OLIVE ENTERPRISES,BANGALORE vs. INCOME TAX OFFICER WARD 5(2)(1), BANGALORE

ITA 2547/BANG/2026Status: DisposedITAT Bangalore29 September 2026AY 2024-20256 pages
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What were the facts?

The assessee, Olive Enterprises, a partnership firm, filed its return of income for Assessment Year 2024-2025 declaring a total income of Rs.9,86,180/-. The return was selected for scrutiny. The Assessing Officer (AO) observed that the assessee had declared income under Section 44AD of the Income Tax Act, 1961, based on gross receipts of Rs.31,19,311/-. However, the AO noted that tax was deducted at source under Section 194JB, suggesting the receipts were technical/professional in nature, thus falling under Section 44ADA. Information from TATA AIA Life Insurance confirmed the assessee provided services for identification, recruitment, training, supervision, counselling, and motivation of agents. The AO computed income under Section 44ADA at 50% and made an addition of Rs.6,43,862/-. The assessee's appeal to the CIT(A) was dismissed, upholding the AO's order.

What did the Tribunal hold?

The Tribunal held that the assessee's activities, which involve recruitment and training of insurance agents for TATA AIA Insurance Company, constitute ordinary business activity and not professional or technical consultancy. The Tribunal noted that the assessee is not engaged in insurance agency business earning commission or brokerage. The Tribunal referred to Section 44AA of the Act, stating that the assessee's activities do not fall within the notified professions. The Tribunal concluded that the requirement for being a professional is rendering services requiring specific knowledge, skill, or training, and the activity must fall within the professions covered by Section 44AA. Since the assessee's activities were contractual business support services and not a notified profession or technical consultancy, the provisions of Section 44ADA were not applicable. The Tribunal directed the AO to delete the addition made under Section 44ADA and allowed the assessee to compute profits under Section 44AD, subject to statutory conditions. The grounds raised by the assessee were allowed.

What were the issues?

1. Whether the assessee's income derived from providing services for recruitment and training of insurance agents constitutes professional or technical consultancy income, thereby attracting the provisions of Section 44ADA of the Income Tax Act, 1961, or business income taxable under Section 44AD. Assessee's Contention: The assessee argued that it is not engaged in professional services and therefore Section 44ADA is not applicable. The activities performed are business support services and do not fall within the list of professions specified in Section 44AA. The assessee also contended that erroneous TDS deduction under Section 194J by the deductor should not determine the character of the income. The assessee relied on the fact that its activities are ordinary business activities and not professional or technical consultancy. Revenue's Contention: The Revenue relied on the orders of the lower authorities, implying that the income should be treated as professional/technical income under Section 44ADA.

Which sections of the Income-tax Act were involved?

Section 44AD,Section 44ADA,Section 194JB,Section 143(3),Section 143(2),Section 142(1),Section 133(6),Section 44AA,Section 194J

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI BALAKRISHNAN S & SHRI SOUNDARARAJAN K.

For Respondent: Shri. Pradeep S - Addl. CIT
Pronounced: 29.09.2026

PER SHRI BALAKRISHNAN S, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of Ld. NFAC, CIT(A), vide DIN: ITBA/NFAC/S/250/2026-27/1088702410(1) dated 26-Jun-2026 for the Assessment Year 2024-2025, arising out of the Order passed under section 143(3) of the Act, dated 29.11.2025. 2. Briefly stated, the facts of the case are assessee, a partnership firm filed

The order continues below.

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