ITAT Delhi Allows Partial Relief on Notional Commission/Interest for Vikram Bakshi & Co. Pvt. Ltd.

Headnote:

The ITAT partly allowed the appeal of Vikram Bakshi & Company Pvt. Ltd., holding that notional income claimed as commission and interest on unpaid commission from Connaught Plaza Restaurants Pvt. Ltd. (CPRPL) cannot be taxed when no actual payment was received. The Tribunal noted that delays in property registration were caused by Noida Authority, beyond the control of the assessee, and capital gains on eventual transfer were offered for taxation in the relevant year.

Background:

1. The assessee is engaged in providing facility management services and also holds investment properties.
2. The assessee purchased a property managed by CPRPL and entered into a business agreement with CPRPL on 15.03.2001 for commission/lease rent.
3. On 22.07.2002, the assessee agreed to sell the property to CPRPL for ₹4.40 crores and received ₹4 crores as advance.
4. The Noida Authority delayed property transfer due to claims on the title, resulting in disputes until AY 2020-21, when the property was finally registered and capital gains were offered for taxation.
5. The AO added ₹1,34,07,964 as commission and ₹1,25,07,426 as interest on unpaid commission for AY 2016-17 (similarly for AY 2017-18).

Tribunal Observations:

1. The assessee did not receive any commission or interest during the relevant years; the claim was only notional.
2. CPRPL confirmed that no payments were made.
3. The delay in registration was caused by Noida Authority, not the assessee.
4. Notional claims cannot be taxed; only actual income received is taxable.
5. Ground Nos. 3–6 (related to commission and interest) were allowed.
6. The same reasoning applied mutatis mutandis for AY 2017-18.

Decision:

1. Both appeals were partly allowed. The addition of notional commission and interest was deleted.
2. The assessment of capital gains for eventual property transfer remains unaffected.

Citation: 2025:ITAT:DEL:1679 & 1385

Case: Vikram Bakshi & Company Pvt. Ltd. v. CIT(A), NFAC, Delhi

Court/Bench: Income Tax Appellate Tribunal (ITAT), Delhi Bench “C”

Coram: Shri M. Balaganesh, Accountant Member & Shri Sudhir Kumar, Judicial Member

Date of Decision: 19 November 2025

ITA Nos.: 1679 & 1385/Del/2024

Assessment Years: 2016-17 & 2017-18