Commission Income would not come under the Presumptive Taxation, not taxable: ITAT [Read Order]

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Commission Income would not come under the presumptive taxation and is not taxable, liable to exclude from gross turnover.

M/s. Euro Home, the assessee challenged the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 13-10-2021 in the matter of an intimation issued by Centralized Processing Center, Bangalore u/s 143(1) of the Income Tax Act on 18.01.2019.

Ms N. V. Lakshmi (Advocate) appeared for the appellant and stated that the assessee already considered the commission income as part of business receipts and offered income u/s 44AD on a presumptive basis. The same has separately been added by CPC which amounts to double addition to a certain extent.

On the other hand, Shri D. Hema Bhupal appeared for the respondent and submitted that commission income could not be offered on a presumptive basis. Having heard rival submissions, the appeal is disposed-off as under.

The assessee is a partnership firm engaged in home furnishing items. Income from other sources has been taken to be Rs.4.50 Lacs as against ‘nil’ and house property income has been taken to be Rs.0.19 Lacs as against ‘nil’ submitted by the assessee. The assessee declared a turnover of Rs.114.85 Lacs and the income was offered at presumptive basis u/s 44AD. The items of Rs.5.09 Lacs as reported in Form 26AS were included as a part of the turnover of Rs.114.85 Lacs which was separately added by CPC.

CIT(A) held that the provisions of Sec.44AD would not apply to commission income and the rental income received would be assessed under Income from House Property.

A Coram of Shri Manoj Kumar Aggarwal, AM observed that commission income would not come under presumptive taxation and the interest on deposits would be income from other sources. Further observed that the assessee has incurred certain expenditure which has been reimbursed and the addition of the same as a separate item is not justifiable.

The Tribunal directed the AO to compute the correct income of the assessee. The interest on the deposit would be income from other sources and the commission income would be added as a separate item. Further held that both these items would be excluded from gross turnover and presumptive income would accordingly be revised. While allowing the appeal, the bench deleted the addition of reimbursement of exhibition expenses.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates