Income Tax Appellate Tribunal - Indore
The Ito, 2(1), Ujjain vs Shri Babulal Jain, Ujjain on 26 May, 2017
Babulal Jain / I.T.A. No.272/Ind/2017/A.Y.:09-10 Page 1 of 4
आयकरअपीलीयअिधकरण,इदं ौर यायपीठ,इदं ौर
IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE
ीसी.एम.गग , याियकसद यतथा ीओ.पी.मीना, लेखासद यके सम
BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER
आ.अ.सं./ I.T.A. No.272/Ind/2017
&नधा(रणवष( /Assessment Year: 2009-10
ITO-2(1), Ujjain Shri Babulal Jain, Prop. of
v. M/s Rajkamal Enterprises,
02, Varaha Mihir Mrg,
Freeganj, Ujjain, MP.
अपीलाथ /Appellant यथ /Respondent
था.ले.सं./PAN:ABNPJ7940E
अपीलाथ क ओरसे/Appellant by Shri Mohmd. Javed, Sr. (DR)
यथ क ओरसे/Respondent by None
सुनवाईक तार ख/Date of hearing 24.05.2017
उ घोषणाक तार ख/Date of pronouncement 26.05.2017
आदे श /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 (Appeals)-, Ujjain, [in short referred to as the CIT (A)] dated 06.01.2017 for 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 interest paid to various relatives.
3. Briefly stated the facts of the case are that the AO noticed that the assessee has paid interest payment to persons 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 accordingly, disallowed the same.
4. Being dissatisfied with the order, the assessee has carried the matter before CIT(A). It was contended before the CIT(A) that 16% interest rate is reasonable rate, hence, the addition 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 merely 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 limited 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 persons quarterly whereas the interest payable to specified persons is credited to the account of respective persons at the year end. The CIT(A) has noted that there is no material on record which shows that the funds are not utilized for business. The CIT(A) has also noted that the Hon'ble Jurisdictional Tribunal and many other Tribunals are already held interest payment @ 16% as reasonable rate of interest. Accordingly, the CIT(A) has confirmed 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 none appeared from the side of assessee whereas the Ld. Sr. DR has relied on the order of the AO.
6. We have considered and perused the material on record. 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 orders of Tribunals held that the interest payment rate @ 16% as a reasonable rate of interest and allowed the resultant 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 find no infirmity of the order of the Ld. CIT(A), hence, no inference is called for in the order of the Ld. CIT(A). Accordingly, same is upheld and the appeal of the Revenue is dismissed.
7. In the result, the appeal of the Revenue is dismissed.
8. This order has been pronounced in the open court on 26.05.2017 Sd/- Sd/-
(C.M. GARG) (O.P.MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 26.05.2017
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