2016 (1) TMI 642 - AT - Income Tax

Disallowance made towards brokerage charges paid on purchase of land - CIT(A) deleted the disallowance - Held that - Ld. SR.DR having gone through the facts on record still did not make any prayer seeking time for rebutting the facts and evidences on record. The reasons for the conclusion have already been brought out in the earlier part of this order as the facts would show that the genuineness of the transaction; the existence of the party etc. stood accepted by the AO himself as brokerage to the extract of 2% has been allowed. However the basis for arbitrarily restricting the same based on suspicions to the extent of 2% as opposed to the claim of 2.8% duly supported by unrebutted evidences and facts on record is absent on record. In the absence of any material justifying the restriction to 2% in the facts of the case and considering the legal position thereon, I am of the view that the finding arrived at by the First Appellate Authority deserves to be upheld. The said order was pronounced on the date of hearing itself in the open Court. - Decided against revenue

Issues Involved:
1. Deletion of disallowance made towards brokerage charges.
2. Erroneous nature of the CIT(A)'s order.
3. Potential addition, alteration, or amendment of grounds of appeal by the appellant.

Detailed Analysis:

1. Deletion of Disallowance Made Towards Brokerage Charges:

The Revenue challenged the CIT(A)'s decision to delete the disallowance of Rs. 19,19,247/- towards brokerage charges paid to M/s Ajanta Estate & Developers on the purchase of land. The AO had restricted the brokerage to 2% instead of the 2.8% claimed by the assessee, resulting in the disallowance. The AO's decision was based on the broker's non-response to a notice issued under section 133(6) and the assessee's failure to produce the broker.

The assessee argued that it had provided sufficient evidence to substantiate the brokerage charges, including the broker's address, PAN, invoice, TDS certificate, and proof of payment via account payee cheques. The assessee contended that the AO's decision to restrict the brokerage to 2% was arbitrary and not supported by any concrete evidence. The CIT(A) agreed with the assessee, noting that the AO had not disputed the purchase of the land or the payment of brokerage but had made an ad hoc disallowance without any substantial basis. The CIT(A) emphasized that the AO had the power to enforce the broker's attendance but did not do so, and the disallowance was based on conjecture and surmises.

2. Erroneous Nature of the CIT(A)'s Order:

The Revenue claimed that the CIT(A)'s order was erroneous and untenable in law. However, the Tribunal found no infirmity in the CIT(A)'s order. The Tribunal noted that the AO had accepted the genuineness of the transaction and the existence of the broker, as evidenced by the allowance of brokerage to the extent of 2%. The Tribunal observed that the AO's restriction of the brokerage to 2% was arbitrary and not supported by any material evidence. The Tribunal upheld the CIT(A)'s decision, emphasizing that the disallowance was not justified in the absence of any adverse material or inquiry.

3. Potential Addition, Alteration, or Amendment of Grounds of Appeal by the Appellant:

The appellant (Revenue) sought leave to add, alter, or amend any/all grounds of appeal before or during the hearing. However, this issue became moot as the Tribunal dismissed the appeal based on the merits of the case.

Conclusion:

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the disallowance of brokerage charges. The Tribunal found that the AO's restriction of the brokerage to 2% was arbitrary and not supported by any concrete evidence. The Tribunal emphasized that the genuineness of the transaction and the existence of the broker were accepted by the AO, and the disallowance was based on conjecture and surmises. The Tribunal concluded that the CIT(A)'s order was sound and justified, and the Revenue's appeal was dismissed.

← Previous Next →