Finquest Financial Solutions Pvt. Ltd. Vs DCIT (ITAT Mumbai)
During the course of assessment the assessing officer observed that assessee has debited an amount of Rs.15,00,000/- to the profit & loss account under the head loan syndication fees claimed to be paid to M/s Moncon Exports Pvt. Ltd, and M/s Niyoshi Trading and Investment P. ltd. During the course of appellate proceedings before us the ld. Counsel has placed the detail of loan syndication fees as per page no. 21 to 23 of the paper book. After perusal of the same it is noticed that assessee has filed only the debit note pertaining to /s Moncon Exports Pvt. Ltd & M/s Niyoshi Trading and Investment P. ltd, showing this amount pertained to Investment Advisory Services. The assessee has not filed any other documentary evidences to substantiate that this amount of Rs.15,00,000/- was pertained to loan syndication fees. The assessee has also not filed any specific detail of the loan arranged by these two parties. Further, on the similar issue and identical facts, coordinate bench of the ITAT, vide ITA No. 7383/Mum/2016 and ITA No. 7241/Mum/2016, dated 28.02.2019 in the case of the assessee itself for assessment year 2012-13 has sustained the disallowance of Rs.15,00,000/- shown as Investment Advisory Services to the same parties. During the year under consideration also the assessee could not substantiate with relevant evidences that these expenses were related to loan syndication fees and the same was claimed as Investment Advisory Services without any break up of the detail of loan advances arranged by these two parties. Therefore, we do not find any infirmity in the decision of ld. CIT(A) after following the decision of coordinate bench of the ITAT as supra. Accordingly, this ground of appeal is dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present filed by the assessee is directed against the order passed by the CIT(A)-16, Mumbai, which in turn arises from the assessment order passed by the A.O u/s 143(3) of the Income Tax Act, 1961, dated 27.12.2016 for A.Y. 2014-15. The assessee has assailed the impugned order on the following grounds before us:
“1. Disallowance under section 40A(2) out of interest paid:
On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in confirming the disallowance of Rs.1,14,59,016/- u/s. 40A(2) made by the Ld. A.O., being alleged excessive interest paid to Bharat J. Patel, a Director of the appellant. Your appellant, therefore, prays that the Ld. AO be directed to delete the disallowance of Rs.1,14,59,016/- made u/s. 40A(2) of the Act.
2. Disallowance of fees paid towards Investment Advisory Services:
On the facts and in the circumstances of the case, and also in law, the Ld. CIT(A) erred in confirming the disallowance of Rs.15,00,000/- made by the Ld. A.O. being professional fees paid by the appellant towards Investment Advisory Services rendered by Moncon Exports Pvt. Ltd. and Niyosi Trading and Investment Pvt. Ltd. Your appellant, therefore, prays that the disallowance of Rs. 15,00,OOO/- be deleted.
Your appellant craves leave to alter, modify, amend or delete any of the above grounds of appeal, or to add one or more new ground(s), as may be necessary.”
2. The fact in brief is that return of income was filed by the assessee declaring total income of Rs.5,33,187/- on 30.09.2014. The case of the assessee was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued on 28.08.2015. The relevant facts of the case are discussed while adjudicating the ground of appeal filed by the assessee as follows:
“1. Disallowance under section 40A(2) out of interest paid:
On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in confirming the disallowance of Rs.1,14,59,016/- u/s. 40A(2) made by the Ld. A.O., being alleged excessive interest paid to Bharat J. Patel, a Director of the appellant. Your appellant, therefore, prays that the Ld. AO be directed to delete the disallowance of Rs.1,14,59,016/- made u/s. 40A(2) of the Act.
3. During the course of assessment the A.O noticed that assessee has shown unsecured loan to the tune of Rs.62,36,70,556/-under the head short term borrowings on which it had paid interest amount of Rs.3,71,37,937/-. Detail of payment of interest on the loan amount obtained from various parties as reflected at Page No. 5 of the assessment order is reproduced as under:
