Professional receipt taxable as Income from Profession & not under Salary

Jayaram Rangan Vs ACIT (ITAT Chennai)

ITAT Chennai held that professional fees received cannot be taxed under the head Salary merely because consultant/ professional is appointed as managing director of the company. Various details filed undoubtedly proves that professional service is rendered and accordingly taxable under ‘income from profession’.

Facts- During the course of assessment proceedings, it was noticed that the assessee derives consultancy income from M/s. Fichtner Consulting Engineers (India) P.Ltd. and sitting fees from M/s. Consolidated Construction Consortium Ltd. The assessee has treated consultancy fees and sitting fees received from two companies as his professional income and claimed various expenses against professional income. AO did not accept claim of the assessee and according to him, although, the assessee receives periodic professional fees from the company, but if you go through service agreement between the assessee and the company, it is in the nature of employer and employee agreement for appointing a person for carrying out day to day management of the company. Therefore, assessed consultancy fees under the head ‘salary’ and disallowed various expenses claimed by the assessee.

CITI(A) confirmed the action of AO. Being aggrieved, the present appeal is filed.

Conclusion- There is no dispute with regard to fact that there is agreement between the assessee and company for rendering professional services. As per the agreement between the parties, the assessee has been engaged as a professional on professional fee which shall be payable in monthly equated installments.

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