Commission

Hi,

One of my client is doing fishery products business. He is purchasing goods from farmers (who grow fishery products) and selling goods to the exporting companies. He is collecting money from companies through cheque and paying money to the farmers in cash. I consider this as trading for tax purposes. But he is telling that he receives only the commission. Companies fix the commission for eg. Rs.2 per kg. but he was paid the full amount by the companies. And he is paying the amount for the farmers.

Can anyone tell me whether this is trading business or commission?

Thanks in advance

Thanks and Regards,

Arun

Replies (6)

Hi Arun,

If the assessee concerned is purchasing in his own capacity and selling in his own capacity then it is a trading business. But if he is acting merely as an agent of the company and procuring the fish products on behalf of the company he is liable for commission.

The segregation should be decided on basis of facts of case and you have to go through contractual agreements between the person and the company.

Regards,

Karthik V Kulkarni

Please also see whether TDS was deducted on full value or only on commission value. if it is deducted on commission value then it is commission income, otherwise trading income.
Please also see whether TDS was deducted on full value or only on commission value. if it is deducted on commission value then it is commission income, otherwise trading income.
It is a case of kachcha arhatia and his income consists of only commission. There is no trading regardless of non deduction of tds.
The agreement between company and your clients matters. If client reimburse the amount after retaining commission... Then it is commission income otherwise trading activity

Hi all, 

Thank you for your timely information.

Thanks and Regards,

Arun

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