APPLICABLE, AS THE ASSESSING OFFICER HAS NOT BROUGH T ANY MATERIAL ON RECORD TO SHOW THAT THE PAYMENT OF INTEREST AT 18% IS EXCESSIVE. THE L EARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE COMPARISON OF THE INTEREST PAID TO OUTSIDER LENDERS WITH THE INTEREST CHARGED BY THE BANK ON SECURED LOANS IS NOT APPROP RIATE. HE PLEADED THAT THE 5 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 DISALLOWANCE MADE UNDER SECTION 40A(2)(B) AS WELL A S THE DIRECTION OF THE LEARNED CIT(A) TO MAKE A DISALLOWANCE IN RESPECT OF THE INTEREST P AID TO THE DIRECTORS CONSIDERED FOR DISALLOWANCE UNDER SECTION 40(BA) OF THE ACT REQUIR ES TO BE DELETED AS THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 5.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESE NTATIVE SUPPORTED THE ORDER OF THE LEARNED CIT(A) ON THE DISALLOWANCE MADE UNDER SECTI ON 40A(2)(B) OF THE ACT. 6.1 WE HAVE HEARD BOTH PARTIES AND HAVING CAREF ULLY PERUSED AND CONSIDERED THE MATERIAL ON RECORD PROCEED TO DISPOSE OFF THE TWO I SSUES BEFORE US RELATING TO THE DISALLOWANCE MADE UNDER SECTION 40(BA) AND 40A(2)B) OF THE ACT. 6.2 THE FIRST ISSUE RELATES TO THE DISALLOWANCE MADE UNDER SECTION 40(BA) OF THE ACT. THE PROVISIONS OF SECTION 40(BA) READ AS UNDER : 40(BA) IN THE CASE OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS [OTHER THAN A COMPANY OR A CO-OPERATIVE SOCIETY OR A SOCIE TY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860(2) OF 1860), OR UN DER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA], ANY PAYMEN T OF INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION, BY WHATEVER NAME CALLED , MADE BY SUCH ASSOCIATION OR BODY TO A MEMBER OF SUCH ASSOCIATION OR BODY. 6.3 FROM A PLAIN READING OF THE AFORESAID PROVI SIONS, IT BECOMES CLEAR THAT THE INTEREST PAID TO A MEMBER OF AN AOP REQUIRES TO BE DISALLOWE D IN TERMS OF THE AFORESAID PROVISIONS. THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE ON PAGE 4 OF HIS ORDER IS AS UNDER : IN VIEW OF THE ABOVE DECISION OF THE HON'BLE COUR T I HOLD THAT THE TRUSTEES CANNOT BE TREATED AS MEMBERS OF THE AOP EVEN IF THE TRUST IS TO BE ASSESSED AS AN AOP FOR RATE PURPOSES. THE RELATIONSHIP BETW EEN THE SETTLER OF THE TRUST, THE TRUSTEES AND THE BENEFICIARIES IS NOT TH AT OF A MEMBERSHIP OF A COMMON ASSOCIATION. PROVISIONS OF SECTION 40(BA) C ANNOT BE INVOKED TO DISALLOW THE INTEREST PAID TO THE TRUSTEES IF THE TRUST DEED SO PROVIDES FOR. 6 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 IN OTHER WORDS, THE LEARNED CIT(A) HAS NOT HELD TH AT THE ASSESSEE MUST BE ASSESSED IN THE STATUS OF INDIVIDUAL. HE HAS APPLIED THE JUD GMENT OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF SHARADABEN BHAGUSHER MAFATLAL PUBLIC CHARITABLE TRUST (SUPRA) TO CONCLUDE THAT THE TRUSTEES CANNOT BE CONSIDERED AS MEMBERS OF THE AOP. IN FACT, HON'BLE HIGH COURT OF KARNATAKA N THE CASE OF CIT VS. SHYAMARAJU (189 ITR 1) HAS ALSO HELD THAT THE TRUSTEES AS REPRESENTATIVE ASSESSEES CANNOT BE HELD ASSESSABLE AS AOP. THEREFORE, WHETHER OR NOT THE ASSESSEE IS ASSESSED IN THE STATUS OF AOP OR INDIVIDUAL, IT DOES NOT MATTER. THE DISALLOWANCE UNDER SECTION 40 (BA) OF THE ACT, CAN BE MADE ONLY WITH REGARD TO THE INTEREST PAID TO THE MEMBERS OF THE A OP. THE TRUSTEES OF THE ASSESSEE TRUST CANNOT BE DESCRIBED AS MEMBERS OF THE AOP BY ANY STRETCH OF IMAGINATION. HENCE, WE FIND THAT THE ORDER OF THE LEARNED CIT(A) ON THI S ISSUE IS IN ACCORDANCE WITH LAW AND THEREFORE CONFIRM THE SAME. 7.1 THE SECOND ISSUE RELATES TO THE DISALLOWANC E MADE UNDER SECTION 40A(2)(B) OF THE ACT. THE CONTENTION OF THE ASSESSEE BEFORE THE LEA RNED CIT(A) AS PER WRITTEN SUBMISSION FILED BEFORE HIM BY LETTER DT.18.3.2011 AT PAGES 10 TO 12 THEREOF ARE AS FOLLOWS : THE APPELLANT SUBMITS THAT THE EARNED INCOME TAX OFFICER OUGHT NOT TO HAVE APPLIED SECTION 40A(2)(B) IN THE FACTS AND CIRCUMST ANCES OF THE CASE TO DISALLOW A PORTION OF THE INTEREST PAID TO THE RELATIVES OF THE TRUSTEES ON THE LOANS ADVANCED BY THEM TO IT. A PERUSAL OF THE ORDER OF ASSESSMENT WILL INDICATE THAT THE EARNED INCOME TAX OFFICER MADE THE DISALLOWANCE ON THE GROUND THAT THE INTEREST PAID TO THE RELATIVES OF THE TRUSTEES @ 18 % PER ANNUM WAS EXCESSIVE AND UNREASONABLE WHEN COMPARED WITH INTEREST PAID @ 14-1/4% TO BANKS ON LOANS BORROWED. THE LEARNED ITO HELD THAT INTEREST @ 15% PER ANNUM IS REASONABLE AND ACCORDINGLY, DISALLOWED RS. 1,81,13 2 AS EXCESSIVE INTEREST PAID. SECTION 40A(2) IS NOT APPLICABLE TO THE CASE OF THE APPELLANT SINCE IT CAN BE INVOKED ONLY WHILE COMPUTING INCOME UNDER THE HEAD OF THE APPELLANT SINCE IT CAN BE INVOKED ONLY WHILE COMPUTING INCOME UNDER TH E HEAD PROFITS AND GAINS OF 7 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 BUSINESS OR PROFESSION AND SINCE THE APPELLANT HAS DEMONSTRATED BEYOND DOUBT IN THE PRECEDING PARAGRAPHS THAT IT IS PURSUING THE CHARITABLE PURPOSE OF EDUCATION, THAT IT IS NOT CARRYING ON ANY BUSINESS ACTIVITY AND THAT ITS INCOME IS NOT LIABLE TO BE ASSESSED UNDER THE HEAD PROFITS A ND GAINS OF BUSINESS OR PROFESSION. EVEN ASSUMING THAT THE INCOME OF THE APPELLANT IS REQUIRED TO BE ASSESSED UNDER THAT HEAD, THE INVOCATION OF SECTION 40A(2) WAS UNCALLED FOR. SECTION 40A(2) EMPOWERS THE ASSESSING OFFICER TO DI SALLOW, IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OR PROFESSION, EXPEND ITURE INCURRED FOR WHICH PAYMENT HAS BEEN MADE TO THE RELATIVES OF THE ASSES SEE TO THE EXTENT THE EXPENDITURE S CONSIDERED TO BE EXCESSIVE OR UNREASO NABLE. THE REASONABLENESS OF THE EXPENDITURE HAS TO BE JUDGED HAVING REGARD T O THE FAR MARKET VALUE OF THE GOODS, SERVICES OR FACILITIES FOR WHICH THE PAY MENT IS MADE OR THE LEGITIMATE BUSINESS NEEDS OF THE ASSESSEE OR THE BE NEFIT DERIVED BY OR ACCRUING TO THE ASSESSEE FROM SUCH PAYMENT. PERHAPS THE LEA RNED ITO FELT THAT THE INTEREST PAID BY THE APPELLANT @ 14-1/4% TO BANKS R EPRESENTED THE FAIR MARKET VALUE OF THE LOAN FACILITY AND, THEREFORE, CAME TO THE CONCLUSION THAT THE INTEREST PAID BY THE APPELLANT TO THE RELATIVES OF TRUSTEES @ 18% PER ANNUM WAS EXCESSIVE. THE LEARNED ITO HAS LOST SIGHT OF T HE FACT THAT WHILE THE LOANS BORROWED FROM BANKS WERE SECURED AGAINST THE MOVABL E AND IMMOVABLE PROPERTIES OF THE APPELLANT, THE LOANS BORROWED FRO M THE RELATIVES OF THE TRUSTEES WERE UNSECURED. THE APPELLANT HAD PLEDGE D ALL ITS ASSETS TO SECURE LOANS FROM BANKS. THE BANKS WOULD NOT MAKE ANY FUR THER ADVANCES TO THE APPELLANT. IT, THEREFORE, HAD TO RESORT TO BORROW FROM PRIVATE PERSONS. IT MUST BE APPRECIATED THAT IT S DIFFICULT TO BORROW F ROM UNKNOWN PERSONS WITHOUT SECURITY OR GUARANTEE. THE APPELLANT, THEREFORE, B ORROWED MONIES FROM THE RELATIVES OF TRUSTEES WHO OBVIOUSLY TOOK THE RISK O F ADVANCING FUNDS WITHOUT ANY SECURITY OR GUARANTEE. IN THE CIRCUMSTANCES, I NTEREST PAID TO THEM ON SUCH LOANS @ 18% CANNOT BE SAID TO BE EXCESSIVE OR UNREA SONABLE INTEREST PAID ON UNSECURED LOANS CANNOT BE COMPARED WITH SECURED BAN K LOANS. INTEREST PAID ON UNSECURED LOANS IS CERTAINLY MORE THAN INTEREST PAI D ON SECURED LOANS. A FINDING OF EXCESSIVE PAYMENT CANNOT BE REACHED BY MAKING A COMPARISON OF THE RATE OF INTEREST PAID ON UNSECURED LOANS WITH THAT ON SECUR ED LOANS. THE APPELLANT RELIES ON THE DECISIONS OF THE ITAT AMRITSAR BENC H IN ITO VS. BANSI LAL GUPTA 113 TTJ 898 AND LUCKNOW B BENCH IN SATYA NA RAIN KASHO RAM (P) LTD. VS. DCIT 122 TTJ 839 WHEREIN IT WAS HELD THAT INTER EST PAID TO RELATIVES @ 24% PER ANNUM CANNOT BE SAID TO BE UNREASONABLE. T HE LEARNED ITO HAS NOT ESTABLISHED BY COGENT MATERIAL THAT THE INTEREST PA ID BY THE APPELLANT TO THE RELATIVES OF THE TRUSTEES WAS EITHER EXCESSIVE OR U NREASONABLE. THE DISALLOWANCE OF A PORTION OF THE INTEREST PAID BY T HE APPELLANT TO THE RELATIVES OF THE TRUSTEES WAS, THEREFORE, UNCALLED FOR AND UN WARRANTED. 8 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 7.2 WE, HOWEVER, FIND FROM A PERUSAL OF THE ORD ER OF THE LEARNED CIT(A) THAT HE HAS NOT CONSIDERED THE AFORESAID SUBMISSION MADE WITH R EGARD TO THE CLAIM THAT THE INTEREST PAID WAS NOT EXCESSIVE. THE CLAIM OF THE ASSESSEE IS THAT IT HAD BORROWED UNSECURED LOANS AT 18% INTEREST PER ANNUM AND THE ASSESSING OFFICER ACCEPTED THE INTEREST RATE OF 15% PER ANNUM BASED ON THE LENDING RATE OF BANKS. IT I S POINTED OUT THAT THE BANKS LEND MONEY AFTER ACCEPTING SECURITY AND THE TRUSTEES HAD GIVEN UNSECURED LOANS TO THE TRUST. IT IS ALSO CONTENDED THAT THE AMRITSAR BENCH OF THE TRIBU NAL IN THE CASE OF ITO VS. BANSI LAL GUPTA (113 TTJ 898) AND LUCKNOW B BENCH OF THE TR IBUNAL IN SATYA NARAIN KASHO RAM (P) LTD. VS. DCIT (122 TTJ 839) HAS HELD THAT THE INTER EST PAID AT 24% PER ANNUM CANNOT BE SAID TO BE UNREASONABLE. THE LEARNED CIT(A) HAS NO T CONSIDERED THESE ASPECTS OF THE MATTER WHEN HE SUSTAINED THE DISALLOWANCE AND DIREC TED THAT THE SIMILAR DISALLOWANCE BE MADE IN RESPECT OF INTEREST PAID TO TRUSTEES / DIRE CTORS OF THE TRIBUNAL. 7.3 CONSIDERING THE AFORESAID PORTION, WE CO NSIDER IT PROPER TO RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER DE NO VO, THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE FACT THAT THE PAYMENT OF INTEREST AT 18% PER ANNUM IS NOT EXCESSIVE AND UNREASONABLE. WE ARE NOT COMMENTING ON THE MERITS O F THE MATTER AND IT IS SUFFICIENT TO OBSERVE THAT ALL CONTENTIONS ARE LEFT OPEN TO BE DE CIDED BY THE ASSESSING OFFICER. THE ORDER OF THE LEARNED CIT(A) UPHOLDING THE DISALLOWA NCE OF INTEREST IS THEREFORE REVERSED AND THE ASSESSING OFFICER IS DIRECTED TO CONSIDER T HE ISSUE AFRESH IN THE LIGHT OF THE DIRECTIONS AS ABOVE. 9 ITA NO.644/BANG/11 C.O. NO.51/BANG/2011 8. ACCORDINGLY, THE APPEAL BY THE REVENUE IS DI SMISSED AND THE CROSS OBJECTION BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2012. SD/- SD/- (P. MADHAVI DEVI) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 12.06.2012. *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - A BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE