Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment years 2004-05 and 2005-06 - Where assessee transferred its business of distribution of goods to a company on receipt of commission and said commission payment was allowed as business expenditure in hands of transferee, by natural corollary said commission was to be assessed as business income in hands of assessee [In favour of assessee] The assessee-company transferred its business of distribution of the Acer products to 'SIL'. The distribution of the products was to be taken over by SIL on certain terms and conditions including payment of commission on sale at the rate of one per cent. The assessee offered the commission income gained from its business as 'business income' and set off the same against the business losses incurred in the same business. The Assessing Officer treated the income of the assessee from commission as income from other sources and declined to set off against the brought forward business losses. Held that in the case of SIL, it was accepted by the revenue that the commission paid by SIL to the assessee was business expenditure. If that was so, the business expenditure in the hands of SIL by natural corollary was the business income in the hands of the assessee. CASE REFERRED TO Dy. CIT v. FX Info Technologies (P.) Ltd. [2011] 10 ITR (Trib.) 250 (Delhi) Sanjeev Sabharwal for the Appellant. Prem Nath Monga and Manu Monga for the Respondent. JUDGMENT M.L. Mehta, J. - These two appeals are under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), directed against the order dated March 31, 2010 (Deputy CIT v. FX Info Technologies P. Ltd. [2011] 10 ITR (Trib) 250 (Del)), of the Income-tax Appellate Tribunal (for short "the Tribunal") pertaining to the assessment years 2004-05 and 2005-06. The assessee was carrying on the business of distribution of Acer products, such as computers, laptops, desktops, etc., of M/s. Acer India Pvt. Ltd. for about two years. Due to some financial constraints, it could not make its business venture a profitable one and in the process incurred heavy losses. In the meeting of the board of directors…

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