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TMI Blog2012 (9) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... been doing the business of trading in shares and debentures since past 25 years and had been incurring losses far the last more than 10 years. The assessee has brought forward business losses of Rs..3,72,33,512/- pertaining to assessment years 2000-01 to 2007-08. The return of income declaring income of Rs..4,88,9042/- was filed on 19.9.2008. The case was selected for scrutiny and necessary notices were issued u/s 143(2) of the Act. During assessment proceedings, the Assessing Officer noted that the assessee had received commission of Rs..1,62,02,904/- from Mr. Zhao Jingjun, r/o 499, Hepping Road, Shijlazhaung, Hebei, China. Mr. Hao Weiqun r/o 66-Daji Onyinziang Nanjing, China Mr./Ms. Jhad Jin Hua & MA Zhao Ang on export of iron ore to China on behalf of some importers of China. During discussions with the assessee, the Assessing Officer noted that assessee had received such type of commission for the first time. The Assessing Officer issued notice dated 6.12.2010 and 20.12.2010 asking assessee to substantiate his claim of commission with necessary evidences and was asked to show cause as to why the so-called commission income should not be treated as income under the head income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiate the nature of remittance which still remains un-verifiable. xiii) That the assessee is not registered under the Service Tax for providing service of commission and service tax has not been charged and paid on the transaction on which so-called commission has been received. In the light of above observations, the Assessing Officer did not treat the income under the head business or profession and instead treated it as unexplained income u/s 68 of the Income Tax Act, 1961 and taxed it under the head income from other sources. As per Assessing Officer the entry of commission was bogus and was obtained just to set off carry forward business losses. 3. Aggrieved, the Assessing Officer filed appeal before Ld CIT(A) and submitted as under:- i) That the assessee is a business man and has been doing business for a long time and has also been filing regular income tax return. ii) That the assessee had earned commission income from Chinese parties for facilitating the export of iron ore by three parties M/s Chowgule & Co. Pvt. Ltd. Goa, Mandovi Pelletes, Goa and Vikram Ispal. iii) That the payment has been received in foreign exchange and the same has been deposited in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding assessment years of assessment years 2006-07 & 2007-08 which the assessee otherwise eligible for carry forward and set off as provided u/s 70, 71 & 72. The only issue is whether the Assessing Officer is justified to change the head of income of commission income as claimed by the assessee as business income to the different head u/s 56 as income from other sources. It is apparent that the provisions of the residuary section 56 can be invoked only when the income of the assessee is not taxable under any of the specific heads starting from income from salary u/s 17, income from house property u/s 22, income from the profits & gains of business or profession u/s 28, income from capital gain u/s 45 and as such the provisions of residuary section 56 under the head income from other sources read as under:- i) Income of every kind which is not to be excluded from the totals income under this Act shall be chargeable to income tax under the head income from other sources, if it is not chargeable to income tax under any of the heads specified in section 14, items A to E. ii) In particular, and without prejudice to the generality of the provisions of sub section (1) the following inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. In this respect he took us to pages 13-18 of paper book where copies of returns and other documents showing assessee's income as business income were placed. He also invioted our attention to paper book pages 69-71 where computation of income for subsequent years showing assessee's income as business income were placed. In view of the above facts, he argued that since assessee has been into business since long and even continued doing business during subsequent years holding of business income during assessment year 2008-09 as income from other source was not justified. Reliance was placed on the judgments of various courts in the following cases:- 1. SG Mercantgile Corporation P. Ltd. v. CIT 83 ITR 700 (SC). 2. Karanpura Development Co. Ltd. V. CIT 44 ITR 362. 8. We have heard the rival submissions of both the parties and have gone through the material available on record. We have observed that assessee had been doing business of share trading during last so many years and before that he had been doing some business or the other along with business of trading in shares and had suffered heavy losses during last few years. suddenly, during the year under consideration, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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