HARI PRASAD HELA,KOLKATA vs. ITO, WARD 25(1), KOLKATA, KOLKATA

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ITA 554/KOL/2017Status: DisposedITAT Kolkata31 October 2017AY 2012-133 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that commission income should be assessed under 'Income from Business' and that expenses would have been incurred. However, as the assessee failed to substantiate the expenditure, the income was assessed at 40% of gross receipts for both assessment years.

What were the facts?

The assessee claimed expenditure for earning commission income, which was disallowed by the AO for lack of evidence. The First Appellate Authority confirmed the disallowance. The assessee appealed to the ITAT.

What were the issues?

Whether the commission income is assessable under 'Other Sources' or 'Business Income', and the allowability of claimed expenditure without substantiation.

Which sections of the Income-tax Act were involved?

Section 57

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENCH ‘SMC’ KOLKATA

Before: Hon’ble Shri J.Sudhakar Reddy, AM]

Date of Hearing : 29.09.2017. Date of Pronouncement : 31.10.2017. ORDER PER J.SUDHAKAR REDDY, AM:

These are appeals filed by the Assessee directed against the order of the Commissioner of Income Tax-(A)-7, Kolkata relating to A.Y. 2011-12.

2.

The assessee is an individual and earns commission income from related associate companies for procuring customers and for collecting money for customer, for sale of plots. He filed return of income for A.Y.2011-12 and 2012-13 and claimed expenditure of Rs.10,57,628/- for A.Y.2011-12 and Rs.10,57,628 for A.Y.2012-13. The AO disallowed the same on the ground that no evidence in support of this claim was furnished and also there is no direct nexus between the expenditure incurred and the income earned. The assessee had offered the income under the head ‘ Other sources’ and claimed deduction u/s 57 of the Income Tax Act, 1961 (Act).

3.

On appeal the First Appellate Authority confirmed the disallowance and dismissed the appeals.

4.

Aggrieved the assessee is in appeal before me. None appeared on behalf the assessee. Under the circumstances I dispose off the case ex-parte qua the assessee, on merits after hearing the ld. DR. Hari Prasad Hela A.Y. 2011-12 & 2012-13 2

5.

On hearing the ld. DR, in my view the commission income is assessable under the head Income from Business and not under ‘ Other sources’ . The assessee would have definitely, incurred expenses for earning this income. The AO records at para-3 of his order that the assessee produced documents in relation to expenses incurred to earn income. The assessee has declared net profit @29% for A.Y.2011-12 and 25% for A.Y.2012-13. The AO assessed the same @ 78.74% for A.Y.2011-12 and 64.76% for A.Y.2012-13

6.

Keeping in view of the facts and circumstances of the case, and as the assessee could not substantiate the expenditure in question I am of the view that interest of justice would be met if income for both the assessment years be assessed @ 40% of the gross receipts.

7.

In the result both the appeals of the assessee are allowed in part.

Order pronounced in the Court on 31.10.2017.

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