The nature of business of the assessee can not be challenged by any authority whether assessee is competent of doing the business or not competent. It is the assessee who has to decide how to earn the Income.

It is the choice of the assessee what type and of what nature he/she does the business despite his education. The reply of the assessee which is supported by the Hon’ble SC judgements.

The assessee is is an engineer by education. During the period when he was do engineering he started to take interest in stock market. For this he read my books and attended seminars. Besides engineering education he studied a lot and made contact with the expert people of the same line. He started earning out of this stock market. It took him 10 years to become an advisor in this line. His father made him educated and also independent so that he started to took interest in setting up his very small office and installed computers at the basement of his house and appointed some employees. Assesseee trained them to study the market.Assessee invested his valuable time to make people aware of this market and how to get profit out of their investment in the share market which is always uncertain. People took his consultancy and earned small profit.During the F.Yr. he has not made profit from this trading on his own. As the assesseee did not desire to take risk of this market as usual and moreover he was not having his own sufficient funds to invest in this market.

In trading our working is on profit sharing basis

In trading our working is on profit sharing basis how it works is first we get client from online promotions like promoting on facebook and google clients can be from any part of india as we don’t take any advance from them and first they make profit from our trading information and then share a part of profit with us as service charge.We work on profit sharing model of 30/70 for good portfolio and 40/60 for small portfolio. How it works is simple first client is given information without any charges till they make small profit between 25000 to 50000 then we ask for profit share after the client has generated profit. In this case we trust the client that they will share profit after they make profit because only after they share the profit the next trade is provided. Our website is https://www.XXXXXXX in this trades back history and working are mentioned in detail. Reason why the client pays us is because we have first trusted them and given them information and service to generate the profit and after that only they have paid to take further trade information this way makes it most comfortable format for the clients also as they are paying only after they have made profit.

The root question is why assessee was not doing his own trading instead of guiding people of this trade and earning profit.

It is the choice of assessee always how he earns income. The nature of business is of that kind what suits the assessee. People become IAS officers leaving the entire business of their parents. It is ok. Interviewer asks him why you have chosen govt. job instead of your own running business. The candidate answere

Sir, I was also doing business with my father. But I was missing something from the core of my heart. I was not enjoying there. My father trained me well. Provided me wonderful office, car …… everything. But I was feeling not good, I was not getting what I wanted. At last I decided to leave the business and decided to prepare for this great exam. I want to enjoy the service to the mankind. This job is the only plat form from where I can meet the people of different caste and creed those who are deprived of education and all.

Therefore it is the choice of every one what he has to achieve.

Assessee decided to opt to provide consultancy and earn service charges or we can say commission. Commission was always earned when a client got profit otherwise no commission. In consultancy it is always charged first whether you get profit or not. Most of the time assessee has received commission in cash. People deposited directly to the account of the assessee..

  • CIT Vs. Dhanrajgirji Raja Narasingirji 91 ITR 544 (SC), wherein it has been held that it is not open to department to prescribe what expenditure assessee should incur and in what circumstances he should incur that expenditure.
  • CIT Vs. Wal Chand and Co. (P) Ltd. 65 ITR 381 (SC), wherein it has been, inter alia, held that in applying the test of commercial expediency for determining whether the expenditure was wholly and exclusively has to be adjudged from the point of view of the businessman and not of the revenue.

The law is well settled that business decisions of assessee cannot be the subject matter of consideration of revenue authorities. How he has to earn income ? How he has to make expenses. what type of business he shall be doing. what will be the nature of the business. Assessee has to decide it. Revenue authorities can not sit on the arm chair of a businessman.

In this way I hope the cash deposited by the assessee in his saving bank account is quite justified.

Author Bio

Qualification: LL.B / Advocate
Company: S.K.Jain & Co.
Location: Faridabad, Haryana, India
Member Since: 16 May 2019 | Total Posts: 29
I am S.K.Jain , Tax Consultant cum Advocate practising in Income Tax , GST , Company Matters . The name of the concern is S.K.Jain & Co. and I am prop. of this concern . I am in practice for the last 30 years . Those who have joined the profession recently and want to discuss on the particular i View Full Profile

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May 2021