9911796707
TMI Blog2011 (7) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Commissioner of Income tax (Appeals) III, Pune dt. 30-10-2009 for the AY 2001-02. Referring to ground 5 below, Ld DR mentioned that the same is misplaced and therefore, we find that the should be dismissed as not relevant to the facts of this case. Otherwise, the grounds of the appeal are reproduced s under. 2. The revenue raised the following grounds in its appeal: (1) The order of the learned CIT(A) is contrary to law and to the facts and circumstances of the case. (2) The learned CIT(A) has erred on facts and in law in deleting the addition of Rs. 78,50,000 without appreciating the factual and legal position as is clearly delineated by the assessing officer in the assessment order. (3) The learned CIT(A) has erred on facts and in law in deleting the addition of Rs. 78,50,000 on the basis that the assessing officer has not excluded the amount of sub-brokerage from the income of Shri Ashok Sabnis and Smt. Sujata Sabnis, not appreciating the factual and legal position that there is no such requirement of law to exclude such income by the assessing officer. (4) The learned CIT(A) has erred on facts and in law in deleting the addition of Rs. 78,50,000 though the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. Assessee filed various submissions and the relevant details before him. CIT(A) called for remand report of the AO on these submissions and the data filed before him. On considering the said report and the written submissions of the assessee and also from copies of various details and documents filed by the assessee during the course of appellate proceedings, the CIT(A) deleted the addition relating to the disallowance of the sub-brokerage of Rs. 78,50,000 paid to his wife and father. Aggrieved with the said decision of the CIT(A), the revenue is in appeal before us. 5. During the second appellate proceedings before us, Ld DR for the revenue put forwarded various arguments and main ones of the same are: (i) the assessee failed to prove that he received the services; (ii) also failed to prove the services rendered are not commensurate with the pay outs; (iii) failed to reveal all the facts in the Audit report, which is the report of the specialized persons; (iv) failed to file the evidences to prove that the Ashok Sabnis and Sujatha Subnis brought the customer/clients to the assessee; (v) failed to demonstrate that the so called clients of the father and the spouse are the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration is not the only year when Shri Ashok Sabnis and Smt. Sujata Sabnis have earned income by way of commission/brokerage, as they have earned handsome amount as commission/brokerage in preceding years, as well as in succeeding years. These facts are sufficient to keep the capability of Shri Ashok Sabnis and Smt. Sujata Sabnis of earning commission/brokerage away from the arena of any dispute. Further, in my opinion, there is nothing wrong if the payment of brokerage is made by the appellant to Shri Ashok Sabnis and Smt. Sujata Sabnis by way of journal entries. Firstly, the appellant has explained that on account of shortage of funds, the money could not be paid to Shri Ashok Sabnis and Smt. Sujata Sabnis. Considering the fact that huge bad debts have been incurred by the appellant during this year, the explanation of the appellant cannot be said to be unacceptable. Secondly, Shri Ashok Sabnis and Smt. Sujata Sabnis being family members, there was no pressure on the appellant to make the payment in cash from time to time. Thirdly, it is important to consider that though brokerage was credited to their respective accounts by way of journal entries, both Shri Ashok Sabnis and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation regarding the sub-brokerage stating, "Sub-brokerage received from M/s Satish Sabnis for the business transacted of clients of the assessee." Smt. Sabnis claimed that the sub-brokerage received from the respondent was for business handled by her jointly with the respondent's share-broking firm, on the basis of the volume handled by her, which was decided at the end of the year. It was claimed that Smt. Sabnis did the following for the respondent:- (i) Handled the business of respondent by constant monitoring the clients' accounts. (ii) Debit balances were continuously monitored to ensure that it remains within means of the clients. (iii) Close monitoring of terminal operator. (iv) Procedural matters of Stock Exchange its compliance. (v) Continuous monitoring of Bank account position. In consideration of all the above work, handled by Smt. Sabnis, she received sub-brokerage. (3.2) This claim is general, unsubstantiated, unfounded and an afterthought, submitted six months after the query was raised in the questionnaire dated 11.09.2003, evasive reply dated 13.11.2003 27.1.2004. .. As admitted by Smt. Sabnis in her statement dated 3.3.2004 (Ans 2) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59,957/-). List of debtors and creditors as on 31.3.1991, and in 1994-95 of Shri Ashok A Sabnis has been enclosed, wherein names of clients of the respondent appear, to buttress the claim that there was shift of business/clientele of Shri Ashok Sabnis to the respondent. (5.2) Mere fact that the clients were simultaneously dealing with the respondent as well as Shri Ashok Sabnis (in case of Adhatrao Vidya Bhaurao, FY 1998-99) for the share transactions would show that the logic given regarding transfer of business of Shri Ashok Sabnis and Smt Sujata Sabnis, to the respondent, is without any basis. .. (5.3) Admittedly there was no payment of sub-brokerage by the respondent to Shri Ashok Sabnis, during two previous years i.e. FY 1998-99 and 1999-2000, although the respondent did earn brokerage income from such clients in these years (6) Ld. CIT(A) has allowed payment of sub-brokerage to the two related persons on the following grounds:- .. (6.2) It is humbly submitted that even the respondent being a share broker himself with a handsome strength of salaried staff and was equally if not more competent and capable. He was also was acting as authorised representative an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Ambastha, the Sr AR, we find that the revenue's submissions are basically argumentative rather than the fact oriented. In our opinion, these submissions constitutes merely one of the available interpretation of the data made available by the assessee. It is amply vivid that the AO has not garnered any incriminating information to demonstrate that the assessee does not have any clientele, who are diverted to the present assessee to become eligible for the impugned brokerage or not done anything to garner any direct evidence to demonstrate that the recipients of the sub-brokerage are incapable of having their clientele or that the clientele list suffers from credibility or their clients are bogus or non-existent. Revenue has not done anything to demonstrate the sub-brokers failed to bring any clients to the assessee. Further, we find that it is a fact the impugned sub-brokerage recipients are related parties (i.e. father and spouse) and all them are Stock Brokers/sub-brokers and they furnished a list of their clientele and the revenue has not rebutted the same. Further it is not case of the revenue that any of the said clients from the said list have given any incriminating stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
