Disallowance U/s. 40A(2)(b) on account of Interest @ 18% – Held not excessive

Issue – The assessee claimed that the assessee borrowed unsecured loan @ 18% from related as well as unrelated  parties. Therefore, the rate of 18% cannot be said to be  excessive. Reliance was placed upon the decision in the case of  Balkrishna Goyal vs. DCIT, I.T.A. No. 590/Ind/2009, wherein it was held that 18 % interest from the related party is not excessive or unreasonable. On the other hand, the ld. Sr. DR  defended the addition by contending that from the bank loan is available at the lesser rate.

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