Commissioner of Income-tax-III v. Sports Station India (P). Ltd
[Citation -2015-LL-0204-57]

Citation 2015-LL-0204-57
Appellant Name Commissioner of Income-tax-III
Respondent Name Sports Station India (P). Ltd.
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 04/02/2015
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags loans or advances • question of law • excess interest • interest paid
Bot Summary: It urges that the view taken, i.e. that interest shown to be payable or paid by the assessee in the circumstances of the case was to a related party and was excessive. It contends that the Assessing Officers view that the excess interest had to be disallowed, was correct. A number of disallowances and additions were made by the AO which included one under the head excessive interest. The AO was of the opinion that 19 loans or advances from different individuals all of them related to one of the Directors was at excessive rates of interest. The AO made a disallowance to the extent of 3 of the interest and confined the latter at 12 per annum uniformly. Having considered the submissions, we are of the opinion that the mere circumstance that the assessee borrowed amounts from relatives of one of its Directors at about 15 on an average, did not imply that the interest paid was excessive given the prevailing credit market. As directed by Section 40A(2)(a), the decision as to whether certain rates of interest in this case is excessive is to be made from the standpoint as to what are the fair market values of the like goods or services.


7/15/2020 delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=23366&yr=2015 IN HIGH COURT OF DELHI AT NEW DELHI ITA 682/2014 COMMISSIONER OF INCOME TAX-III Appellant Through : Ms. Suruchii Aggarwal, Sr. Standing Counsel with Sh. Aamir Azir, Advocate. versus M/S. SPORTS STATION INDIA (P). LTD. Respondent Through : None. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K.GAUBA ORDER 04.02.2015 revenue?s challenge in this appeal is to order of Income Tax Appellate Tribunal (ITAT) dated 28.02.2014 in ITA No.1554/Del/2013. It urges that view taken, i.e. that interest shown to be payable or paid by assessee in circumstances of case was to related party and was excessive. It contends, therefore, that Assessing Officer?s (AO) view that excess interest had to be disallowed, was correct. necessary facts to decide case are that assessee had filed its return for AY 2009-10 declaring loss at `1,14,50,943/-. number of disallowances and additions were made by AO which included one under head ?excessive interest?. AO was of opinion that 19 loans or advances from different individuals ? all of them related to one of Directors was at excessive rates of interest. AO made disallowance to extent of 3% of interest and confined latter at 12% per annum uniformly. This determination was upset by CIT (Appeals) who was of opinion that there was no justification for delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=23366&yr=2015 1/2 7/15/2020 delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=23366&yr=2015 disallowance under Section 40A(2)(b) of Income Tax Act, 1961 (hereafter referred to as ?the Act?). ITAT merely endorsed that opinion. Having considered submissions, we are of opinion that mere circumstance that assessee borrowed amounts from relatives of one of its Directors at about 15% on average, did not imply that interest paid was excessive given prevailing credit market. Furthermore, AO appears to have donned role of decision maker in business enterprise which is clearly impermissible. Furthermore, as directed by Section 40A(2)(a), decision as to whether certain rates of interest in this case is excessive is to be made from standpoint as to what are ?fair market values? of like goods or services. Such comparison was absent in case. For above reasons, no question of law arises. appeal is accordingly dismissed. S. RAVINDRA BHAT, J R.K.GAUBA, J FEBRUARY 04, 2015 ajk 12 delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=23366&yr=2015 2/2 Commissioner of Income-tax-III v. Sports Station India (P). Ltd
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