2022 (3) TMI 1470

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....o the Commissioner of Income tax (Appeals) [CIT(A)]'s order Dismissing the appeal against the Assessment order, for 2013-14 a/y i) Assessing professional Gross receipts of Rs.1,54,34,001, as salary income; ii) Non allowance of expenditure and depreciation totaling to Rs.2,10,917 against professional income: iii) Non deduction of interest paid, Rs.1,10,000 from the income of Rs.9,17,985 assessed under 'other sources': on the following grounds: 1. The Learned Commissioner of Income Tax (Appeals) [CIT(A)J erred in upholding the assessment of consultancy receipts of Rs.1,54,34,001 under the head 'salaries', ignoring the facts of the case; payment of service tax on the consultancy receipts & TDS u/s 194J. 2. The CIT(A) erred in up....

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....es periodic professional fees from the company, but if you go through service agreement between the assessee and the company, it is in the nature of employer and employee agreement for appointing a person for carrying out day to day management of the company. The Assessing Officer further noted that as per agreement between the parties, the assessee shall be designated as Managing Director and further, he was in-charge of overall operations of the company. From the above, it is very clear that there is an employee-employer relationship between the assessee and the company and thus, consultancy fees received from the company is in the nature of salary assessable under the head 'income from salary'. Therefore, assessed consultancy fees under ....

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.... to monthly professional fees, he had been paid 2% of the profit of the company as additional professional fees. From the above, what is clear is that scope of work of the assessee with the company has clearly established employer and employee relationship and thus, amount received from the company needs to be taxed under the head 'income from salary'. 6. We have heard both the parties, perused material available on record and gone through orders of the authorities below. There is no dispute with regard to fact that there is agreement between the assessee and company for rendering professional services. As per the agreement between the parties, the assessee has been engaged as a professional on professional fee which shall be payable in mo....

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....pany may appoint any person to suitable post. Therefore, merely for the reason that the assessee had been designated as managing director, it cannot be said that professional fee received by the assessee for rendering professional services cannot be treated as salary, which is derived from employer and employee relationship. In this case, various details filed by the assessee undoubtedly proves that the assessee is engaged for rendering professional services in the company and same has been rightly considered for taxation. The Assessing Officer without appreciating facts simply assessed income of the assessee under the head 'salary'. The learned CIT(A), without appreciating facts has simply sustained additions made by the Assessing Officer.....