ITAT · Surat Bench2024§144
Nanak Motumal Pherwani v. ITO · ITAT Surat: AO's 1% commission estimate cut to 0.50% on cheque discounting
What commission rate applies when the AO estimates cheque-discounting income?
The AO's flat 1% estimate was unsustainable against the assessee's stated 0.15–0.20%; the Tribunal adopted 0.50%.
Reviewed by Adidam Sridhar, Deputy Commissioner of Income Tax (Retd.) · Published 2026-07-07
Facts in brief
- The assessee, in cheque discounting and money transfer, stated commission ranged 0.15%–0.20% depending on clearance and client profile.
- The AO disregarded the claim and estimated commission at 1% of total transactions.
Issue before the bench
The reasonable rate for estimated commission income.
Held
On appeal, the estimated commission income was reduced to 0.50%.
Practitioner takeaway
Estimation cases are won on comparables and the client's own consistent statement. Anchor a specific rate early and force the AO to justify any departure.
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