VIDYA VIVEK PADGAONKAR,ANDHER WEST vs. INCOME TAX OFFICER 34 3 5, BANDRA KURLA COMPLEX

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J(SMC)” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No. 3042/MUM/2026 Assessment Year: 2024-25

Vidhya Vivek Padgaonkar, Income Tax Officer, Ward B 702, Krishna Chaitanya, 34(3)(5), Kautilya Bhavan, C-41 – Rajbhavan CHS Ltd, V S Vs. 43 G Block, Bandra East, Phadke Marg, Sai Wadi, Mumbai – 400051, Maharashtra. Mumbai. PAN NO. AKDPP 2213 N Appellant Respondent

: Shri Haresh Shah, CA Assessee by : Shri Mukesh Thakwani (SR. DR) Revenue by

: 22/06/2026 Date of Hearing : 24/06/2026 Date of pronouncement ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against the order dated 20.01.2026, passed by the learned, Commissioner of Income-Tax (Appeals) – National Faceless Appeal Centre, Delhi [in short, ‘the Ld. CIT(A)’], for Assessment Year (in short ‘A.Y’), 2024-25, raising following grounds:-

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i) Addition of Rs.6,42,840/- by invoking the provisions of Section 44ADA of the Act.

ii) Addition of Rs.2,51,704/- on account of disallowance claimed on remuneration received from partnership firm.

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presumptive scheme contained in Section 44ADA of the Act, instead of accepting the assessee's claim that the receipts constituted business income eligible for computation under Section 44AD.

4.1 The facts relevant to the issue are largely undisputed. The assessee was engaged by M/s Apeejay Education Society on a contractual basis to undertake academic and curriculum-related assignments. The responsibilities entrusted to her included conceptualisation, preparation and review of academic content and curriculum structure. The assessee was paid Rs.16,000/- for eight days per month. During the year, the assessee received an aggregate consideration of Rs.14,61,000/-. Tax was deducted at source by the payer under Section 194J of the Act as fees for professional or technical services.

4.2 The assessee treated the said receipts as business receipts and offered income under the presumptive provisions of Section 44AD at six per cent of the gross receipts. The AO, however, was of the view that the nature of services rendered by the assessee was professional in character and, therefore, the provisions of Section 44AD were inapplicable in view of Section 44AD(6). The section 44AD(6) excludes income from a profession as referred to in section 44AA(1) from presumptive taxation u/s 44AD. The AO explained that section 44ADA applies to profession specified u/s 44AA(1), including legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, or any other notified

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profession, wherein 50% of the gross receipts is deemed as income. Further the Ld. AO referred to the provision of section 194J(b) and explained that taxes are deductible under said section on the fees for professional or technical services. The AO further relied on followings:-

“

 CBDT Circular No.25/2016 dated 30.06.2016 – clarified that presumptive taxation u/s 44ADA is applicable to professionals notified u/s 44AA(1).  CBDT Circular No.8/2010 – clarified that income subjected to TDS u/s 194J should be treated as professional income and not as business income.  ITAT, Mumbai in the case of Smt. Arti P. Shah v. ITO (2017) 87 taxmann.com 306 – held that consultancy/teaching income falls under “profession” and cannot be offered u/s 44AD.  Madras High Court in CIT vs. Dr. P. Vadamalayan (2003) 263 ITR 70 – held that professional receipts cannot be treated as business receipts for presumptive provisions.  ITAT Jaipur in Anil Kumar Soni v. ITO (ITA No.1174/JP/2016) – reiterated that income subjected to 194J deduction is professional income, taxable under the head PGBP – profession.”

4.3 According to the AO the assessee was engaged in specialized academic and payments were subject to TDS u/s 194J(b) signifying the professional nature of the income and therefore by virtue section 44AD(6), the professional receipts are specifically excluded from section 44AD of the Act and relevant section applicable in the case of the assessee is section 44ADA of the Act. Based on the above, the AO deemed the 50% of the receipt of Rs.14,61,000/-

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which was computed to Rs.7,30,500/- as the deemed income under the section 44ADA of Act.

4.4 On further appeal the Ld. CIT(A) upheld the addition made by the AO observing as under:-

“During the appellate proceedings, the appellant reiterated that the receipts from Apeejay Education Society were business receipts and not professional receipts and, therefore, the provisions of section 44AD were applicable. It was submitted that the appellant is not engaged in any of the professions specified under section 44AA(1) of the Act and hence section 44ADA could not be invoked. The appellant further submitted that she was engaged on a visiting basis and that the nature of work did not amount to a notified profession. These submissions have been carefully examined in the light of the material available on record. The engagement letter issued by Apeejay Education Society clearly brings out that the appellant was engaged on a contractual basis for academic and curriculum- related work, requiring specialized knowledge, skill and expertise in the field of education. The duties involved conceptualisation, preparation and review of academic content and curriculum structure, which are clearly in the nature of professional services. Further, the payments made to the appellant were subjected to tax deduction at source u/s 194J(b) of the Act as fees for professional or technical services. The manner of deduction of tax at source is a strong indicator of the true nature of income and reflects the understanding of both the payer and the payee that the services rendered were professional in nature. The argument of the appellant that section 44ADA applies only to professions expressly listed in section 44AA(1) is also misplaced. The expression used in section 44AA(1) includes, inter alia, the profession of technical consultancy, and the scope of the term "technical consultancy is wide enough to cover services requiring specialised academic and technical expertise. The services rendered by the appellant cannot be equated with routine commercial or trading activities so as to fall within the ambit of an eligible business under section 44AD. Moreover, section 44AD(6) expressly excludes persons carrying on a profession as referred to in section 44AA(1) from its applicability. Once the receipts are found to be professional in nature, the application of section 44AD is clearly barred by the statute itself. The Assessing Officer has rightly applied the provisions of section 44ADA and computed the presumptive income at 50% of the gross receipts, and the difference between the income so computed and the income declared by the appellant has been correctly brought to tax. The contention of the appellant that certain circulars and judicial precedents relied upon during assessment were not provided does not, by itself, vitiate the assessment, particularly when the conclusions drawn are firmly supported by

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statutory provisions and undisputed factual aspects such as the nature of work and deduction of tax u/s 194J. The determination of the head and nature of income has to be made on the basis of substance of the transaction and not merely on the nomenclature or the manner in which the appellant has chosen to offer the income in the return.” 4.5 Before us the Ld. Counsel for the assessee primarily submitted that the services rendered by the assessee were in the nature of the trade and commerce and therefore income was in the nature of the business income and hence correctly offered by the assessee for presumptive taxation u/s 44AD of the Act. Further the Ld. Counsel submitted that taxes deducted at sources u/s 194J(b) by the deductor is not determinative of the nature of the income. in support thereof, the Ld. Counsel relied on the decision of the Coordinate Bench of the Tribunal in the case of DCIT vs. Node Angelia Education Infrastructure Private Limited in ITA No.205, 206 and 314/VIZ/2025 for AY 2014-15, 2017-18, 2018-19.

4.6 On the contrary, the Ld. DR submitted that the services rendered by the assessee are not in the nature of trading or manufacturing of goods or services. He submitted that as per the engagement letter, the assessee provided services of conceptualization of academic curriculum and review of the academic content etc., which are in the nature of a technical consultancy. The Ld. DR submitted that tax deducted at source under the head Fee for Technical Service is one of the factors for determination of the income rendered by the assessee to the said entity. Further the Ld. DR submitted that the receipt was also

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estimated on the basis of the number of hours of duty performed by the assessee. The Ld. DR relied on the order of the lower authorities.

4.7. We have heard rival submissions of the parties and perused the relevant material on record. he short question requiring adjudication is whether the receipts derived by the assessee from M/s Apeejay Education Society constitute business income eligible for presumptive taxation under Section 44AD or professional income governed by Section 44ADA.

4.8 The engagement letter and the nature of responsibilities discharged by the assessee leave little room for doubt that the services rendered were not routine commercial or trading activities. The assessee was entrusted with academic and curriculum-related assignments involving conceptualisation, preparation, evaluation and review of educational content. Such functions inherently require specialised knowledge, expertise and intellectual application in the field of education.

4.9 Section 44AD expressly excludes from its ambit any person carrying on a profession referred to in Section 44AA(1). The expression employed in Section 44AA(1) is of wide amplitude and includes, inter alia, technical consultancy and other professions requiring specialised knowledge and expertise. In our considered view, the services rendered by the assessee fall within the broad

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spectrum of professional services contemplated under the said provision.

4.10 The contention that the profession carried on by the assessee is not specifically enumerated in Section 44AA(1) cannot be accepted. The statutory provision is inclusive in nature and is not confined only to the professions expressly named therein. What is material is the character of the activity undertaken and the degree of specialised knowledge required for its performance.

4.11 Though deduction of tax under Section 194J may not be determinative by itself, it nevertheless constitutes a relevant factor indicating the nature of the services rendered. In the present case, such deduction is consistent with the substantive nature of the work performed by the assessee.

4.12 We, therefore, concur with the findings recorded by the learned CIT(A) that the receipts in question are professional receipts and that the provisions of Section 44ADA have been correctly applied by the Assessing Officer. Accordingly, we uphold the finding of the CIT(A) on the issue in dispute and the Ground No.1 of the appeal of the assessee is accordingly dismissed.

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the hand of said LLP deduction of Rs.8,39,296/- only was allowed as remuneration to the partner. Therefore, the assessee has contested that in hands of the assessee only remuneration should be considered for tax at Rs.8,39,296/-. The relevant finding of the Ld. CIT(A) is reproduced as under:-

“The second issue relates to the addition of Rs. 2,51,704/- in respect of remuneration received from the partnership firm. The appellant has submitted that since the firm was allowed deduction of only Rs. 8,39,296/- out of the total remuneration paid, only that amount should be taxed in her hands in view of the proviso to section 28(v) of the Act. This contention is also not acceptable. Section 28(v) clearly provides that any interest, salary, bonus, commission or remuneration received by a partner from the firm shall be chargeable to tax under the head "Profits and gains of business or profession". The proviso to section 28(v) merely ensures that any portion of such payment which is disallowed in the hands of the firm under section 40(b) shall be taxable in the hands of the partner and not escape taxation. It does not confer any right on the partner to reduce or proportionately disallow the remuneration received by her in her individual return. The disallowance under section 40(b) operates only at the level of the firm and has no bearing on the taxability of the full amount received by the partner. Therefore, the Assessing Officer was fully justified in holding that the entire remuneration of Rs. 10,91,000/- received by the appellant was taxable in her hands and that the claim of disallowance of Rs. 2,51,704/- made in the return was not in accordance with law.” 5.1 We have rival submissions of the parties and perused the relevant material on record. Section 28(v) of the Act unequivocally provides that any interest, salary, bonus, commission or remuneration received by a partner from a firm shall be chargeable to tax under the head "Profits and Gains of Business or Profession". The taxable event in the hands of the partner is the receipt or accrual of such remuneration. Admittedly, the assessee received remuneration aggregating to Rs.10,91,000/- from the LLP during the relevant previous year. The disallowance of a portion of such

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remuneration in the hands of the LLP under Section 40(b) does not alter the character or quantum of remuneration received by the partner. The operation of Section 40(b) is confined to computation of income in the hands of the firm and does not govern the taxability of the amount actually received by the partner. Once the receipt of remuneration to the extent of Rs.10,91,000/- is undisputed, there exists no legal basis for restricting its taxation in the hands of the assessee to Rs.8,39,296/- merely because a part thereof was disallowed while computing the income of the LLP. We, therefore, find no infirmity in the order of the learned CIT(A) sustaining the addition of Rs.2,51,704/- Accordingly, we uphold the same.

Order pronounced in the open Court on 24/06/2026.

Sd/- Sd/- (ANIKESH BANERJEE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 24/06/2026 M. Ranganath Vittal , Sr. P.S.

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Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai