1 IN INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC , CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA No. 890/CHD/2016 Assessment year: 2012-13 M/s K.S. Agricultural Industries, Vs. ACIT, Circle-IV, Malerkotla Ludhiana PAN No. AABFK5707H (Appellant) (Respondent) Appellant By : None Respondent By : Sh. S.K. Mittal Date of hearing : 06.10.2016 Date of Pronouncement : 07.10.2016 ORDER This appeal by assessee has been directed against order of Ld. CIT(A)-2, Ludhiana dated 16.05.2016 for assessment year 2012-13 . 2. None appeared on behalf of assessee. 3. I have heard Ld. DR and perused findings of authorities below. 4. assessee s counsel has forwarded letter stating there that issue is identical as have been decided by Tribunal in assessee s case in ITA No. 825/Chd/2015 dated 13.7.2016, copy of which is placed on record. 2 5. On ground Nos. 1 and 2, assessee has challenged addition of Rs. 2,48,207/- u/s 40A(2)(b) of Income-tax Act, 1961 on account of alleged excess interest paid to persons covered by provisions. During course of assessment proceedings, Assessing officer observed that assessee had given interest to related parties @ 18% per annum except to M/s K.S. Agrotech (Regd) to whom interest was paid @ 12% per annum. assessee was asked to explain why interest amount paid to related parties over and above 12% be not disallowed. Assessing officer after considering explanation of assessee made above disallowance. Ld. CIT(A) also confirmed addition. 6. After considering submissions of Ld. DR, I find that issue is similar as have been decided in case of assessee by ITAT (SMC) Chandigarh Bench in ITA No. 825/Chd/2015 for assessment year 2011-12 vide order dated 13.7.2016, wherein identical addition have been deleted. Para 5 of order of Tribunal is reproduced as under:- 5. After considering rival submissions, I am of view that addition is totally unjustified. assessee pleaded before authorities below that interst @ 18% were not excessive or unreasonable having regard to fair market value. assessee also submitted that financial institute charge interest @ 12% to 15 % after obtaining collateral securities and charging compounding interest which may vary up to 24%. In case of assessee, no security have been given for obtaining unsecured loans. Therefore, Assessing officer should have considered these aspects 3 before making disallowance in matter. Ld. Counsel for assessee referred to PB- 43 which is assessment order u/s 143(3) dated 23.12.2011 for assessment year 2009-10 in case of assessee in which Assessing officer did not make any disallowance of interest on same issue. He also referred to PB-46 which is also assessment order of assessee for assessment year 2010-11 dated 18.12.2012 u/s 143 of I.T. Act in which also no disallowance have been made by Assessing officer on account of excessive interest paid. PB-50 to PB-52 are ledger accounts of interest on unsecured loans for those periods which showed that assessee paid interest to related persons @ 18%. These facts, therefore, would clearly prove that in preceding assessment years i.e. in 2009-10 and 2010-11, assessee was paying interest @ 18% on unsecured loans. Assessing officer in assessment order u/s 143(3) did not consider payment of interest @ 18% to be excessive or unreasonable. Therefore, considering history of assessee, I find that payment of interest @ 18% is not excessive or unreasonable having regard to fair market value. I accordingly, set aside of Assessing officer and delete addition of Rs. 2,29,693/-. Ground No.1 of assessee s appeal is allowed. 7. Following order of Tribunal in case of assessee for preceding assessment year 2011-12, I set aside order of authorities below and delete addition. Ground Nos. 1 & 2 of appeal of assessee are allowed. 4 8. Ground No.3 is general in nature. 9. On Ground No.4, assessee challenged addition of Rs. 98,607/- on account of disallowance @ 20% on account of personal use out of car, insurance expenses etc. Assessing officer have disallowed 1/5 t h of these expenses and added back to income of assessee. Accordingly, after giving effect of Rs. 32,271/-, addition of Rs. 98,607/ -was made. Ld. CIT(A) confirmed addition and dismissed appeal of assessee. 10. After considering submissions of Ld. DR, I find that issue is also covered in favour of assessee by earlier order dated 13.7.2016 (supra). assessee pleaded before Ld. CIT(A) that 1/10 t h disallowance have been made in preceding assessment year 2010- 11, therefore, same may be made by following rule of consistency. In assessment year 2011-12 vide order dated 13.7.2016, Tribunal has restricted disallowance to 10% as against 20% made by Assessing officer. orders of authorities below to that extent are modified and addition is restricted to disallowance of 10% only. This ground is partly allowed. 11. In result, appeal of assessee is partly allowed. Order pronounced in Open Court. Sd/- (BHAVNESH SAINI) JUDICIAL MEMBER Dated : 7 t h October, 2016 Rkk 5 Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR M/s K.S. Agricultural Industries v. ACIT, Circle-IV, Ludhiana