Disallowance of interest expenditure u/s 40a(20(b)

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Querist : Anonymous

Querist : Anonymous (Querist)

02 March 2012 disallowance of interest expenditure u/s 40A(20(b)by comparision of relatives and others interest rate with bank int rate.
Relatives and others int rate - 18%
Bank int rate - 12%

in this case int rate to relatives and outsiders is same but the AO disallow based on Bank int rate. please help me in this regard

CA.rajni kalsariya

CA.rajni kalsariya (Expert)
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02 March 2012 yes if ao has find that the rate of interest to relative is more & loan amount is high than dissallowed. if paid to outsider is on nominal loan.

anurag

anurag (Expert)
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02 March 2012 AO has the power to disallow.

Guest

Guest (Expert)

02 March 2012 AO is empowered to make such dissallowance.

Querist : Anonymous

Querist : Anonymous (Querist)

03 March 2012 how can he disallow? banks may provide loan with security but outsiders and relatives provide without security. the loan amount taken from outsiders and relatives are almost same or nearby.

CA.rajni kalsariya

CA.rajni kalsariya (Expert)
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03 March 2012 if AO found genioun transaction than he can not dissallowed.

Querist : Anonymous

Querist : Anonymous (Querist)

03 March 2012 he know all the facts that am written above but he says i want to disallow

CA.rajni kalsariya

CA.rajni kalsariya (Expert)
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04 March 2012 than file apeal aginst notice of dissal.

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