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2016 (4) TMI 1042 - ITAT HYDERABADDetermination of income - assessee is a commission agent derived income from real estate activities - Held that:- From the record, it is clear that no commission agent or even the person dealing with the real estate can earn @ 25% as income from the business. On careful evaluation of the return of income, assessee had offered to tax 25% as net income from the commission earned from real estate activities and not from gross receipts. First we need to arrive what will be the income earned from the real estate business as commission. AO has treated 25% as commission, which cannot be proper in the normal course of business. Moreover, the assessee has used the joint account to carry out the business, activities of accepting money from purchasers and paying to the sellers and the net balance shown as commission income. The similar business activities were also carried by his wife, who has shown commission income. We are not in a position to allocate the funds movements in business activities of assessee and his wife. In principle, there is movement of funds in the bank account of assessee as well as joint account. We are of the view that we need to determine the reasonable of income from the real estate i.e. the line of business activities of the assessee. In our view, AO should estimate the income of the assessee after evaluation of the business of the assessee and similar business in the real estate. Such percentage can be adopted to determine the gross income of the assessee and arrive at net taxable income @ 25% of the gross income by giving proper opportunity of being heard to assessee. Accordingly, we direct the AO to arrive the net income along with the other declared income as taxable income - Decided in favour of assessee for statistical purposes.
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