TMI Blog2018 (2) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the CIT(A) is correct and deserves to be upheld. - Decided against revenue Disallowance on account of brokerage paid for getting the credit facility from nationalized banks - assessee could not establish the identity of the party and genuineness of transaction - Held that:- A perusal of the order of the CIT(A) reveals that confirmation from the recipient M/s. Avias Corporate Services Pvt. Ltd. was produced before him. The learned CIT(A) also recorded a finding of fact that the bill is towards the credit facilities arranged from IOB and thus the payment was made in connection with professional services for obtaining credit facility. It was also noted by the CIT(A) that TDS has been deducted and the payment was made through bankin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd filed return of income on 28th September, 2010 declaring total income of ₹ 28,37,533/-. Thereafter the case of the assessee was fixed for scrutiny under CASS and notice under Section 143(2) of the Income Tax Act, 1961 (hereinafter the Act ) dated 24.08.2011 was duly served upon the assessee. During the course of assessment proceedings the AO noticed that the assessee has debited ₹ 62,28,563/- as interest on bill discounting charges. The learned AO also observed that the assessee has made investments/given advances to various parties as stated in para 6 of the order aggregating to ₹ 25,00,60,128/- and the assessee has not charged any interest on the said investments/advances and thus the reached a conclusion that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 and find that the bank has credited the sales amounts into the account and on the same day debited the interest, processing charges and the margin money on the two bills. The value of the sale bills appears as a credit in the bank account, while the other amounts appear as debits on the same day. The net effect of this was that the balance amount of ₹ 9,22,30,731 was paid to the appellant on 29/09/2009. The immediate next entry in the bank account is a debit of ₹ 9,51,05,441 paid by RTGS to Royal Oak Steels Pvt Ltd. It is therefore clear that the proceeds of the sale discounted have been utilized to pay the creditor Royaloak. Similarly, the appellant further issued two more sale bills to Ushdev Intl amounting to ₹ 10,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting 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 business. It is apparent from the records that the assessee has given two loans to M/s. Ushdev International Ltd. amounting to ₹ 10,05,79,463/- in September, 2009 which was discounted with the bank and the bank after retaining margin money and processing charges released the net balance of ₹ 9,22,30,731/- to the assessee on 29.09.2009. The next day a payment of ₹ 9,51,05,441 was made to Royal Oak Steels Pvt. Ltd. Thus the proceeds of discounted bills were used to pay the creditor M/S Royal Oak Steels Pvt. Ltd. Similarly two bills were issued to Ushdev International Ltd. amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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: This is against the disallowance of brokerage paid of ₹ 11,03,000. The AO has disallowed this brokerage claimed primarily on two grounds. One is that no brokerage needs to be paid for obtaining credit facilities in a nationalized bank and the other being the fact that the notice u/s 133(6) issued to Avias Corporate Services Pvt Ltd -was returned. The appellant has produced before me a confirmation from Avias being the bill issued to him. I observe that the bill is towards the credit facilities arranged by Avias for the appellant from Indian Overseas Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X
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