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2017 (5) TMI 352 - ITAT PUNE

2017 (5) TMI 352 - ITAT PUNE - TMI - Claim of deduction on account of commission/brokerage paid against hiring of showroom - revenue v/s capital expenditure - Held that:- Where the assessee had paid commission/brokerage for taking on lease premises from where the assessee is running its showroom and the concerned party had charged commission/brokerage to the assessee for finalizing the deal, then the same is to be allowed as an expenditure in the hands of assessee as revenue expenses. The Ground .....

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e provisions of section 271D and 271E of the Act, for any default under section 269SS and 269T of the Act, penalty is leviable. However, such penalty is to be imposed by the Joint Commissioner of Income Tax. The assessment order in the present case was completed by the Assistant Commissioner of Income Tax and hence beyond his jurisdiction. In any case, disallowance is made under section 269SS and 269T of the Act which is invalid. Accordingly, the Ground of appeal No.2 raised by the assessee is t .....

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s, loan processing charges and interest on term loan. - The total advances made by the assessee are to the tune of about ₹ 3 crores as against the share capital and the reserves and surplus, i.e. opening balance as on 01-04-2009 the assessee has made investment in fixed deposits and other investments totaling to ₹ 4.38 crores. Accordingly, we find no merit in the plea of the assessee in this regard. However, the AO is directed to restrict the disallowance to ₹ 10,69,222/- a .....

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. The Assessee has raised the following grounds of appeal:- "1. The Ld.CIT(A) has erred in upholding the action of Assessing Officer in treating the expenditure of ₹ 2,81,000/- in the shape of commission/brokerage, as capital in nature. 2. In respect of the disallowance of ₹ 12,60,378/- made by the Assessing Officer u/s.269SS and 269T, the Ld.CIT(A) has erred, in observing that the transactions amounting to ₹ 12,60,378/- were in the nature of interest free loans and advanc .....

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law, the Assessing Officer erred in disallowing the Current Account Transactions between the Director and the Company and adding ₹ 12,60,378/- to the total income of the company under section 269SS, 269T and 40A(3) of the Income Tax Act 1961 and initiating penalty proceedings for concealment of the income and giving inaccurate particulars. The Assessing Officer made this addition to the income disregarding the various explanations, submissions and other evidences filed at the time of hear .....

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dividend of ₹ 7,78,670/- made by the Assessing Officer would include the amount of ₹ 2,21,240/- as reflected in the current account and the amounts that have been repaid on her (assessee s) behalf by the company towards various loans in the other ledger account entitled DC . 7. That Ld.CIT(A) erred in holding that the disallowance of ₹ 16,65,055/- made by the Assessing Officer is justified. 8. The appellant prays to add, delete or amend any of the above grounds. 3. The Ld. Auth .....

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monthly rent. He further pointed out that the commission was paid to the agent who had secured the deal. He further pointed out that the copy of the bill raised by the said party is placed at page 45 of the paper book. 5. The Ld. Departmental Representative for the Revenue on the other hand placed reliance on the order of the CIT(A) at Para 3.2. 6. We have heard the rival contentions and perused the record. The limited issue which arises by way of ground of appeal No.1 is against the claim of de .....

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expenses. The Ground of appeal No.1 is thus allowed. 7. The issue in ground of appeal No.2 raised by the assessee is against disallowance made by the Assessing Officer at ₹ 12,60,378/- under section 269SS and 269T of the Act. The Assessing Officer was of the view that where the payments have been made in cash then the same are to be added back to the total income of the assessee under section 269SS and 269T r.w.s. 40A(3) of the Act. The AO had disallowed the said amount on this account. T .....

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case. 8. We find no merit in the said approach adopted by the CIT(A) upholding the addition in the hands of assessee that the provisions of section 269SS and 269T of the Act are to be applied in making the aforesaid disallowance. As per the provisions of section 271D and 271E of the Act, for any default under section 269SS and 269T of the Act, penalty is leviable. However, such penalty is to be imposed by the Joint Commissioner of Income Tax. The assessment order in the present case was complet .....

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several related persons interest free on the one hand and had claimed interest expenses of ₹ 16,65,055/-. The Assessing Officer was of the view that where the loans given to the parties were not in normal course of business then there is no merit in the claim of finance charges of ₹ 14,22,719/- and loan processing charges of ₹ 2,42,336/-. The CIT(A) upheld the order of the AO and the assessee is in appeal against the same. 11. The Ld. Authorised Representative for the assessee .....

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ence no merit in the said disallowance. 12. The Ld. Departmental Representative for the Revenue on the other hand placed reliance on the order of the CIT(A) with special reference to Para No.7. 13. We have heard the rival contentions and perused the record. The assessee has placed the copy of the balance sheet on record and has also placed the list of advances made by the assessee during the year under consideration which is placed at page 200 of the paper book. The perusal of the said list refl .....

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had fairly admitted to the position that the advances to the sister concerns were not for business purposes. However, he has vehemently argued that no disallowance out of the finance charges is to be made in the hands of assessee. The list of finance charges is placed at page 10 of the paper book and the break-up of ₹ 16,65,055/- is as under : Sr.No. Particulars Amount Rs. 1 Bank charges 99,318.32 2 Loan processing charges 242,336.00 3 Bank interest 1,069,222.00 4 Interest on term loan 186 .....

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