In Vandana Guliani v. ITO, the ITAT Delhi bench has held that the incentive received by the assessee, a buyer of a residential flat,from the property broker during original booking of the residential flat in a Developers project is not taxable from the hands of the assessee under the provisions of Income Tax Act since the same constitute “capital receipt”.
The assessee received Rs. 1,81,497/- as brokerage from M/s Ali check Deals.com on which the TDS of Rs.18,150/- was deducted u/s. 194H of the Act. The assessee claimed that she had got a discount on her Jay Pee Property purchased from All Check Deals in the year 2011-12. The assessee had not added the receipt of Rs. 1,81,497/- from All Check Deals, in her total income, therefore, assessment was completed by adding Rs. 1,81,497/- as other income of the assessee.
On appeal, the assessee claimed that as per the Income Tax Act only the income is to be taxed in the hands of the recipient in whose hands the nature of income is to be decided. It was also stated that in the case of the assessee the income received by her is not a revenue receipt but a capital receipt since the very source of her receipt is only the residential flat which is capital receipt in nature. The assessee further relied upon the decision in CIT vs. Saurashtra Cement Ltd.
It was further contended that here is no principal/ agent relationship between the broker and the assessee because in this the case the Builder is a Principal and the Dealer is his agent. However, the assessee is simply a buyer of the property. The assessee has not rendered any service to anyone. Rather, the agent of the Builder helped the assessee in booing of the flat.
The Single Member noed that in CIT vs. Saurashtra Cement Ltd., 325 ITR 422 (SC), the Apex Court held that any receipt directly and intimately linked with the procurement of capital asset is in the nature of capital receipt and not a revenue receipt.
Read the full text of the order below.
