Commissioner of Income Tax vs V.S. Bhagat

The revenue is aggrieved by an order dated 4-8-2006 passed by the income tax Appellate Tribunal, Delhi Bench ''A'', New Delhi in ITA No. 3627/Delhi/2004 relevant for the assessment year 2001-2002. The assessee had purchased and sold some units of IL & FS Mutual Funds and as a result of this transaction, he received through Standard Chartered Bank an incentive brokerage of Rs. 41,55,061. The question that arose for adjudication before the Departmental Authorities was whether this amount forms a part of the cost of acquisition or whether it is to be treated separately under the head of income from other sources.

According to the assessee, Ibis amount has to be adjusted against the cost of acquisition of the Mutual Funds since it is an amount that has been saved from the cost of acquisition, white according to the revenue the amount is the income received by the assessee from other sources.

The Tribunal was of the view that the amount is to be adjusted against the cost of acquisition and for this purpose reliance was placed upon CIT v. U.P. State Industrial Development Corpn. [1997] 225 ITR 7031 (SC). In this decision rendered by the Supreme Court, an underwriter was given some commission and he had also purchased some shares which were not subscribed by the public. The -Supreme Court held that the underwriting commission earned by the Respondent in respect of shares not subscribed by the public but purchased by the respondent cannot be treated as a part of its taxable income. In other words, the amount would have to be adjusted against the cost of acquisition.

In view of the decision of the Supreme Court, in our opinion, on the facts and in the circumstances of the case, we find that no substantial question of law arises for our consideration. Dismissed.