M/S VISHNULAXMI SILK MILLS, Mumbai V. ITO 18 (3)(5), Mumbai

ITA 983/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7429 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: S D PATHAK
• Keywords: Fair market value
• Section: 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI PAWAN SINGH (JM) I.T.A. NO. 983 /MUM/ 201 9 (ASSESSMENT YEAR 20 14 - 1 5 ) I.T.A. NO. 984/MUM/2019 (ASSESSMENT YEAR 2015 - 16) M/S. VISHNULAXMI SILK MILLS C/O. D.C. J AIN & CO. 75, BOMBAY MUTUAL BUILDING 293, DR. D.N. ROAD, FORT MUMBAI - 400 001. PAN : AAAFV 3106C V S . ITO 18(3)(5) ROOM NO. 605 6 TH FLOOR EARNEST HOUSE NARIMAN POINT NCPA MARG MUMBAI - 400021. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI S.D. PATHAK DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 10 . 10 . 201 9 DATE OF PRONOUNCEMENT 06.01.2020 O R D E R PER SHAMIM YAHYA (AM) : - THESE ARE APPEALS BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF LEARNED CIT(A) FOR THE RESPECTIVE ASSESSMENT YEARS 2014 - 15 & 2015 - 16 WHEREIN LEARNED CIT(A) HAS SUSTAINED THE DISALLOWANCE OF INTEREST TO THE PARTIES COVERED U/S. 40A(2)(B) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS PAID INTEREST TO OUTSIDERS AT RATES STARTING FROM 12% AND OTHER HIGHER RATES. HE NOTED THAT ASSESSEE HAS PAID INTEREST AT THE RATE OF 18% TO PERSONS COVERED UNDER SECTION 40A(2)(B) OF THE ACT. ASSESSING OFFICER PROCEEDED TO DISALLOW INTEREST PAID TO PARTIES CO VERED U/S. 40A(2)(B) OF THE ACT BY HOLDING THAT THE FAIR MARKET VALUE OF THE INTEREST SHOULD BE 12%. LEARNED CIT(A) UPHELD THE ASSESSING OFFICERS ORDER. 3. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE M/S. VISHNULAXMI SILK MILLS 2 CONTENDED THAT THE ASSESSEE IS OBTAINING LOAN FROM TH E MARKET AT VARIOUS RATES RANGING FROM 18% TO 21% IN THE CONTEMPORANEOUS SITUATION. HE SUBMITTED THAT EVEN BANK FINANCE IS AVAILABLE AT THE RATE OF 15%. HE F URTHER SUBMITTED THAT ADVANCES FROM RELATIVES WERE OBTAINED AT THE TIME OF STRESS. HE FURTHER SUBMITTED THAT THESE LOANS DO NOT REQUIRE ANY COLLATERAL OR COMPLICATED DOCUMENTATION. HENCE, LEARNED COUNSEL PLEADED THAT NO ADJUSTMENT/ DISALLOWANCE IS REQUIRED IN THIS CASE U/S. 40A(2)(B) OF THE ACT. 4. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORDS, WE ARE INCLINED TO AGREE WITH THE CONTENTIONS RAISED BY LEARNED COUNSEL OF THE ASSESSEE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE ON CONSIDERATION OF COG ENCY IN THE SUBMISSION OF LEARNED COUNSEL OF THE ASSESSEE IN OUR CONSIDERED OPINION THE DISALLOWANCE OF INTEREST TO PARTIES U/S. 40A(2)(B) OF THE ACT IS NOT JUSTIFIED. HENCE, WE DIRECT THAT THE DISALLOWANCE OF INTEREST U/S. 40A(2)(B) BE DELETED. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE STAND ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 06 . 0 1 . 20 20 . SD/ - SD/ - ( PAWAN SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 05 /0 1 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI