TaxTMI 
TaxTMI 
2026 (7) TMI 1585
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.... and is liable to be deleted. b) The learned Commissioner of Income Tax (Appeals) erred in confirming the Assessing Officer's action of denying deduction of the success fee of Rs.1,47,50,000 and treating it as brokerage commission. c) The learned CIT(A) failed to appreciate that the Assessing Officer did not afford the assessee an opportunity to cross-examine Varroc Polymers and disregarded the evidence relating to that party. d) The learned Commissioner of Income Tax (Appeals) ought to have noted that the statement of Varroc Polymers recorded under section 133(6) does not support the conclusion drawn against the assessee. 3. The assessee is an individual who filed his return of income for Assessment Year 2018-19 declaring total income of Rs.30,66,790. The return was selected for scrutiny to examine the claim relating to capital gains, and assessment proceedings under section 143(3) of the Income-tax Act, 1961, were accordingly initiated. The assessee was engaged in the business of share trading, was a partner in a partnership firm, and was also a director in a company. 4. During the assessment proceedings, the Assessing Officer found that the asses....
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.... of Team Concepts Private Limited. c. Varroc Polymers Private Limited purchased 90% of the shares of Team Concepts Private Limited, including 13,770 shares from the assessee, Shri Mohan Rajashekar, and 30,770 shares from Shri Mahendra Jolapara. The Assessing Officer held that, if the buyer had acquired the shares through an agent or intermediary, the buyer would have disclosed that fact. d. The buyer submitted its financial records, and no expenditure relating to brokerage or commission was found recorded in its accounts. Further, the buyer's income-tax return for the relevant year had been scrutinised without any adverse observation on this issue. e. The Assessing Officer also noted that the agreement relied upon was between Singhi Advisors Private Limited and Team Concepts Private Limited, and not between Singhi Advisors Private Limited and the assessee in his individual capacity. Therefore, according to the Assessing Officer, the material on record did not establish that the agreement was between the assessee and the alleged agent for the assessee's personal share sale. f. The Assessing Officer further observed that the engagement was between ....
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....iry regarding the alleged intermediary was misconceived, as there was no relationship between Varroc Polymers Private Limited and Singhi Advisors Private Limited According to him, the engagement letter was issued for the sale of shares of Team Concepts Private Limited held by the assessee. He also submitted that the learned CIT(A)'s adverse finding was unjustified because the assessee had filed the consultant's confirmation, and email correspondence involving Varroc Polymers Private Limited was also placed before the Assessing Officer to show the consultant's participation. He contended that the notice issued under section 133(6) to Varroc Polymers Private Limited and the information received in response could not be relied upon adversely without granting the assessee an opportunity to cross-examine that party. Therefore, the authorities below ought not to have denied the deduction. 11. The learned authorised representative further submitted that the other shareholder, Shri Mahendra Jolapara, had been allowed an identical deduction by the Assessing Officer in his case under the order dated 24 February 2021. 12. The learned Departmental Representative supported the orders of t....
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....yment of Rs.5,00,000 and a monthly retainer fee of Rs.2,00,000 were payable. A success fee of 3% of the transaction value was also agreed, subject to a minimum fee of Rs.1,00,00,000. It is not in dispute that the agreement was entered into by the assessee in his capacity as Chairman and Director of Team Concepts Private Limited. On 29 November 2017, Singhi Advisors Private Limited raised a pro forma invoice on the assessee for success fee of Rs.1,25,00,000, which, after service tax, amounted to Rs.1,47,50,000. The invoice was raised on the assessee and not on the company, and the assessee paid the amount by cheque from his personal bank account on 5 December 2017. On 6 March 2021, Singhi Advisors Private Limited issued a certificate stating that it had been appointed by Shri Mohan Rajashekar as adviser for identifying strategic partners and providing advisory services for divestment of his shareholding in Team Concepts Private Limited, on the terms and conditions set out in the engagement letter dated 19 August 2016 and as mutually agreed. The certificate further confirmed that, upon successful completion of the divestment of the assessee's shares in Team Concepts Private Limited, ....