UNH Management Services Private Limited Vs DCIT (ITAT Mumbai)
PCIT Cannot “Recruit” Section 263 for a Second Inquiry: 1.24 Crore Section 80JJAA Deduction Restored
The Mumbai ITAT quashed the revisionary order under Section 263 concerning UNH Management Services Pvt. Ltd.’s deduction of ₹1,23,89,236 under Section 80JJAA.
During the original assessment, the AO had specifically examined the claim, proposed its disallowance and considered the assessee’s response, Form 10DA, employee-wise particulars, salary details and PF/ESIC records before accepting it. Therefore, this was not a case of “lack of enquiry”; at most, the PCIT wanted a more extensive enquiry conducted differently. Such inadequate enquiry or difference of opinion could not justify revision under Section 263.
The Tribunal further held that Section 80JJAA does not exclude employees merely because they are deployed at clients’ premises by a staffing or manpower-supply company. Operational supervision by the client does not destroy the employer–employee relationship where the staffing company recruits the employees, pays their salaries, deducts TDS and fulfils PF and ESIC obligations. Similarly, recovery or reimbursement of salary costs from clients does not mean that the staffing company incurred no employee cost.
Since the PCIT neither identified any employee who violated the statutory conditions nor established that the AO’s view was legally unsustainable, the Section 263 order was quashed and the original assessment restored.
