9911796707
TMI Blog2004 (1) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the apex court in the case of CIT v. Indian Woollen Textiles Mills [1964] 51 ITR 291, this would be a question of law as the relevant facts have not been taken into consideration by the authorities below. It was also submitted by learned counsel that it is open for the Assessing Officer to consider the reasonableness of the amount of brokerage claimed by the assessee as business expenditure. The assessee was called upon to explain about the brokerage, which he claimed to the tune of Rs. 1,45,25,708 in his profit and loss account. The assessee pointed out that the following aspects were required to be taken into consideration at the time of giving brokerage: 1. The brokers were required to arrange for the sale of space; 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of space given on lease to M/s. Oracle Software on the rent of Rs. 17,50,000 while advance rent of Rs. 10,50,000 and interest-free security has been received to the extent of Rs. 42,00,000. Here commission has been paid equivalent to 1 1/3 times the monthly rent. A similar example is quoted about another estate agent where commission was paid at the rate of Rs. 2,67,650 amounting only 1/3rd where the monthly rent fixed was Rs. 10,50,000 and interest-free security has also been received amounting to Rs. 2,61,000. Thus, the commission paid is equivalent to about 1/3rd of the monthly rent. These are some examples only while the payment has been made on similar lines excepting five parties. In a market, it is well known that the faster the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid is in the sum of Rs. 41,89,947. Considering the figures, it appears that the amount of brokerage is paid at the rate of 1 1/3 times the monthly rent. As against this, the benefits secured are also required to be taken into consideration as also the loss, which would be suffered by the brokers on the lower rate of monthly rent on account of higher security amount deposit and advance amount paid by the persons/tenants. In this backdrop, the Commissioner of Income-tax (Appeals) was required to examine the matter and in para. 12 of the judgment, the Commissioner of Income-tax (Appeals) has considered this submission and in para.14 has arrived at a conclusion that the brokers were not related to the appellant or its directors and the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
