EXCELLENT SERVICES,BHUBANESWAR vs. AO,ITO WARD 5(1), BHUBANESWAR

Shri Vikram Dudhoria, Vikram Dudhoria, ld AR appeared for the assessee. Shri S.C.Mohanty, ld Sr DR , ld Sr DR represented on behalf of the revenue. represented on behalf of the revenue.

The appeal is time barred by 35 days. The assessee has filed The appeal is time barred by 35 days. The assessee has filed The appeal is time barred by 35 days. The assessee has filed condonation petition supported by an affidavit, stating the reason that due petition supported by an affidavit, stating the reason that due petition supported by an affidavit, stating the reason that due to health issue of the partners of the firm, the appeal could not be filed to health issue of the partners of the firm, the appeal could not be filed to health issue of the partners of the firm, the appeal could not be filed

It was submitted by ld AR that the assessee is providing housekeeping service to Jindal Steel and Power Limited at Angul. It was the submission that the assessee had received Rs.1,50,37,697/- on account of the said services during the relevant assessment year. It was the submission that the assessee was to provide services in the nature of maintenance and cleanness of the roads and office space, etc. The assessee had employed various staff at the premises of the client and had paid salary of staff to an extent of Rs.23,42,816/-. The same was claimed as expenditure under the head “Client Management Service Expenses”. It was the submission that the assessee has also paid PF and ESI during the relevant assessment year to an extent of Rs.12,23,498/-. It was the submission that the Assessing Officer computed the PF and ESI in relation to employees and wages directly paid by the assessee, which has been claimed separately to an extent of Rs.14,61,440/- and Rs.4,20,800/- in its profit and loss account and had worked out the PF and ESI liability to an extent of 27% of Rs.14,61,400/- and had disallowed an amount of Rs.8,28,920/- as excess PF and ESI. It was the submission that the so P a g e 2 | 5 called excess PF and ESI related to the salary and wages paid under Client Management Service Expenses to an extent of Rs. Rs.23,42,816/-. Ld AR drew my attention to page 5 of the assessment order, wherein, the entire break-up of the PF and ESI at a total salary of Rs.38,04,216/- was categorically specified in reply to query at sl. No.2.1 of the show cause notice of the Assessing Officer. It was the submission that the entire PF and ESI of Rs.12,23,498/- related to salary and wages of Rs.38,04,216/-, which included salary and wages at the client site and at office of the assessee. It was the further submission that the Assessing Officer did not allow the expenditure of Rs.23,42,816/- representing salary paid to the employees at the client site, which was claimed under the head “Client Management Services Expenses” of Rs.1,08,26,762/-. It was the submission that all the details had been produced before the Assessing Officer, which is evident at pages 7 & 8 of the assessment order. Ld AR also drew my attention to pages 12 to 13 of PB, which was a list of employees, their Adhar No. and payment mode were available and also their share of PF and ESI, which had been deposited. It was the submission that these details were produced before the Assessing Officer and the Assessing Officer has also recognized the same in page 2 at para 2.2 of the assessment order. It was the submission that the addition as made by the Assessing Officer and confirmed by the ld CIT(A) is liable to be deleted.

In reply, ld Sr DR vehemently supported the order of the AO and ld CIT(A).

I have considered the rival submissions. A perusal of the assessment order clearly shows that an amount of Rs.12,23,498/-, representing PF and ESI of the employees at the client sites as also at the assessee’s office premises has been paid by the assessee. It is further noticed that the assessee has incurred salary and wages at the client site to an extent of Rs.23,42,816/- and the evidence in regard to the same has also been produced before the lower authorities. This being so, the entire payment of Rs.38,04,216/- being salary and wages would have been considered as all the evidences have been produced before the Assessing Officer and same have been recorded in the assessment order supported by balance sheet and profit and loss account. Therefore, both the additions as made by the AO and confirmed by ld CIT(A) stand deleted.

In the result, appeal of the assessee stands allowed.