Comparison of Secured & Unsecured Loan Interest Rates Not Justified: ITAT Indore

ACIT 2(1) Vs Surajbhan Agrawal (ITAT Indore)

ITAT Indore held that rate of interest on secured loan from banks cannot be compared with the rate of interest on unsecured loan. Accordingly, disallowance of interest u/s. 40A(2)(b) of the Income Tax Act deleted.

Facts- Assessee made payment of interest to the tune of Rs. 10,99,117/-. The observation of the Assessing Officer is that such payment was made to the persons covered u/s 40A(2)(b) at the rate of 15% which is on higher side. AO worked out the figure at Rs.2,74,779/- as excessive, consequently disallowed.

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