FYERS SECURITIES PRIVATE LIMITED ,BENGALURU vs. DCIT, CIRCLE-3(1)(1), BENGALURU

ITA No. 2755/Bang/2025 is filed by M/s. Fyers Securities Private Limited (the Assessee/Appellant) for Assessment Year 2022-23 against the Appellate Order passed by the National Faceless Appeal Centre, Delhi (the Ld. CIT(A)) on 24.09.2025 wherein the Appeal filed by the Assessee against the Assessment Order passed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 (the Act) by the Income Tax Department Assessment Unit (the Ld. Assessing Officer) dated 18.03.2024 was dismissed.

The solitary issue in this Appeal raised by the Assessee is the disallowance of Rs. 5,50,80,000/- being the consultancy fees paid by the Assessee claimed

Brief facts of the case show that Assessee is a company engaged instock brokering services filed its return of income on 29.09.2022 at a total income of Rs. 30,86,31,000/-. On selection of the case for scrutiny, the Assessee was asked to explain payment of consultancy fees of Rs. 5,50,80,000/- paid to M/s. Fyers Investment Advisors Private Limited. The Assessee submitted a consultancy agreement dated 04.12.2018 and submitted that the consultancy company is providing technical and professional services to the Assessee in the form of intellectual property consultancy; real estate advisory; end to end documentation services including purchase and stamp papers, payment of stamp duty and any other services. It was further stated that payment of consultancy charges of Rs. 5,50,80,000/- is comprising of GST and therefore the actual services are Rs. 5,10,00,000/-. Thus, Assessee submitted that it has explained the nature of services and nature of consultancy rendered by the Assessee. The Assessee also submitted the details of 13 invoices raised by the service provider stating its Permanent Account Number, GST number, nature of services rendered and the amount of services paid. 4. The Ld. Assessing Officer held that the agreement is between related parties and the basis of making payment is not detailed in the said agreement and therefore he issued notice u/s. 133(6) of the Act on 19.02.2024 to the service provider. On the basis of the submission made by the service provider, the Ld.

The Assessee approached Ld. CIT(A). The Assessee reiterated the same facts. However, the Ld. CIT(A) confirmed the disallowance stating that the agreement produced by the Assessee is unregistered with its related party but there is no evidence of rendition of services and therefore the payment made by the Assessee is not exclusively incurred for the purposes of the business. The Ld. CIT(A) further noted that Assessee failed to furnish a single correspondence exchanged between the Assessee and the service provider to demonstrate that any of the activity mentioned in the agreement was performed by it. Thus, the Appeal of the Assessee was dismissed.

On Appeal before us, the Assessee furnished written submission as well as a paper book containing 305 pages and also an application for admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules. In additional evidence, the Assessee produced the evidence with respect to rendition of the services. The reason given by the Ld. Authorized Representative is that these were neither asked by the Ld. Assessing Officer nor by the Ld. CIT(A) but in the Appellate Order the addition was confirmed on this account. In his detailed note, the Ld. Authorized Representative mentioned that service provider has rendered the services which are remunerative according to the agreement, the expenditure is wholly and exclusively incurred for the purpose of the business and further the disallowance was wrongly computed. He submitted that for the year ended on 31.03.2021, the Assessee has paid such remuneration to this party for Rs. 250 lakhs which was allowed. However, for this year, the payment was Rs. 510 lakhs which were disallowed. He further stated that the revenue income of the Assessee for the previous year was Rs. 1800 lakhs whereas for this year it is Rs. 5778 lakhs and therefore the consultancy expenses incurred by the Assessee in the last year of Rs. 346 lakhs are also increased to Rs. 684 lakhs. He further submitted that despite being a related party it is not claimed by the Ld. Assessing Officer that the remuneration paid by me is excessive. He further referred to the paper book wherein he submitted that in reply given by the service provider u/s. 133(6) clearly furnished all the details of the service provider about the rendition of the services. He thereafter referred to the annual accounts of the service recipient to show that he submits that the

The Ld. Departmental Representative vehemently submitted that Assessee has failed to prove the rendition of services by a related party of a huge magnitude and there is no business of the related party except the above service charges received from the Assessee, the claim of the Assessee was disallowed. He further submitted that it is irrelevant that tax is paid by the

We have considered the rival submissions and perused the orders of the learned lower authorities. The Assessee carries on the business of brokerage. Its revenue for the year ended 31.03.2021 was Rs. 1860 lakhs, whereas for the year under appeal it was Rs. 5565 lakhs. The Assessee claimed Rs. 684 lakhs as legal and professional charges, out of which Rs. 510 lakhs were paid to its related party, M/s. Fyers Investment Advisors Private Limited. The record contains the agreement and proof of payment. In response to notice under section 133(6) of the Act, the service provider filed a detailed reply, placed on page 254 of the paper book, setting out the nature of services rendered to the Assessee. It also furnished invoice particulars, copies of its income-tax return, tax audit report, GST returns, and TDS certificates. As regards the related-party transaction, it was stated that the payment had been considered and approved by the Board of Directors. Reference was also made to the experience of the service provider’s management in the stock market, real estate, and mutual funds. Even if the service provider had no clients other than the Assessee, that fact itself would not justify disallowance. The relevant test is whether the expenditure was incurred wholly and

It is, therefore, evident that the Assessee incurred the expenditure for services rendered, including the right to use the trademark and the other services

As the Assessee has furnished the additional evidence in the form of various certificates of registration of trademark in the name of service provider which were not available before the Ld. lower authorities, In view of these facts, we restore the whole issue back to the file of the Ld. Assessing Officer to examine the additional evidences submitted in the form of paper book at page no. 306-364 which may be verified and then the issue of the allowability of these expenditure may be decided afresh keeping in view the observations made by us above. 14. In the result, Appeal filed by the Assessee is allowed for statistical purposes.

Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. CIT(A) By order