S. 40A(2)(b) Interest Payment at 15% to related parties is not excessive

Only reason advanced for making dis allowance out of the interest paid to two coparceners was that the interest paid to other parties was at 12% per annum. We find that the interest paid to two coparceners at the rate of 15% could not be said to be excessive, considering the prevailing rate of interest during the relevant assessment year 2007-2008. Once it is found that the rate of interest paid to two coparceners at 15% is not excessive, no dis allowance could be made by invoking the provisions of Section 40A(2)(b) of the Act. The loans raised from two coparceners could be safely relied upon ...