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DCIT, Central Circle-26, New Delhi Versus Parav Builders Pvt. Ltd.

2016 (1) TMI 642 - ITAT DELHI

Disallowance made towards brokerage charges paid on purchase of land - CIT(A) deleted the disallowance - Held that:- Ld. SR.DR having gone through the facts on record still did not make any prayer seeking time for rebutting the facts and evidences on record. The reasons for the conclusion have already been brought out in the earlier part of this order as the facts would show that the genuineness of the transaction; the existence of the party etc. stood accepted by the AO himself as brokerage to .....

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ounced on the date of hearing itself in the open Court. - Decided against revenue - I.T.A .No.-94/Del/2015 - Dated:- 9-11-2015 - SMT DIVA SINGH, JUDICIAL MEMBER For The Appellant : Sh. Raman Kant Garg,Sr.DR For The Respondent : Sh.Gaurav Goel, CA ORDER The present appeal has been filed by the Revenue assailing the correctness of the order dated 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 .....

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as 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 .....

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ge charges paid to M/s Ajanta Estate & Developers on account of purchase of land from Sh. Virender K Khosla measuring 29 Bigha 04 Biswa at Vill.-Chhawla, Delhi. The assessee claimed that it has paid brokerage charges amount to ₹ 66,63,987/- beside other expenses. The AO in order to verify the brokerage charges issued a letter u/s 133(6) of the Act. For ready-reference, the relevant extract is reproduced hereunder:- 5. However for verification of the details of brokerage charges a lette .....

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e. 3. In response to the show cause notice as per para 5.1 of the assessment order, the assessee is found to have filed letter dated 15.03.2013 referred to therein. A perusal of the same shows that on behalf of the assessee it was argued that the assessee reiterated on facts that the said broker had assisted the assessee for procurement of land approximately 0.83 acres situated at the specific village. Further it was also pleaded that in support of the said claim the address, PAN, copy of invoic .....

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g 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, n .....

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peal before the First Appellate Authority, the detailed submissions of the assessee are found reproduced at pages 3 to 8 of the order. A perusal of the same shows that apart from reiterating the facts as canvassed before the AO it was further pleaded that no evidence has been placed on record to justify the estimate at 2%. The adhoc disallowance in the absence of any evidence was assailed. The genuineness of the payment it was submitted has not been questioned and for restricting expenses no evi .....

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of Form 16A issued to Broker; (c) Copy of PAN of broker; (d) Copy of Bank Statement showing payment of brokerage from account of appellant company. 4.1. It is also seen that it had also been pleaded that the assessee had never dealt with the said broker in the future and infact had only one transaction with this broker. Thus in this background it was pleaded that the assessee was not in a position to put any pressure or influence on the broker as he was not related to the assessee and nor was he .....

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ociated (P.) Ltd. [2014] 43 taxmann.com; and (v) Hon ble High Court of Delhi in the case of Siddho Mal & Sons v ITO [1980] 122 ITR 839. 4.2. On the basis of the same it was pleaded that genuineness of the payment had not been disputed as brokerage to the extent of 2% has been allowed thus simply because broker does not respond to the notice u/s 133(6) the AO cannot upset the evidence and apply brokerage as per his will. The extract of the further arguments advanced before the CIT(A) found ex .....

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ed 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 regardi .....

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into a single transaction only with this broker and is not having any other relationship with him therefore appellant company is not in contact with him for the last 5 years so it was not possible for it to enforce his personal attendance. As it has no pressure or influence on the broker. But the office of Ld.AO is empowered by civil court powers to enforce the attendance of any person but it may be noted that in the instant case the Ld.AO has not issued notice u/s 131 of the Act to enforce the .....

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RO); and (iii) Midland International Ltd. v DCIT, Co. Circle 2(1), New Delhi by the ITAT Delhi Bench E [2007] 109 ITD 198 (Delhi) justifying the claim. 5. Considering these facts and arguments, the CIT(A) came to the following conclusion:- 4. I have gone through the above submission of the appellant and have considered the facts and evidences on record and the case law relied upon by the appellant. It is seen that the AO has not disputed the purchase of land from Mr.Virender K. Khosla amounting .....

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ich it is seen that the payments have been made through an account payee cheque 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 representat .....

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e 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 are excessive and it being the search case, no evidence was either found during the search regarding the bogus or disproportionate expenses. Hence, in view of the above discussion and also without any inquiry and any ad .....

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tire order the Ld. Sr. DR still did not make any request seeking time to rebut the facts on record. Thus considering the peculiar facts and circumstances of the case as have been elaborated in the earlier part of this order and in the absence of any infirmity in the impugned order the request of the Sr. DR was rejected as no prayer for rebutting the facts on record was made. In the circumstances where on facts there is no dispute and no infirmity in the impugned order is brought out it was prono .....

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