677 dated 28 1 1994
Circular No. 677 was issued by the Central Board of Direct Taxes on 28 January 1994. Its subject is 677 dated 28 1 1994.
Extends to agents of mutual funds notified by the Central Government under section 10(23D) the ad hoc deduction of 50 per cent of gross commission receipts that Circular No. 594 dated 27-2-1991, with its corrigendum of 15-5-1991, had allowed to authorised agents of the Unit Trust of India and agents of the securities named there. The deduction is available only to agents who keep no detailed accounts of their expenses and whose gross commission for the year is less than Rs. 60,000, that figure being the aggregate of commission from Unit Trust of India agency, the specified securities, the mutual funds, and Life Insurance Corporation commission as covered by Circular No. 648 dated 30-3-1993. An agent whose commission from all these sources put together exceeds Rs. 60,000 gets no ad hoc deduction, and his expenditure claim is decided by the Assessing Officer on the ordinary provisions.
The Board received representations asking that agents of mutual funds be given the same ad hoc deduction already allowed to Unit Trust of India and securities agents.
463. Whether benefit of ad hoc deduction for expenses @ 50 per cent of gross receipts of commission should be given to agents of those mutual funds which are notified by Central Government for purposes of section 10(23D) and who are not maintaining detailed accounts for expenses incurred by them and having gross commission of less than Rs. 60,000 for the year, including gross commission, as authorised agents of UTI and securities specified in Circular No. 594, dated 15-5-1991 and Circular No. 648, dated 30-3-1993
1. The Board in Circular No. 594, dated 27-2-1991 (Sl. No. 461) and corrigendum dated 15-5-1991 has granted, subject to conditions therein specified, benefit of ad hoc deduction for expenses @ 50 per cent of the gross receipts of commission, to the authorised agents of the Unit Trust of India and the agents of the Securities specified in the circular. The benefit of ad hoc deduction is available only where no detailed accounts are maintained and the gross commission received by the agents is less than Rs. 60,000.
2. The Board has received representations for grant of similar ad hoc deduction to agents of mutual funds.
3. The Board has considered these representations and has decided that the benefit of ad hoc deduction for expenses @ 50 per cent of the gross receipts of commission be given to the agents of those mutual funds which are notified by the Central Government for purposes of section 10(23D) of the Income-tax Act, 1961. The benefit of ad hoc deduction will only be available to agents not maintaining detailed accounts for the expenses incurred by them and having gross commission of less than Rs. 60,000 for the year, including gross commission as authorised agents of Unit Trust of India and agents of Securities specified in Board’s Circular No. 594, dated 27-2-1991 and corrigendum dated 15-5-1991, as well as total commission from Life Insurance Corporation as specified in Board’s Circular No. 648, dated 30-3-1993. (Sl. No. 462).
4. The benefit of ad hoc deduction will not be available to agents who have earned gross commission as computed above of more than Rs. 60,000 from all the abovementioned sources put together during the year. The admissibility of expenditure claimed by such agents (with higher income) will be decided by the Assessing Officers as per the provisions of the Income-tax Act.
Circular : No. 677, dated 28-1-1994.
On the assessment of a commission agent whose 50 per cent expense claim is disallowed for want of vouchers.
An agent earns Rs. 30,000 of Unit Trust of India commission and Rs. 35,000 of mutual fund commission in a year and keeps no accounts. The aggregate of Rs. 65,000 crosses Rs. 60,000, so no ad hoc deduction is available and his expenses must be established on the ordinary provisions.
Source: the Income Tax Department’s own published text — its page for this instrument.
