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M/s. S.D.N. Company Versus The ITO Ward 12 (2) (1) , Mumbai.

2016 (12) TMI 180 - ITAT MUMBAI

Disallowance of brokerage amount paid - Held that:- AO has not brought any evidence on record either to prove that the transaction is a colourable device to disallow the same or the brokerage paid by the assessee in the present case is excessive or unreasonable to apply the provisions of section 40(A)(2) of the Act. Similarly, the Ld. CIT(A) has not recorded the reasons for holding that the object behind making payment of the amount in question was tax avoidance through a colorable device. The f .....

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epairs and maintenance expenses - Held that:- We notice that the AO has disallowed 20% of expenses for want of evidence, however, the Ld. CIT(A) has taken altogether new ground and taken the view that the expenditure other than the society charges aforesaid, are capital in nature. We also notice that the CIT(A) did not seek any explanation from the assessee before arriving at such a conclusion. Accordingly, we are of the view that this issue requires fresh examination at the end of the Ld. CIT(A .....

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CIT(Appeals)-23 Mumbai for the Asst. Year 2008-09, whereby the Ld. CIT(A) partly allowed the appeal filed by the assessee, against order dated 27/12/2010 passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the Act ). 2. Brief facts of the case are that the assessee, a partnership firm, engaged in the business of financing investments and hiring premises filed its return of income for the relevant Asst. year, declaring the total income as NIL. The return was processed .....

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s brokerage from ₹ 14,25,020/-determined by the AO to ₹ 21,91,020/- and also confirmed the disallowance claimed as repairs and maintenance expenses. 3. Aggrieved, the assessee is in appeal before the Tribunal. The assessee has raised the following effective grounds of appeal:- 1) The learned Commissioner of Income-tax (Appeals) erred in disallowing brokerage paid to the tune of ₹ 21,19,020/-. 2) The learned Commissioner of Income-tax (Appeals) erred in assuming jurisdiction to .....

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on account of repairs and maintenance. 6) The learned Commissioner of Income-tax (Appeals) erred in giving findings which were irrelevant for deciding the issue of allowability of repairs expenditure. 7) The appellant submits the additions suggested by Commissioner of Income Tax (Appeals) on account of repairs be deleted. 8) The learned Commissioner of Income-tax (Appeals) erred in assuming jurisdiction to make an enhancement on the issue of repairs. 4. In the present case basically the appella .....

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eceived security deposit of ₹ 7 crores. The appellant/assessee paid brokerage of ₹ 21,91,020/- in respect of the said leave and license agreement to Viwa Chem Pvt. Ltd. i.e. 2% security deposits of ₹ 7 crores plus 2% of license fees for the period of 36 months and service tax @ 12.36%. The Ld. Counsel further submitted that Viwa Chem Pvt. Ltd. has confirmed the payment. The AO has wrongly applied the provisions of section 40A(2)(b) of the Act and disallowed ₹ 14,25,020/- .....

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on, the Ld. CIT(A) ought to have deleted the same. But instead of delegating of disallowance the Ld. CIT(A) has wrongly enhanced the disallowance to the total amount claimed exceeding the powers conferred on him u/s 251of the Act. 5. On the other hand the Ld. departmental representative (DR) relying upon the order passed by the Ld. CIT(A) submitted that same has been passed in accordance with the provisions of law and as per the evidence on record. Therefore, there is no merit in the appeal file .....

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d. CIT(A) relying on the ratio laid down by the Hon ble Supreme Court in CIT vs. Macdowell & Co vs. CIT (1985) 154 ITR 148(SC), Hon ble High Court of Calcutta, in CIT vs Shekkawat Rajputana Trading Corporation(1999) 236 ITR 1950 Cal and Hon ble Bombay High Court in Twinstar Holding Ltd.vs DCIT (2003) 260 ITR 8 (Bom.), disallowed the entire amount claimed by the assessee holding that the company to whom the brokerage was paid has failed to establish that it was authorized to act as a broker. .....

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paid net brokerage of ₹ 19,42,777/-and deducted the tax of ₹ 2,48,243/- at source. In our considered opinion the said facts are sufficient to draw a presumption that the transaction in question is genuine and said presumption can only be rebutted by cogent and convincing evidence. The authorities below have held the transaction as colourable device on the basis of surmises and conjunctures without referring to any convincing evidence. AO has not brought any evidence on record either .....

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Since, the Ld. CIT(A) has not referred any evidence to justify the disallowance made by the AO or to enhance the same, it can safely be presumed that the payment in question has been made by the assessee as brokerage. The impugned order is therefore not sustainable in the eyes of law. Accordingly, we set aside the findings of the Ld. CIT(A) on this issue and allow this ground of appeal of the assessee. Since, we have decided the first issue in favour of the assessee on merit, the issue regardin .....

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