9911796707
TMI Blog2025 (3) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that it is some kind of make-belief arrangement or some kind of colourable device.
Both ld. AO and ld. CIT(A) have decided this issue in a very slip shot manner without even considering the relevant records or bringing any adverse material on record.
Also we are unable to appreciate how Section 69C can be invoked, i.e., unexplained expenditure outside the books. When assessee has duly shown the payment from the books and claimed as an expenditure debited to the profit and loss account, then how section 69C can be invoked.
Reasons given by the AO and CIT (A) for making the addition is set aside and the claim of assessee is allowed. Thus, addition is deleted. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... om Financial Institution by leveraging this asset 2. Initial commitment of the said investment will not be more than Rs. 20 Crores and MCAF will make a provision for such amount 3. Finvest will be paid 1% of the investment as transaction fees. Such fees will be paid at the time of deployment of fund 4. MOU will remain valid for a period of 71 days from the date of its signing (both days inclusive) 5. If Finvest is unable to conclude the deal in 71 days or if before the said 71 days if any party terminates the agreement, Finvest will pay 18% p.a. interest to MCAF for initial commitment amount i.e. Rs. 20 Crores from the date of signing this agreement" 4. The assessee could not conclude the deal for investment within a period of 71 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us ld. Counsel for the assessee submitted that assessee had entered into an agreement for providing services to MCAF for the purpose of making investment / deployment of funds for sourcing a deal of warehouse investment. The assessee was to raise funds from financial institutions while leveraging the assets for which assessee was entitled for a referral fees @1% of the investment. Since assessee could not arrange or help MCAF for making investment / deployment in the warehouse projects and to raise funds from financial institutions within the period of 71 days as agreed in the MOU, the agreement was terminated and as per the agreement assessee was liable to pay compensation in the form of interest @18% on the initial commitment amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrange investments of Rs. 20 Crores and within a short span of 71 days assessee had paid compensation of Rs. 70,00,000/- without even earning a single rupee from MCAF. Thus, the entire transaction do not give credibility of any business expediency so as to allow the payment of Rs. 70,00,000/- as an allowable interest / business expenditure. 9. We have heard both the parties, perused the relevant finding given in the impugned order as well as material placed on record. In so far as the ld. AO is concerned, his entire finding is based on the fact that assessee is not clear whether it is interest or compensation and therefore, he has made the disallowance; whereas the ld. CIT (A) has questioned the transaction and the reasons for terminatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be paid 1% of the investment as transaction fees at the time of deployment of the fund. As per the agreement, assessee had to arrange the investment of Rs. 20 Crores within a period of 71 days failing which the agreement will get terminated and assessee has to pay interest @18% per annum to MCAF for the initial commitment amount of Rs. 20 Crores from the date of assigning of this agreement. The letter for termination of MOU dated 12/06/2017 has been placed in the paper book before us. Thus, the business commitment done by the assessee could not be performed within the stipulated time. As per the agreement assessee was under obligation to pay the compensation in the form of interest which worked out to Rs. 70,00,000/-. Once assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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