TMI Blog2019 (2) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... enial of permission for remission of payment by Reserve Bank of India by order dated 20.11.1997, such payments could not be made. This is an additional reason why we would not interfere with the order of the Tribunal. Addition u/s 40A2(b) - Disallow 50% of the sub-brokerage charges paid by the assessee to related parties - HELD THAT:- Tribunal, while giving relief to the assessee, observed that the Assessing Officer had made disallowance without any reason. In the earlier assessment years, such expenditure was recognized and accepted. However, the Assessing Officer had not built up a case that payment was excessive so as to apply Section 40A(2)(b) of the Income Tax Act, 1961. In view of such findings of the Tribunal, no question of law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1997-98. The Revenue has urged following questions for our consideration:- A. Whether on facts and in the circumstances of the case and in law, the Tribunal was right in deleting the disallowance of sub-brokerage of ₹ 89,32,288/- and sub-brokerage of ₹ 43,04,449/- without appreciating the fact that the assessee had failed to prove that any services were rendered by the parties to whom sub-brokerage was paid? B. Whether on facts and in the circumstances of the case and in law, the Tribunal was right in deleting the disallowance of sub-brokerage of ₹ 82,27,229/- (included in ₹ 89,32,288) payable to C S Boston (Hong Kong) Ltd., without verifying whether the assessee has actually written back the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nial of permission for remission of payment by Reserve Bank of India by order dated 20.11.1997, such payments could not be made. This is an additional reason why we would not interfere with the order of the Tribunal. 4. Question No. (C) arises out of the action of the Assessing Officer to disallow 50% of the sub-brokerage charges paid by the assessee to related parties. The Tribunal, while giving relief to the assessee, observed that the Assessing Officer had made disallowance without any reason. In the earlier assessment years, such expenditure was recognized and accepted. However, the Assessing Officer had not built up a case that payment was excessive so as to apply Section 40A(2)(b) of the Income Tax Act, 1961. In view of such findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s net worth, it cannot be concluded that the company had sufficient interest free funds in excess of interest bearing loans. In theory, learned counsel may be right, however, in the present case, the balance sheet of the company would show that the company's net worth was arrived at principally by taking into account its share capital, reserves and surplus and application money after adjusting the amounts transfered to profit loss account. Thus, the facts involved in the present case are substantially similar to those examined in the case of Reliance Utilities and Power Ltd (Supra) in which also to arrive at the amount of interest free funds available to the company, reference was made to its share capital, reserves and surplus and de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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