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M/s. Dhoot Advisory Services Pvt. Ltd. Versus D.C.I.T., Circle-6, Kolkata

2016 (1) TMI 497 - ITAT KOLKATA

Disallowance of service charges expended by the assessee wholly and exclusively for the purpose of its business - Held that:- In the light of the evidence on record it is not possible to accept the claim of the revenue that the commission expenditure in question is not genuine or the assessee has failed to prove that the commission expenditure in question is wholly and exclusively for the purpose of the assessee's business. The Hon'ble Punjab and Haryana High Court in the case of CIT vs Mandeep .....

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for the purpose of services rendered by SFPL and therefore the same has to be allowed as deduction as the same is for the purpose of business of the assessee. We, therefore, direct the AO to allow the deduction as claimed by the assessee. - Decided in favour of assessee. - ITA No.592/Kol/2013 - Dated:- 2-12-2015 - Shri N.V.Vasudevan, JM & Shri Waseem Ahmed, AM] For the Appellant : Shri A. K. Tulsiyan, FCA For the Respondent : Smt. Sarbari Mukherjee, JCIT, Sr DR ORDER Per: N V Vasudevan: This .....

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craves leave to add, alter, amend or withdraw any ground or grounds of appeal before or at the time of hearing." 3. The assessee is a company. It is engaged in the business of distribution of Mutual Fund Schemes of various mutual fund houses for which it earns commission from mutual fund houses at specified percentages for different schemes. During the previous year the assessee earned total commission of ₹ 1,01,93,430/- from the mutual fund houses. The assessee paid commission of &# .....

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.2009. In the course of the statement recorded of SFPL it was explained by SFPL that there is no specific reason that bills were raised only on 31.03.2009 even though the business were procured by them during the period from 01.04.2008 to 31.03.2009. The AO for the following reasons disallowed the claim of the assessee for deduction of a sum of ₹ 67,62,207/-. "1.Both the commission giving and commission receiving company has transaction only with each other. The assessee company M/s. .....

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ived business. 4. Both M/s Dhoot Advisory Services (P) Ltd the assessee company and M/s Speedfast Finco (P) Ltd is not produce the date wise procurement of business form different parties along with evidence 5. As per claim of M/s Speedfast Finco (P) Ltd the business was procured throughout the year but the bill was raised only on 31.03 2009 for the whole year which is quite absurd considering volume of Business generated as claimed by M/s Speedfast Finco (P) Ltd. 6. The person received advance .....

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ribution chain of agents and corporates across the country to tap the investments from the retail customers at the root level right till the High Net Worth Individuals and the corporate. The assessee explained that it was also a part of such a chain as the distribution agent and registered with the Association of Mutual Fund in India (AMFI) having been assigned AMFI Registration No.ARN-54995. The assessee also pointed that the commission was paid to SFPL and Smt. Rashmi Agarwal as agents to proc .....

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also of the view that the arrangement between the assessee and SFPL was purely with a view to reduce the tax burden of the assessee as well as that of SFPL. The following are the relevant observations of the CIT(A) in this regard : "10. The perusal of the assessment record of the appellant (M/s. Dhoot Advisory Services Pvt. Ltd.) had the copy of accounts of M/s. Speedfast Finco Pvt. Ltd. and it shows that it is assessed to income tax ender PAN AAECS7551 F as per the copy of intimation u/s 1 .....

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vt. Ltd., the advisor and agent in A.Y. 2009-10 has incurred a trading loss of ₹ 7,65,873/- in the share trading; loss in equity/commodity! Derivative trading of ₹ 46,95,446/-; short term loss on sale of investment of ₹ 3,43,802/-; long term loss on sale of investment of ₹ 1,21,304/-. It has merely an expenditure on salary and Bonus of ₹ 1,50,000/- and general expenses of ₹ 23,182/-; Telephone expenses of ₹ 12,560/-; Books and periodicals of ₹ 500/ .....

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by showing payment to a loss making company who has not to pay taxes on this expenditure (commission) ultimately during the year. It is a clear case of avoiding of payment of taxes. The principle of res judicata is not applicable in the income tax proceedings and especially when the matter has not been investigated in the earlier years as in the present year on the issue of genuineness of payment of commission by appellant to a loss making company and the various facts and circumstances as ment .....

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through SFPL dated 01.04.2008 whereby the SFPL was appointed as a sub-broker of the assessee. At page 35 is another letter dated 26.12.2008 agreeing pay brokerage at a particular rate for a particular mutual fund scheme. At page 37 is a list of Mutual Fund Schemes and the percentage of subbrokerage agreed to be paid to SFPL by the assessee. Besides the above copy of the bills raised by SFPL on the assessee and the details of business procured by SFPL for the assessee are placed at pages 41 to 45 .....

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