TaxTMI 
TaxTMI 
2026 (3) TMI 1014
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....s additions made by him." 3. For that the Ld. CIT(A) erred in confirming the disallowances of expenses made on ad-hoc basis when the audited books of accounts were not rejected. 4. For that the Ld. CIT(A) erred in confirming the disallowance of 10% of the Sub-brokerage expenses on ad hoc basis simply on the basis of suspicion and surmises when all the details were submitted and the onus that lay on assessee was discharged but the AO failed to make enquiry of his own. 5. For that the Ld. CIT(A) erred in disallowing Rs 46,261/- (30% of Rs 1,54,206) being the Sub brokerage expenses on which allegedly no TDS was deducted when proper TDS as per law was deducted and even otherwise the payee had paid taxes on the income and filed its return of income. 6. For that the Ld. CIT(A) erred in confirming the disallowance of 10% of the total administrative expenses i.e. Rs 20,56,298/- on ad hoc basis on total suspicion and surmises without pin pointing specific items of expenses. 7. For that the additions and disallowances made by the AO and confirmed by the Ld. CIT(A) are nor in accordance with law and the same are liable to be deleted." 3. A perus....
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.... paid is enclosed herewith. 5. The copy of agreements entered into with two of the above sub-parties are enclosed herewith. 6. We are not engaged in any trading activities. We earn commission income on the basis of collection of sale proceeds of the sales made by the sellers to their customers through our persuasion. There are 5000-6000 sellers with whom we deal. The modus operandi is that we collect the ledger copies of the buyers from the sellers on a periodic basis and accordingly pursue for collection of the outstanding dues. After collection, we raise our commission bills to the sellers. We do not retain the details of sales made by them once our commission bill is made. However, the name, address and PAN of the sellers with whom we deal and charge commission are enclosed herewith along with the amount of collection made. Your honour may verify the facts from the parties as per law. The sellers shall be able to give all the details. They also deduct TDS on our payments wherever applicable as evident from 26AS on the portal. 7. As stated above, we do not maintain the details of sale made by the sellers to the buyers viz. Date of sale, Nature of item, ....
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....n the goodwill, credibility and past track record of the sub-brokers for assurance that the payment will be received. g. As already submitted, we are a broker i.e. middleman and we do not maintain and are not required to maintain the details of orders placed by the customers with the suppliers once the collection is completed and our bill is raised on the supplier. Your honour can get the details of the orders received from the suppliers, the details of which has already been given to in our earlier reply. h. Documentary evidence in support of TDS deducted i.e. Form 16A is enclosed herewith. Point no. 3 The intention behind the clause in the sub-broker agreement that the sub-brokers will manage with our office is that the sub-broker shall co-ordinate with our office staff along with their own staff for facilitating the services to the suppliers as well as buyers. This does not imply that they will bear our office expenses. They are simply sub- brokers and charge us sub- brokerage for their services and do not bear our office expenses. They will simply ordination manage their orders with the suppliers from our office in co- with our office staff a....
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.... administrative expenses, the AO observed that the assessee had claimed administrative expenditure of Rs. 2,05,62,989/- and an amount of Rs. 3,28,67,666/- on account of salary and remuneration. He observed that as per the agreement furnished by the assessee with the sub-broker, the sub-broker was supposed to manage the office and whereas the assessee itself had claimed such huge expenses. On being asked to explain in this respect, the assessee gave the bifurcation of the administrative expenses as under: Business Promotion Rs. 22,42,762/- Conveyance 41,22,996/- Office Maintenance 30,80,471/- Parking Expenses 57,204/- Printing & Stationery 4,33,635/- Rent 16,95,390/- Vehicle Upkeep 36,26,783/- Other Expenses 53,03,746/- Total 2,05,62,989/- 5.2. On being asked to produce bills and vouchers the assessee also produced the same. The AO, further observed that the assessee had provided bills/vouchers of business promotion amounting to Rs. 22,42,762/-, however, on some of the bills, no GST number was mentioned. That two bills of the same person of different dates were bearing same bill number. He, therefore, noting that there were ce....
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....yments wherever applicable as evident from 26AS on the portal. The assessee also furnished the entire details of the sub-brokerage paid along with the ledger copies of the sub-brokers and commission payments. TDS had been deducted on all payments made. The assessee also furnished the details such as Name, PAN and address of the parties to whom sub-brokerage was paid. The assessee also furnished the copy of agreements entered into with two of the above sub-brokers. The assessee also explained even before the Ld. CIT(A) that all the communication, such as, intimation by the customers/suppliers, etc. takes place over telephone and there was no documentary evidence maintained in this respect. Moreover, the goods were directly despatched by the sellers to the buyers and the assessee was not required to maintain any record in this respect. It was also submitted that the assessee's gross commission earned was more than Rs. 10.39 cores, whereas, the assessee had paid sub-brokerage of Rs. 2.54 crores only. It was submitted that the disallowance !@ 10% on adhoc basis was not justified. We note that despite furnishing of the extensive details and evidence, the AO without pointing out any spec....