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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य,राजे�� के अनुसार लेखा सद�य राजे�� के अनुसार -Per Rajendra,AM: लेखा सद�य लेखा सद�य राजे�� के अनुसार राजे�� के अनुसार Challenging the order dt.26.2.15 of CIT(A)-22, Mumbai the Assessing Officer(AO) has filed the present appeal. Assessee-company,engaged in the business of financial consultancy and broking of mutual funds etc.filed its return of income on 26.09.2009,declaring total income at Rs.16.16 lakhs.The AO completed the assessment on 29.12.2011,u/s.143(3) of the Act, determining its income at Rs.75.58 lakhs. 2.Effective Ground of appeal is about deleting the addition made on account of commission payment.During the assessment proceedings,the AO found that the Assessee had paid commission of Rs.59.12 lakhs to Amit Umakant Agarwal.The assessee has paid commission on the investment made by four investors namely Sadhana A. Nadkarni, (Rs.35 lakhs); Shakuntala R.Ambekar(Rs.1.10 crores);Sujata R.Ambekar(Rs.35.00 lakhs) and Rajashree S. Dokras(Rs.35 lakhs)@2.75% brokerage.He issued notices u/s. 133 (6) to the investors.In reply to the notice the investors stated that investment in the PNB Asset Management Co. Pvt. Ltd.( PNB Asset) was made through the assessee-company. Vide order sheet noting dt.13.12.11 the AO issued a show cause notice to the assessee and asked it to explain as to why the commission payment of Rs.59.12 lakhs paid to Amit Agarwal should not be disallowed. The assessee filed its reply on 21.12.2011 and stated that payment was made by cross account payee cheques. The AO held that assessee had not
M/s. Raviraj Investments Corporate (India) Pvt. Ltd. proved that any services were rendered by Amit Agarwal, that the application form of PNB Asset nowhere mentioned the name of Amit Agarwal as broker / sub-broker, that commission payment for introducing or bringing the above mentioned investors, was not genuine, that the investors had confirmed that they had made the investment directly to the assessee, that commission payment was not incurred for business purposes.Finally, he made disallowance of Rs.59.12 lakhs and added it to the income of the assessee .
3.Aggrieved by the order of the AO the assessee preferred an appeal before the FAA and made elaborate submissions. It relied upon certain case laws also. After considering the order of the AO and submission of the assessee, the FAA held that the assessee was a registered broker,that it would receive brokerage income and in turn would pay commission to sub- brokers, that the sub-broker code of Amit Agarwal was ARN-41999, that the payment details of PNB Asset proved that Amit Agarwal was a sub broker,that PNB Asset in its profile has mentioned the sub broker code as ARN 41999, that the profile showed that funds invested by Ramesh S.Ambekar and Shakuntala R.Ambekar were through Raviraj and sub broker Amit Agarwal ,that Amit Agarwal had offered his income in Income tax return,that payment was made to Amit Agarwal through banking channel,that the AO had made disallowance based on the information given by the CA of the investors ,that no cross examination was allowed to the assessee of the CA of the investors, that the assessee had made payment to sub broker for the services rendered by him.He referred to case of Mobile Index(125ITD309) and Bharat Bijlee Ltd.(71ITD412).Finally,he deleted the disallowance made by the AO.
4.During the course of hearing before us, the Departmental Representative (DR) argued that the onus was on the assessee to prove that payment was incurred wholly and exclusively for the business,that no evidence was produced to prove that the sub-broker had rendered services, that the assessee did not ask for cross examination of the CA, that the investors had made direct investment.The Authorised Representative (AR) contended that genuineness of transaction was proved, that the portfolio of PNB clearly mentioned the name of sub broker, that payment was made through banking channels and the recipient had offered his income in his return, that the information of the CA had no evidential value.
5.We have heard the rival submissions and perused the material before us. We find that the AO had made enquiries about the investment made by four investors with their CA,that he held that sub broker had not rendered any services to the assessee and that commission expenditure was not incurred wholly and exclusively for business purposes, that the FAA