TALENT AHEAD INDIA PVT. LTD.,MUMBAI vs. DCIT 1(3)(1), MUMBAI

This appeal filed by the assessee on 18.4.2016 is against the order of the CIT (A)-3, Mumbai dated 21.12.2015 for the assessment year 2012-13. In this appeal, assessee raised two grounds and the same read as under:- “1. The Ld CIT (A) has erred in law and facts and in circumstances of the case in confirming addition to total income of Rs. 6,60,000/- under section 69C of the Act in respect of consultancy charges paid to certain key management personnel.

The Ld CIT (A) erred in law and facts and in circumstances of the case by not allowing credit of Rs. 8,111/- for payment of dividend distribution tax.” 2. Briefly stated relevant facts of the case are that the assessee is engaged in the business of „recruitment of employees for various companies on outsourcing basis‟. Assessee filed the return of income declaring the total income of Rs. 30,77,670/-. Assessment was completed u/s 143(3) of the Act and the assessed income was determined at Rs. 37,37,670/-. In the assessment, AO made addition of Rs. 6,60,000/- u/s 69C of the Act on account of consultancy charges paid to Smt. Anita Agarwal (Rs. 4,80,000/-) and Smt. Shakuntala Agarwal (Rs. 1,80,000/-). On finding that Smt. Anita and Smt. Shakuntala are not properly qualified to render the services, AO disallowed the said amount totalling to Rs. 6.6 lakhs. In the process, AO ignored the fact that of rendering the services and also the fact that Smt. Anita is a qualified Graduate. There is nothing on record collected by the AO to prove that they have not rendered any services. AO accordingly rejected the explanation given by the assessee. On appeal, CIT (A) confirmed the same. Aggrieved, assessee is in further appeal before the Tribunal by raising the above mentioned grounds.

Before us, Ld Counsel for the assessee submitted that in the said employees, Smt. Anita is a Graduate and filed relevant certificates in support of the same. The fact that the employees (Smt. Anita and Smt. Shakuntala) have rendered services was also explained. Further, Ld AR mentioned that the assessee done the business amounting to Rs. 3.77 Crs and the expenditure claimed against the same, amounting to Rs. 3.47 Crs, is appropriate. Ld AR further mentioned that recipients of the above consultancy charges are regularly assessed to tax. They also paid taxes on the income received by the said recipients Smt. Anita and Smt. Shakuntala. Assessee filed relevant copies of the acknowledgements in this regard before us. Ld AR further submitted that the same amount cannot be taxed twice ie once in the hands of the assessee as well as in the hands of the recipients. Considering the same, Ld AR prayed for deleting the addition.

On hearing both the parties, we find, the claim of the assessee is proper. AO has not demonstrated the payments to Smt. Anita and Smt. Shakuntala are not bogus. There is no evidence to demonstrate that money paid to them was received back by the assessee. No case is made out by the Assessing Officer to demonstrate that the relevant provisions of section 40A(2)(b) are applicable in the present case. It is not understood as to why the provisions of section 69C were invoked by the Assessing Officer in this case. Considering the overall factual matrix of the assessee, we are of the opinion, it is not a fit case for making disallowance on this account. Accordingly, Ground no.1 is allowed.

Ground No.2 (sic) raised by the assessee relates to the AO‟s failure to give credit to the dividend distribution tax of Rs. 8,111/-. In this regard, Ld Counsel for the assessee submitted that this issue may be set aside to the file of the AO for considering the page 55 of the paper book ie Cyber Receipt for CBDT e-Tax Payment vide Axix Bank challan no.ITNS 280 evidencing the TDS of Rs. 8,111/- in favour of the assessee. After hearing both the parties, we direct the Assessing Officer to