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TMI Blog2016 (5) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue, as the professional receipts of the assessee B21,66,939/- has to considered as salary income. The assessee is drawing salary from the company as Managing Director and also received professional income. The ld. Commissioner of Income Tax referred and relied on the provisions of Sec. 17(1)(iv) of the Act. The Commissioner of Income Tax is of the opinion that professional receipts are to be considered as salary income and the assessee is not eligible to claim any expenditure and set aside the order. In compliance to the directions, the Assessing Officer issued notice u/s.142(1) of the Act and called for the details. The ld. Authorised Representative of the assessee appeared on various dates and submitted the details and explained that the assessee is maintaining separate office for his profession and incurring establishment expenditure for running the professional office. Further assessee is also a Managing Director of Company and received salary income of B3,24,000/-. The ld. Assessing Officer considered that the submissions of ld. Authorised Representative but consolidated the professional income as salary income under provisions of Sec. 17(1)(iv) of the Act and disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod 2005-06 nor their Identification details furnished for verification. Subsequently on being directed on 10/3/2014, I hove verified the three employees presently working in the office in writing. Shri R. Rajarajan; on being enquired stated that he is working as commercial Manager from 2008 with salary of ₹ 20,OOO/- per mensem: The' other employee Shrj C. Jaisankar, an M,Com., graduate stated that he is working from 2008 said he is looking after accounts and is. getting salary of ₹ 15,OOO/- per month. Shr.N. Viswanothan, DME stated that he is working from 2001, ., but has not given any designation and has not furnished any appointment order for his employment stated in his letter that h'e is getting salary of ₹ 8,OOO/- p.m,. Further, the assessee has confirmed that presently there (are three employees are only working in his office by his letter dated ll/3/20I4. From this it Is clear that this claim personnel employment lacks any credible proof to prove the claim. But, it is stated that none of them have any PF, ESI account or they have any appointment order for their employment. Further for the said consultancy for product development for energy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... devising methods for fuel efficient system, and modification of existing machinery for improving the conservation of power and is purely on assessee s knowledge and experience. The product working of the company is based on the advice of the assessee expertise. Further technology has to be upgraded and there is also a separate consultancy setup to develop engineering and design with unique networks with the consultancy. The knowledge product has created a demand in the export market and improved the global image of the company and exposure to international business opportunities. The salary was paid to the assessee as Managing Director only for the Administrative works. The Assessing Officer contended that any fees, commission, perquisite or profit received in addition to salary has to be considered as salary income. The assessee being a technical person is in receipt of dual income under income from salary and income from professional. The ld. Assessing Officer considered working system and application of intellectual guidance of the assessee to increase the business opportunities and demand for the product. The Managing Director is appointed as per the provisions of Companies Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs globally which is more than 60 crores and export turnover substantially increased. The ld. Authorised Representative relied on the decision of jurisdictional High Court in the case of P. Ramajayam (supra) were the lordship has considered the salary received has to be treated as income from salary and commission for services is offered as income from business or profession. The assessee was appointed for administrative work and as consultant for expertise opinion on boilers which increased the progress of the business and pleaded for allowing the appeal. 6. Contra, the ld. Departmental Representative relied on the orders of the lower authorities and vehemently opposed to the ground and prayed for dismissal the appeal. 7. We heard the rival submissions, perused the material on record and judicial decisions cited. The ld. Authorised Representative contention that the assessee has been appointed as Managing Director to look after administrative work and salary is payable for such company works and at the same time as per the decision of board of Directors, the assessee was appointed as consultant as he was qualified and worked at National and International units similar to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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