COMMISSIONER OF INCOME TAX Vs. SHIV KUMAR

JUDGEMENT

(1.) This appeal is directed against the order dated January 20, 2012, passed by the Income-tax Appellate Tribunal, New Delhi, in I.T.A. 3247/Del/2010 in respect of the assessment year 2007-08. By virtue of our order dated January 2, 2013, we had directed issuance of notice limited to the question of disallowance of interest under section 40A(2) of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"). We have heard the learned counsel for the parties after notice.

(2.) The Assessing Officer had made an addition of Rs. 18,57,189 under section 40A(2) of the said Act on account of excessive interest having been paid by the respondent-assessee to his relatives. There is no dispute that the loans were taken from persons who fell within the description of "relative" of the assessee as employed in section 40A(2)(b)(i) of the said Act. The only issue that is sought to be raised by the Revenue is that the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal have erred in deleting the addition of Rs. 18,57,189 made by the Assessing Officer.

(3.) The plea of the Revenue is that the Assessing Officer had rightly contended and concluded that the rate of interest in excess of 12 per cent., which had been paid to the relatives of the assessee, was excessive and, therefore, the Assessing Officer was well within his rights to have added the amount of Rs. 18,57,189 by way of the difference in excess of the rate of interest of 12 per cent.