TMI Blog2011 (10) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... eave for 20 days in the month of March, 2009, the immediate steps could not be taken for filing the appeal. After the recovery from the illness Mrs Harsha Parmar, resumed to work but she forgot to file the appeal before the Tribunal against the impugned order. The ld AR has further submitted that this the fact of non filing of the appeal was realized only in the month of June, 2010 when the assessee received the notice of hearing of penalty proceedings before the CIT(A. The ld AR has submitted that after realizing the fact that the appeal against the impugned order has not been filed, the assessee took immediate steps to file the appeal and the same was filed on 29th June 2010. The ld AR has filed the copy of the notice of the CIT(A) for the hearing of the penalty appeal filed by the assessee on 1.6.2010 and in response, the assessee filed the application for adjournment of the hearing. The ld AR, thus submitted that initially there was sufficient time for filing the appeal but due to illness of Mrs Harsha Parmar, the appeal could not be filed within the period of limited i.e. upto 24.3.2009. Thereafter, when Mrs Harsha Parmar resumed to her duty, she completely forgot to file the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal belatedly. In support of his contention, he has submitted that both these appeals for Assessment Years 2005-06 and 2006-07 are having common issue and when the assessee has already filed the appeal in time for the Assessment Year 2006-07; then, there was no reason for the assessee would have benefited while not filing the appeal for the AY 2005-06. 3.3 The ld DR has vehemently objected the condonation of delay. He has submitted that the delay in filing the appeal for AY 2005-06 is inordinate and the assessee has not disclosed a sufficient reason for condonation of delay. He has thus submitted that the extra ordinary delay in filing the appeal cannot be condoned and the same may be rejected. 4 After considering the rival contention as well as the relevant material on record, we find that the assessee filed the appeal for AY 2006-07 within the time when the major issue in both the appeals are common then it cannot be said that the assessee had an ulterior motive in filing the appeal belatedly. It is settled law that while deciding the condonation of delay, the court should take a lenient view. A mistake on the part of the counsel may in certain circumstances be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act and confirming the income at ₹ 1,83,98,007/- ii) The ld CiT(A) has erred in law and in facts in confirming the disallowance of brokerage amounting to ₹ 33,48,760/- paid to various parties for arranging third party exports and sale of DEPB license. ii) The ld CIT(A) has erred in law and facts in confirming the disallowance of the following expenses out of; a) Motor car expenses R. 45,700/- b) Depreciation on motor car ₹ 65,481/- c) Telephone expenses ₹ 30,540/- d) Proportionate expenses u/s 1q4A of the Act ₹ 39,901/- e) Foreign travelling expense ₹ 46,965/- iv) The ld Assessing Officer erred in law and facts in charging interest u/s 234B of the act. 8 Ground no.1 is general in nature and hence no specific finding is required 9 Ground no.2 is regarding disallowance of commission/brokerage paid to various parties for exports and sale of DEPB license. 10 This ground is common for both the appeals; therefore, we adjudicate this ground by this common finding. 11 The assessee is engaged in the business of purchase and sale of DEPB/DFRC licenses and brokerage thereon. The Assessing Officer noticed that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them if such licenses are purchased or sold by the assessee. M/s PPL has introduced various parties with whom such DEPB licenses were available for purchase/sale. Based on their information and details, the assessee has purchased/sold DEPB/DFRC licenses to various parties, the details of which were filed before the Assessing Officer. 12.1 The AR of the assessee has pointed out that the brokerage was paid by the assessee only and not by the other parties because the brokers were appointed by the assessee and not by the other parties. The assessee has not paid any commission to any other parties for purchase and sale of license, except to the brokers with respect to the transactions, which were carried with the parties introduced by the broker. Some of the parties had directly approached to the assessee and accordingly licenses were purchased/sold to them without direct involvement of PPL; but some parties were introduced by the broker; therefore, the brokerage was payable because of the business were generated through broker. 12.2 The ld AR of the assessee has further submitted that the Assessing Officer has given a finding that the parties have confirmed the transaction with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions. The assessee has paid brokerage net of TDS to M/s PPL. In support of his contention, the ld AR referred the balance sheet of M/s PPL. He has further pointed out that the Assessing Officer himself has partly allowed the brokerage payment and in view of the accepted fact of payment of brokerage by the assessee, the deduction is fully allowable u/s 37 of the I T Act. 12.6 On the other hand, the ld DR has heavily relied upon the orders of the lower authorities and submitted that when the other parties have clearly denied the involvement of broker and payment of brokerage, then, there is no question of services having been rendered by the broker and payment of brokerage by the assessee. The assessee has not disputed that the other parties have directly approached the assessee and without any assistance of the broker. Thus, the assessee has failed to prove that the broker has actually rendered any services in the transactions of purchase and sale of DEPB/DFRC licenses. 13 We have considered the rival contentions and perused the relevant material on record. The Assessing Officer disallowed the part of the brokerage paid by the assessee. In response to the summons issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there is a time limit of validity of the said license then the risk involved in the transaction of purchase and sale due to efflux of time is of the assessee and to mitigate the said risk, the assessee has availed the services of the broker for introduction of the parties, who are interested in purchase or selling of DEPB/DFRC licenses. The Assessing Officer has not disputed that the payment of brokerage is not prevailing in such kind of business and the broker to whom payment was made was not in the business of brokerage. Therefore, once the payment of the said amount, after deduction of TDS to the broker has not been disputed then, the reason for disallowance that the other parties have not paid any brokerage, in our opinion is highly improper and unjustified. The Assessing Officer, instead of verifying the facts from the broker itself, conducted enquiry from the other parties, who have accepted the transactions with the assessee of sale and purchase of DEPB/DFRC licenses but denied any payment of brokerage. Once the transactions of sale and purchases are found genuine and actual payment of the amount, after TDS is not disputed, then, in the facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of disallowance on telephone expenses, in our opinion is proper and justified. Accordingly, we do not see any reason to interfere with the order of the CIT(A) on this issue. 17 Proportionate Expenses U/S 14A: The assessee received interest of ₹ 49,11,002/- on Govt of India Bond and dividend of ₹ 31,59,500/- during the year under consideration. The Assessing Officer disallowed proportionate expense in the ratio of exempt income and total revenue of assessee s business. On appeal, the CIT(A) concurred the view of the Assessing Officer. 17.1 Before us, the ld AR of the assessee has submitted that the provisions of section 14A are not applicable as no expenditure directly or indirectly has been incurred in relation to the exempt income. He has further submitted that the dividend income is received through Electronic Clearing System (ECS) and interest on RBI bond is actually not received by the assessee but accrued in the books of account against which no expenses are incurred. Under the provisions of sec. 14A(1) proportionate of the expenditure in relation to the income which does not form part of the total income can be made only when the Assessing Officer is not sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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