2023 (4) TMI 1054 - HC - Income Tax

Court allows appeal delay, upholds cost deduction for seconded personnel, finds no legal question

The court condoned the 240-day delay in filing the appeal by the appellant/revenue, as the respondent/assessee did not oppose the request. Regarding the ... Addition of secondment cost borne by assessee - cost incurred by the respondent/assessee towards personnel who were seconded from another entity could be allowed as deduction or not? - As submitted AO had rightly disallowed 50% of the cost, since services were rendered not only to GPI but also other group companies - HELD THAT:- As not disputed that the respondent/assessee has utilized the services of the personnel which were deployed by it on secondment for according professional services to GPI as well as other group companies. No dispute raised before us that the income earned by the respondent/assessee on account of professional services rendered by the employees who were deployed on secondment basis, has been offered to tax. Therefore, to our minds, for the appellant/revenue to raise this issue when the arrangement has been in place for a substantially long period of time lent’s uncertainty to an established business arrangement. Although we are conscious of the fact that the principles of res judicata do not apply to income tax proceedings, there is another principle which is equally well-entrenched, which is, the principle of consistency. [See Radhasoami Satsang v. Commissioner of Income Tax 1991 (11) TMI 2 - SUPREME COURT]. No substantial question of law arises for our consideration. Issues Involved:1. Condonation of delay in filing appeal.2. Allowability of deduction for cost incurred on seconded personnel from another entity.Summary:Condonation of Delay:An application was filed seeking condonation of a 240-day delay in filing the appeal by the appellant/revenue. The respondent/assessee did not oppose the request, and the delay was condoned by the court.Allowability of Deduction:The appeal pertained to Assessment Year (AY) 2013-14 and challenged the Income Tax Appellate Tribunal's order regarding the deduction of costs incurred on personnel seconded from another entity, Godfrey Philips India Ltd. The key issue was whether the expenses towards seconded employees could be allowed as a deduction. The Assessing Officer (AO) had initially disallowed 50% of the total secondment cost, adding it to the respondent/assessee's income. However, the Commissioner of Income Tax (Appeals) ruled in favor of the respondent/assessee, allowing the expenses as claimed. The Tribunal upheld the CIT(A)'s decision, leading to the appellant/revenue challenging it in court.Court's Decision:After considering the arguments presented, the court found no substantial question of law requiring its consideration. The court noted that the arrangement between the parties had been ongoing since AY 2011-12, with no prior objections raised by the appellant/revenue. Additionally, the court emphasized the principle of consistency in tax proceedings and the importance of not disturbing factual findings unless they are perverse. As such, the court declined to interfere with the decisions of the lower forums and closed the appeal accordingly.