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TMI Blog2002 (7) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... d investments. It invited deposits and loans from various parties on which interest is paid. Such loans or deposits are reinvested on which the income was earned. During the course of asst. proceedings, the AO noted that the assessee has claimed deduction of commission amounting to Rs. 3,18,325 as under : (Rs.) Victor Credit Construction Pvt. Ltd. 2,80,170 Scholar Financial Management Ltd. 3,184 Tata Finance Ltd. 4,990 Loyds Finance Ltd. 29,981 3,18,325 4. The AO allowed the deduction of commission in respect of the last three parties. However, in respect of commission paid to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking the provisions of section 40-A(2) did not arise. Thus the question of setting aside this issue to the file of the AO was infractuous. While relying on the decision of Hon ble Allahabad High Court, reported in 72 STC 343 at 348, the ld. counsel stated that setting aside of an order should be resorted only in the special circumstances, in the instant case, the CIT(A) has set aside this issue to examine the provisions of section 40-A(2) when such provisions was not applicable at all. Ld. counsel therefore, argued that the CIT(A) should have allowed the claim of the assessee. On merits, it was stated that the assessee was earning an interest of 30/31 per cent on its advances. Such advances have been made out of funds borrowed. For borrowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amine as to whether the provisions of section 40-A(2) were applicable in this case or not. We, therefore, hold that the CIT(A) was not jusified in setting aside this issue. 10. The disallowance of commission could be made only if the commission payment was excessive vis-a-vis the services rendered by the payee. We find that assessee was earning interest at the rate 30 to 31 per cent on its advances and therefore, a brokerage of 2 per cent paid to the brokers cannot be said to be excessive or unreasonable. Under similar circumstances, the AO himself has allowed the deduction of brokerage at the rate of 2.25 per cent paid to Lloyds Fin. Ltd. In view of these facts, we hold that the addition made by the AO and set aside by the CIT(A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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