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2016 (1) TMI 249

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..... ated 08.10.2014 of CIT(A)-III, New Delhi pertaining to 2008-09 assessment year on the following grounds:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance made towards brokerage charges of ₹ 19,19,247/- paid to M/s. Ajanta Estate Developers on purchase of land. 2. The order of the CIT(A is erroneous and is not tenable on facts and in law. 3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 2. However, at the time of hearing no one was present on behalf of the assessee. Accordingly, the appeal was passed over twice. In view of the fact that even in the third round, no one was present. Considering the material available on record it was considered appropriate to proceed with the present appeal exparte qua the assessee responded on merit after hearing the Ld. Sr.DR. However, the Ld. Sr.DR filed an adjournment petition stating that it needs to be argued by CIT DR. Considering the material available on record, the said request was rejected. The record shows that in the facts of the present case pursuant to the sear .....

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..... vide account payee cheques through proper banking channel systems after making proper TDS at the applicable rates. Your good office will appreciate the fact that the payment of brokerage is a quite common phenomenon in real estate industry and everybody accepts that involvement of brokers in the real estate deal is very common. There is no standard rate of brokerage for all kind of real estate deals, its wholly depends upon the facts circumstances of the case like location, size of the land parcels, level of competition in the market, utility, need of the seller, name goodwill of the parties etc. (emphasis provided) 3.1. However, not convinced with the claim of the assessee the AO rejected it holding that notice u/s 133(6) of the Act had been issued to the broker and he had not responded. Further, the claim was also rejected as the assessee had not produced the broker. Accordingly the brokerage was restricted to 2% instead of 2.8% as claimed by the assessee resulting in the addition by way of a disallowance amounting to ₹ 19,19,247/-. 4. In appeal before the First Appellate Authority, the detailed submissions of the assessee are found reproduced at pages 3 to .....

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..... cted in the impugned order are reproduced for ready-reference:- 1.5.2. Moreover during assessment proceedings Appellant submitted the copy of Sale Deeds, which clearly contains the name of Mr.Pawan Kumar proprietor of Ajanta Estate as one of the witness to the sale deed done before the Sub-registrar, New Delhi. Therefore, the identity and existence of Mr. Pawan Kumar, Proprietor of Ajanta Estate and Developer gets established by the fact that he is one of the witness to the sale deed registered with Registrar and even his Photograph was also clicked which forms part of the sale deed. The sale deed was a material available on record, hence his identity stands established and clearly establishes his nexus with the land purchase transaction. We are enclosing herewith the copy of sale deed as Annexure 3 which substantiates the identity of Broker. It may further be clarified that even though the Ld.AO has alleged that the notice u/s 133(6) went unserved but still he was satisfied regarding the genuineness of brokerage as he has very well accepted the presence of broker in the land deal and has allowed brokerage to the extent of ₹ 4744740/- paid to Ajanta Estate and Devel .....

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..... ue and on such brokerage payment, TDS has also been deducted. The AO has not doubted the payment of brokerage expenses but he has restricted the expenses to the extent of 2% instead of 2.80% paid by the appellant. This part disallowance is primarily made because notice under section 133(6) was not complied with by M/s. Ajanta Estate Developer and also failure on the part of the appellant to produce the representative of M/s. Ajanta Estate. In my humble view, the onus was duly discharged by the appellant by filing the requisite details with the AO and the AO had ample powers under the Act to enforce the attendance of M/s Ajanta Estate Developer and I find that instead of using the powers available to the AO to enforce the attendance of M/s Ajanta Estate, the disallowance of the part of brokerage expenditure is not on sound footing but is purely based on conjecture and surmises. The AO admits that the payment of brokerage expenses to the extent of 2% is wholly and exclusively towards his business but an adhoc and part disallowance is not as per the cannon of natural justice. There was no concrete evidence and material available with the AO to hold that the brokerage expenses .....

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