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Income Tax Appellate Tribunal, “A”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
Assessee by Shri D.R.Barve – AR Revenue by Shri Arvind Desai – DR Date of hearing 13/06/2022 Date of pronouncement 14/07/2022 आदेश/ ORDER
PER DR.DIPAK P.RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income-tax(Appeals)-3, Pune’s, order dated 05.11.2019 for the Assessment Year 2015-16, involving proceedings under section 143(3) of the Income Tax Act, 1961. The Assessee has raised the following grounds of appeal: “1. The Ld.CIT(A) was not justified, in the facts & circumstances of the case, in upholding the addition of Rs.13,66,243/-, being the commission paid to broker for sale of land.
2. The Ld.CIT(A)failed to appreciate that the commission paid was subject to tax deduction at source and the same is properly supported by invoice/receipt from the broker, payment thru banking channels etc.
A.Y.2015-16 Dr.Subhash Nathmal Pallod Vs. DCIT (A)
3. The Ld.CIT(A) failed to appreciate that, commission rate for two years cannot be compared when the facts and circumstances of the cases are different.
4. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal
and/or to lay the additional evidences at the time of hearing.”
2. Brief facts of the case as emanating from the assessment order are that the assessee is deriving income from trading in land and shares. The assessee is also partner in M/s.Pallod Realtors and other LLPs. The assessee is also having interest income. The book results of the assessee reveal that during the year under consideration, the gross receipts on sale of lands is shown at Rs.10.79 crores and net profit at Rs.9.59 crores. Sale of shares is shown at Rs.2.05 crores and loss thereon has been booked at (Rs.10.30) lakhs. Profit on speculation activities is shown at Rs.80,970/- and other income in the form of Interest and Dividend is show at Rs.72.96 lakhs.
During the year, the assessee had paid amount of Rs.40 lakhs towards Commission. The Assessing Officer(AO) was of the opinion that earlier year the commission paid was 2.44%, whereas during this year the commission of Rs.40 lakhs was 3.71%. Therefore, the AO restricted the assessee’s claim of payment of commission at 2.44% of sale of land of Rs.10,79,33,475/- and balance commission of Rs.13,66,243//- was disallowed and added back under section 37(1) of the Act.
A.Y.2015-16 Dr.Subhash Nathmal Pallod Vs. DCIT (A)
Aggrieved by the said order, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) confirmed the addition stating that no agreement or correspondence etc., was furnished by the assessee to prove the commission paid.
Aggrieved by the order of the ld.CIT(A), the assessee filed appeal before this Tribunal.
We have heard both the parties and studied the records. It is an admitted fact mentioned in the assessment order that commission of Rs.40 lakhs was paid for sale of land situated at Gut No.175/1, 176/1 & 177/1 at Village Hinjewadi, Pune. It is also an admitted fact mentioned in the assessment order that the impugned commission was paid by cheque and TDS was deducted. The ld.Authorised Representative (ld.AR) of the assessee submitted a paper book. AT page No.19 of the paper book, there is a receipt dated 09.10.2014 duly signed on stamp by Mr.Kishore Gangaram Aware. The ld.AR submitted that copy of PAN Card and copy of said receipt was submitted during the assessment proceedings and appellate proceedings. The ld.DR has not disputed this fact. In this case, the assessee has submitted that Rs.40 lakhs brokerage was paid to Mr.Kishore Gangaram Aware, for the same, assessee has submitted receipt also specifying the cheque number and the bank. TDS has been duly deducted. Copy of the PAN Card of Mr.Kishore A.Y.2015-16 Dr.Subhash Nathmal Pallod Vs. DCIT (A)
Gangaram Aware was submitted by the assessee during the assessment proceedings. Thus, the assessee has submitted all the essential documents during the assessment proceedings to claim the expenditure as business expenditure. The AO has allowed the expenditure, but restricted it to 2.44% of the cost of land. Thus, the AO has not doubted the genuineness of the said expenditure. The AO has merely followed earlier years rate of commission ignoring the submission of the appellant that the commission depends on various factors. The AO has not bothered to carry out any enquiry, once all the details were available with the AO. The AO was free to issue summons under section 131 of the Act to confirm the receipt of payments or verify the same from the assessment records of the other person, but the AO did not take pain to verify any of the facts. In this background, we are of the opinion that the assessee has fulfilled the onus cast on him to claim expenditure under section 37(1) of the Act. Therefore, the said expenditure is allowed. Accordingly, grounds of appeal raised by the assessee are allowed.