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2019 (2) TMI 1282 - HC - Income TaxDisallowance of sub-brokerage and sub-brokerage - assessee had failed to prove that any services were rendered by the parties to whom sub-brokerage was paid - HELD THAT:- The Tribunal, on the basis of the evidence on record, came to the conclusion that there was confirmations from the recipients regarding the payments as well as of rendering services. Additionally, we notice that in case of sub-brokerage charges of ₹ 82.27 Lacs (rounded off) which were part of larger disputed figure of ₹ 89.32 Lacs (rounded off) was offered to tax by the assessee in the later assessment year 1999-00 on the ground that due to denial of permission for remission of payment by Reserve Bank of India by order dated 20.11.1997, such payments could not be made. This is an additional reason why we would not interfere with the order of the Tribunal. Addition u/s 40A2(b) - Disallow 50% of the sub-brokerage charges paid by the assessee to related parties - HELD THAT:- Tribunal, while giving relief to the assessee, observed that the Assessing Officer had made disallowance without any reason. In the earlier assessment years, such expenditure was recognized and accepted. However, the Assessing Officer had not built up a case that payment was excessive so as to apply Section 40A(2)(b) of the Income Tax Act, 1961. In view of such findings of the Tribunal, no question of law arises. Disallowance of interest expenses - interest bearing funds of the company were used for purchase of shares on behalf of directors & family members of the directors - HELD THAT:- In the present case, the balance sheet of the company would show that the company's net worth was arrived at principally by taking into account its share capital, reserves and surplus and application money after adjusting the amounts transfered to profit & loss account. Thus, the facts involved in the present case are substantially similar to those examined in the case of Reliance Utilities and Power Ltd ( 2009 (1) TMI 4 - BOMBAY HIGH COURT) in which also to arrive at the amount of interest free funds available to the company, reference was made to its share capital, reserves and surplus and depreciation reserves. No question of law arises.
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