Fyers Securities Private Limited Vs DCIT (ITAT Bangalore)
The appeal concerned the disallowance of ₹5,50,80,000 paid as consultancy fees by the assessee to a related party, M/s. Fyers Investment Advisors Private Limited, for Assessment Year 2022-23. The assessee, engaged in stock brokering services, had claimed the expenditure as a business deduction. The Assessing Officer disallowed the claim under Section 37 of the Income Tax Act, and the disallowance was subsequently confirmed by the Commissioner of Income Tax (Appeals).
During assessment proceedings, the assessee explained that the consultancy company provided technical and professional services, including intellectual property consultancy, real estate advisory, documentation services, payment of stamp duty, and other related services. The assessee produced the consultancy agreement dated 04.12.2018 and furnished details of invoices raised by the service provider. The service provider also supplied information in response to a notice issued under Section 133(6), including income tax returns, audited accounts, GST returns, TDS details, and particulars of services rendered.
The Assessing Officer, however, observed that the transaction was between related parties and concluded that the arrangement lacked sufficient substantiation. According to the Assessing Officer, the service provider had not furnished specific details establishing the services rendered. Consequently, the entire consultancy payment was treated as inadmissible expenditure and disallowed.
