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2016 (5) TMI 1029 - AT - Income TaxSalary income or professional income - Amount received by the managing director as consultancy charges - TDS was deducted u/s 194J - Disallowance of expenditure land and professional income is treated on par with salary income of the assessee - Held that:- The assessee is eligible to receive consultancy fees and claim expenditure. The nature of expenditure being travelling, lodging, conveyance incurred at various places of Thermal power station, refinery and such expenditure was incurred wholly and exclusively for the purpose of profession and due to expertise opinion of the assessee, the company could fetch export orders and improved the brand image which is not disputed by the Assessing Officer The assessee being professional and employees are below the limit for applicability of ESI and PF provisions. The assessee most of time is out stations and electricity bills are meagre and claimed in his personal account. At the time of hearing ld. Counsel drew our attention to the statement of salary and professional income received for assessment year 2006-07 and 2007-08 explaining with comparable turnover of the company and export turnover. The assessee is rendering service for past several years and connected with the company and due to his efficient advice the company could able to increase its turnovers. We found as per the provisions of section 17 of the Act which includes certain items of receipts as salary but in order that a particular receipt is treated as salary, it is fundamental requisite that employee and employer are related by agreement and any income derives from connection is treated as salary. But in receipt of professional income of B21,66,939/-, the assessee is a consultant to the company as per the minutes of Board of Directors and form no.16A was issued on such terms and conditions agreed between them. Therefore, we are of the opinion that the assessee has provided expertise in product management of the business due to national and international experience in the field of Boilers and has rightly offered the income under the profession and claimed establishment expenditure. Therefore, we direct the Assessing Officer to exclude the professional income clubbed in salary income and we allow the appeal of the assessee.
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