Law: Income Tax Act, 1961

Section: 256(1)

Law: Income Tax Act, 1961

Section: 256(1)

Income - Brokerage - income from business or profession - Assessee earned income from brokerage and claimed professional income - income Tax Officer did not accept the claim - Whether Tribunal rightly held that brokerage amounts to profession - Held no. The Tribunal has proceeded only on the basis that some manual/professional skill is required for earning income from brokerage which could not be the only criteria. There should be some special qualification of a person apart from skill and ability, which is required in carrying on any activity which could be considered as profession. This could be by having education in a particular system either in a college or university or it may be even by experience. No such finding has been given by the Tribunal with regard to personal qualification and, therefore, we are of the view that the Income-tax Appellate Tribunal was not justified in coming to the conclusion that the income from brokerage should be assessed as professional income and not brokerage income. Case followed: JUDGMENT The Judgment of the Court was delivered by V.K. Singhal, J. - The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following question of law arising out of its order, dated June 27, 1980, in respect of the assessment year 1977-78 under section 256(1) of the Income-tax Act, 1961: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that brokerage amounts to profession and not business?" The brief facts of the case are that the assessee derived income from brokerage and claimed it to be professional income in accordance with Sub-paragraph II of paragraph C of the Finance Act, 1977. The Income-tax Officer found that income derived is from business and not from profession as no special skill was acquired and, therefore, it cannot be considered to be income from profession. In appeal before the Commissioner of Income-tax (Appeals) also it was considered that profession involves the idea of an occupation requiring purely intellectual skill or manual skill on the basis of some special learning and accordingly the appeal of the assessee was dismissed. The Income-tax Appellate…

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