MAULIK CONSULTANCY ,MUMBAI V. ITO WARD 24(2)(1), MUMBAI

ITA 4460/MUM/2025

AI Insights

Maulik Consultancy appealed against the order of the National Faceless Appeal Centre (NFAC) / CIT(A), which disallowed consultancy charges of Rs. 34,98,500 for the assessment year 2023-24. The primary contention was that the assessee, Maulik Consultancy, did not possess the necessary academic qualifications or licenses to render consultancy services in trading of shares and securities. However, the Tribunal noted that the agreements in question were profit and loss sharing agreements rather than consultancy agreements, and thus the qualifications or licenses were irrelevant. The Tribunal referenced examples of successful investors in India who lacked formal qualifications, emphasizing that the substance of the agreement was profit and loss sharing, not consultancy.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773156 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2023-2024
• Appeal Filed On: 11-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANNAVARAN KOSURI
• Assessee Lawyers: MILIND SAHASRABUDHE VIRTUALLY
• Keywords: Set aside; TDS

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER I.T.A. No. 4460/Mum/2025 Assessment Year: 2023-24 Maulik Consultancy 1213, 12th floor, habtown Solaris, Professor NS Phadke Road, Andheri (E), Mumbai - 400069 PAN – AAYFM7985L Vs ITO – 29(2)(1) Piramal Chambers Lalbaug, Parel Mumbai - 400012 (Assessee) (Respondent) Assessee by Mr. Milind Sahasrabudhe (Virtually present) Revenue by Shri Annavaran Kosuri, Sr. AR Date of Hearing 17.09.2025 Date of Pronouncement 22.09.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.: The present appeal has been filed by the assessee challenging the impugned order dt. 28.05.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2023-24. 2. The only ground raised by the assessee relates to challenging the order of Ld. CIT(A) in disallowance of consultancy charges paid of Rs. 34,98,500/-. Printed from counselvise.com 2 ITA No. 4460/Mum/2025 Maulik Consultancy, Mumbai. 3. In this regard, assessee in order to substantiate consultancy charges received by him as professional fee filed supporting documents, which are reproduced herein below: i. Consultancy agreement; ii. Working showing the agreed amount iii. TDS Certificate iv. Bank statement showing the amount paid Abhinav Nathani Pradhana Nathani 4. It was submitted that during the year under consideration, the assessee had rendered consultancy services for trading in shares and securities and has also referred to the respective agreements placed on record. However, the said income earned was disallowed on the ground that assessee is not having Academy qualification or licence to render such services. But in this regard, the assessee categorically submitted that the very presumption about educational qualification is totally misconceived, and while referring to the written submissions and order of Ld. CIT(A), pointed out and gave example of one Shri Radhakishan Damani and submitted that the said person is one of the successful investors on Indian Markets and is reported to be college dropout. Apart from the above another example of one Shri Vijay Kedia was also put forth and submitted that he is a mere B.Com. It was further submitted that the certification of series 7, FCA is applicable only in United States of America and not in Printed from counselvise.com 3 ITA No. 4460/Mum/2025 Maulik Consultancy, Mumbai. India. Therefore it was argued that the presumption that the consultant in this field needs combination of academic qualification in itself is misconceived and not sustainable and therefore the disallowance on this ground is clearly not justified. 5. On the other hand, Ld. DR relied up on the order passed by revenue authorities and submitted that since assessee do not possess required qualification or experience in consultancy therefore additions were rightly made by the revenue authorities. 6. We have heard the counsels for both the parties, perused the material placed on record, Judgements cited before us and also the orders passed by the revenue authorities. From the records, we noticed that in order to substantiate his income from consultancy, the assessee had placed on record the following documents: i. Consultancy agreement; ii. Working showing the agreed amount iii. TDS Certificate iv. Bank statement showing the amount paid Abhinav Nathani Pradhana Nathani 7. Apart from above, the assessee also relied upon agreements placed on record. It was categorically submitted that the character of the agreement was simple profit and loss sharing agreement. In this regard reference to para d of both the agreements at page No. 3 and page Printed from counselvise.com 4 ITA No. 4460/Mum/2025 Maulik Consultancy, Mumbai. No. 15 of the Paper book No.1 respectively. The said clause reads as follows: d) All Profit and loss arising on the transaction shall be shared by The Consultant and The Trader in the ratio of 60:40% 8. It was therefore strongly argued that there was no requirement of expert consultancy as the consultancy was a patent misnomer. After having gone through the contents of both the agreement we found that the real substance of the agreement is simple profit and loss sharing. It was strongly submitted that consultants never take responsibility for outcome and never share losses. We also noticed that in the line of share trading, the consultants never share losses and in fact qualify all recommendations with simultaneously advising stop loss levels. Hence our attention was drawn towards Scrip wise statement of charges paid to both the parties at paper book page nos. 5-7 and paper book page nos. 17-19 which duly reflects that even the losses were shared by both the parties of the agreement. 9. We are also of the view that the requirement as to advisor's qualifications etc are entirely misconceived in context of the transaction on hand, where the real character of the agreement is simple profit and loss sharing. As per the agreements, the assessee was entitled only to 40% income in first place and only that sum should have character of assessee's income rest of the 60% was never income accruing to the assessee and therefore there Printed from counselvise.com 5 ITA No. 4460/Mum/2025 Maulik Consultancy, Mumbai. was no question of claiming it as an expense or disallowance thereof in the hands of assessee. 10. In our view, the agreement needs to be interpreted on the principles of substance over the form and the substance of the agreement is that of profit and loss sharing. The reasons offered by the AO for the additions do not apply to profit and loss sharing agreements. Ld. AR has also referred to few websites like Zignaly, Bybit, Zulu Trade, who offer similar arrangements and there is no question of qualification / compliances. 11. In this case the TDS has been deducted and paid in time, all the payments have been made through banking channel and no fault has been found in the documents furnished by the assessee. 12. Therefore taking into consideration the entire facts and circumstances as discussed by us above in detail, we set aside the disallowance made by the AO. Consequently the ground raised by the assessee stands allowed. 13. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on 22/09/2025 SSd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai, Dated: 22/09/2025 Printed from counselvise.com 6 ITA No. 4460/Mum/2025 Maulik Consultancy, Mumbai. KRK, Sr. PS. Copy of the order forwarded to: (1)The Assessee (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "