Itxa/1973/2011 Of The Commissioner Of Income Tax - 10 Mumbai v. Avendus Advisors Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1973 OF 2011 The Commissioner of Income Tax-10V/s.M/s.Avendus Advisors Private Limited ....Appellant ....Respondent Mr.Suresh Kumar for the Appellant. None for the Respondent. CORAM : S.J. VAZIFDAR AND M.S. SANKLECHA, JJ.DATE : 4TH JULY, 2012. P.C. :- 1.This is an appeal under section 260-A of the Income Tax Act against the order of the Income Tax Appellate Tribunal (ITAT) dismissing the appellant's appeal against the order of the CIT (A). The appellant seeks to raise the following as substantial question of law :- “Whether on the facts and in the circumstance of the case and in law, the Hon'ble ITAT was correct in holding that the expenditure on Referral Fee of Rs.89.25 lakhs is revenue expenditure as the payment merely facilitates the assessee's trading operations more efficiently or more profitably although the assessee is not engaged in trading activity ?” 2.The respondent paid referral fees to various parties which, according to the AO, results in an enduring benefit and were therefore liable to be considered as capital expenses and not revenue expenses. The services involved introducing the clients, interacting with them, understanding their funding requirements and forwarding leads to the respondent. It was found by both the appellate authorities that these parties provide the respondent initial groundwork and that the same facilitates the respondent trading operations more efficiently. The fees were not in respect of the services which brought into existence an asset or advantage of an enduring nature. 3.The above are essentially finding of facts on the basis whereof the appellate authorities considered the expenditure to be on revenue account. The findings cannot be termed perverse. 4.A substantial question of law does not arise. The appeal is therefore dismissed. (M.S. SANKLECHA, J.) (S.J. VAZIFDAR, J.)