Case Law Details

Case Name : Euro Home Vs DCIT (ITAT Chennai)
Appeal Number : ITA No. 668/Chny/2022
Date of Judgement/Order : 19/09/2022
Related Assessment Year : 2017-18

Euro Home Vs DCIT (ITAT Chennai)

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. Accordingly, the appeal was dismissed against which the assessee is in further appeal before us.

ITAT find that commission income would not come under presumptive taxation. Similarly, interest on deposits would be income from other sources. So far as the exhibition reimbursement is concerned, it appears that the assessee has incurred certain expenditure which has been reimbursed and therefore, the addition of the same as a separate item appear to be not justified. Further, if commission income and interest on deposits are separately added, they would have to be deducted from gross turnover to compute presumptive income. Therefore, I direct Ld. AO to compute correct income of the assessee. The interest on deposit would be income from other sources. The commission income would be added as separate item. However, both these items would be excluded from gross turnover and presumptive income would accordingly be revised.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned 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 Act on 18.01.2019. The sole issue under appeal is additions made by Centralized Processing Center (CPC) while processing the return u/s 143(1).

2. The registry has noted a delay of 241 days in the appeal, the condonation of which has been sought by Ld. AR. Considering the fact that the impugned order was passed during lockdown situation arising out of Covid-19 Pandemic, I condone the delay and admit the appeal for adjudication on merits.

3. The Ld. AR, at the outset, submitted that the assessee already considered the commission income as part of business receipts and offered income u/s 44AD on presumptive basis. The Ld. AR submitted that the same has separately been added by CPC and therefore, there was double addition to certain extent. The Ld. Sr. DR, on the other hand, submitted that commission income could not be offered on presumptive basis. Having heard rival submissions, the appeal is disposed-off as under. The assessee being partnership firm is stated to be engaged in the home furnishing items.

Commission income not falls under presumptive taxation scheme

4. Upon perusal of intimation u/s 143(1) dated 18-01-2019 issued by CPC, it could be seen that income from other sources has been taken to be Rs.4.50 Lacs as against ‘nil’ submitted by the assessee. Similarly, house property income has been taken to be Rs.0.19 Lacs as against ‘nil’ submitted by the assessee. The same stem from information contained in Form 26AS. This form contains the details of TDS deducted u/s 194A, 194H, 194C and 194IB against income credited to the assessee. Such amounts aggregated to Rs.5.09 Lacs. The assessee declared 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 was included as a part of turnover of Rs.114.85 Lacs. The items of Rs.5.09 Lacs as separately added by CPC consist of following: –

No. Particulars Amount (Rs.)
1. Incentive Received 3,95,421/-
2. Exhibition Reimbursement Recd. 58,219/-
3. Interest on deposits 55,449/-
Total 5,09,089/-

5. The Ld. 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. Accordingly, the appeal was dismissed against which the assessee is in further appeal before us.

6. I find that commission income would not come under presumptive taxation. Similarly, interest on deposits would be income from other sources. So far as the exhibition reimbursement is concerned, it appears that the assessee has incurred certain expenditure which has been reimbursed and therefore, the addition of the same as a separate item appear to be not justified. Further, if commission income and interest on deposits are separately added, they would have to be deducted from gross turnover to compute presumptive income. Therefore, I direct Ld. AO to compute correct income of the assessee. The interest on deposit would be income from other sources. The commission income would be added as separate item. However, both these items would be excluded from gross turnover and presumptive income would accordingly be revised. The addition of reimbursement of exhibition expenses stands deleted. I order so.

7. The appeal stands partly allowed.

Order pronounced on 19th September, 2022.

Download Judgment/Order

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