Commission income from real estate transaction qualifies as business income under Income-tax Act

The court held that the commission income of Rs. 15,00,000 received by the assessee from a real estate transaction qualifies as business income under section 2(13) of the Income-tax Act. The Income-tax Appellate Tribunal's decision to treat the commission under the head "Income from the business" was upheld, ruling in favor of the assessee and against the Revenue.

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Issues Involved:
The issue involves determining whether the assessee's income from commission, amounting to Rs. 15,00,000, is assessable under the head 'Income from business' u/s 256(1) of the Income-tax Act, 1961.

Judgment Details:

The facts of the case state that the assessee received commission of Rs. 15,00,000 from a real estate transaction and claimed it as income from business. However, the Assessing Officer treated the commission as income from other sources, leading to an appeal before the Commissioner of Income-tax (Appeals) who allowed the appeal, considering it as income from the business of real estate transaction. The Revenue then approached the Income-tax Appellate Tribunal, which upheld the decision of the Commissioner of Income-tax (Appeals), resulting in the present reference.

During the proceedings, the Revenue argued that the real estate transaction did not constitute a business for the assessee, and thus, the income derived from the commission should be assessed as income from other sources. Conversely, the assessee's counsel referred to the definition of "business" u/s 2(13) of the Act, contending that the commission income should be treated as business income.

Upon examining the definition of "business" under section 2(13) of the Act, which includes any trade, commerce, or manufacture, the court found that the commission received in the real estate transaction falls under the definition of business income. The court cited dictionary meanings of "trade" to support this interpretation, emphasizing that the commission can be considered business income arising from the real estate transaction. Consequently, the Tribunal's decision to assess the commission under the head "Income from the business" was upheld.

Therefore, the court answered the question in the affirmative, in favor of the assessee and against the Revenue.

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