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TMI Blog2018 (2) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... est expenses claimed on bill discounting charges even when the assessee had sufficient fund to meet this business requirement which was instead used by the assessee for making interest free advance to its related parties. (ii) On the facts and in the circumstances of the case and law, the Ld. CIT(A), Mumbai erred in directing the AO to delete the disallowance of Rs. 11,03,000/- on account of brokerage paid for getting the credit facility from nationalized banks even when the assessee could not establish the identity of the party and genuineness of transaction. 3. The brief facts of the case are that the assessee is carrying of the business of trading in steel and filed return of income on 28th September, 2010 declaring total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance has been made by the AO on misconceived facts. I refer to the chart of bill discounting charges submitted by the appellant and reproduced in his submissions above. The appellant issued two sale bills to Ushdev Intl amounting to Rs. 10,05,79,463 on 29/09/2009. These were discounted with the bank. The bank retained margin money @5% of each bill which was Rs. 26,73,480 and Rs. 23,85,500 respectively. The bank also retained processing charges of Rs. 1,68,000 and charged interest for period of discount amounting to Rs. 31,21,752. I have examined the bank statement of the appellant with Indian Overseas Bank for Sept 2009 and find that the bank has credited the sales amounts into the account and on the same day debited the interest, proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived from bills discounted have been utilized to pay his creditors and therefore used in the business. The interest of Rs. 62,28,563 is therefore allowable to the appellant. I therefore delete the disallowance made by the AO on this issue." 5. We heard the rival submissions and perused the material on record including the impugned order of the CIT(A). The ld DR argued before us that the order of CIT(A) was wrong as much as the interest bearing funds advanced free of interest without any business exigencies resulting into suppression of income of the assessee by claiming interest on discounting bills whereas the ld AR tried to substantiate that the funds were used to pay off the sundry creditors incurred in the ordinary course of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year the assessee paid Rs. 11,03,000/- as brokerage which was charged to Profit & Loss Account. The said brokerage was paid for obtaining credit facility from nationalised banks, i.e. Indian Overseas Bank. The AO issued notice under Section 133(6) of the Act to verify the genuineness of the payment but the same was returned unserved as the party was not available on the given address. The AO thereafter simply added the same to the income of the assessee while observing that it is very strange and unacceptable that a national bank has been approached for credit facility through brokers and as a result disallowed the said amount as non-genuine. The learned CIT(A) allowed the appeal of the assessee by observing as under: - "5.2 Ground 2: T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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