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TMI Blog2016 (12) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, a partnership firm, engaged in the business of financing investments and hiring premises filed its return of income for the relevant Asst. year, declaring the total income as NIL. The return was processed u/s 143(1) of the Act. The case was selected for scrutiny and accordingly assessment order u/s 143(3) of the Act was passed, determining the total income at Rs. 17,18,412/- after making inter alia disallowance of Rs. 14,25,020/-, brokerage paid by the assessee and disallowance of Rs. 3,14,322/- claimed as repairs and maintenance expenses. The assessment order was challenged before the Ld. CIT(A). In appeal the Ld. CIT(A) after hearing the assessee enhanced the disallowance claimed as brokerage from Rs. 14,25,020/-determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue relating to disallowance of brokerage amount paid by the assessee and issue pertaining to disallowance of repairs and maintenance expenses of Rs. 3,14,322/. As regards the first issue, the Ld. Counsel for the assessee submitted that the assessee during the relevant years entered into a leave and license agreement to hand over a flat in building called 'Sunita' to IndusInd Bank Ltd. on a monthly license fees @ Rs. 7,66,000/-. The assessee also received security deposit of Rs. 7 crores. The appellant/assessee paid brokerage of Rs. 21,91,020/- in respect of the said leave and license agreement to Viwa Chem Pvt. Ltd. i.e. 2% security deposits of Rs. 7 crores plus 2% of license fees for the period of 36 months and service tax @ 12.36%. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai normally brokerage fees is charged @ 1% of the transaction and the amount of brokerage claimed in this case is abnormally higher than the normal rate. On the other hand the Ld. CIT(A) relying on the ratio laid down by the Hon'ble Supreme Court in CIT vs. Macdowell & Co vs. CIT (1985) 154 ITR 148(SC), Hon'ble High Court of Calcutta, in CIT vs Shekkawat Rajputana Trading Corporation(1999) 236 ITR 1950 Cal and Hon'ble Bombay High Court in Twinstar Holding Ltd.vs DCIT (2003) 260 ITR 8 (Bom.), disallowed the entire amount claimed by the assessee holding that the company to whom the brokerage was paid has failed to establish that it was authorized to act as a broker. Moreover, mere payment of money by the assessee in this case is not suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO or to enhance the same, it can safely be presumed that the payment in question has been made by the assessee as brokerage. The impugned order is therefore not sustainable in the eyes of law. Accordingly, we set aside the findings of the Ld. CIT(A) on this issue and allow this ground of appeal of the assessee. Since, we have decided the first issue in favour of the assessee on merit, the issue regarding jurisdiction of Ld. CIT(A) to enhance the disallowance becomes academic hence we do not consider it necessary to adjudicate this issue separately. 8. Second issue pertains to disallowance of repairs and maintenance expenses of Rs. 3,14,322/-. The Ld. Counsel for the assessee referring to the profit and loss account, in which a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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