Manpower Services India Pvt Ltd Vs ACIT (ITAT Delhi)
Summary: The ITAT Delhi ‘I’ Bench considered the assessee’s claim of deduction under Section 80JJAA of the Income-tax Act, 1961, along with a Transfer Pricing adjustment concerning IT and ITeS services provided to its associated enterprise. The assessee, Manpower Group Services India Private Limited, was engaged in providing staffing services and had claimed deduction under Section 80JJAA in respect of additional employees. For AY 2020-21, the claim of Rs. 36,28,32,847 was restricted to gross total income of Rs. 24,16,27,837. The Assessing Officer denied the deduction, principally taking the view that the employees hired on fixed-term contracts were temporary/contract employees and that an employer-employee relationship did not exist between the assessee and such employees. The DRP upheld the disallowance.
The Tribunal examined the service agreements with customers and the fixed-term employment contracts with employees. It found that the assessee retained authority over deployment, assignment, remuneration, work schedules, relocation, disciplinary action and termination, while the customers’ role was restricted to supervision and instruction concerning the work performed at their premises. The Tribunal therefore held that the assessee was the employer of the employees and that an established employer-employee relationship existed. It further held that the amended Section 80JJAA did not contain the earlier requirement of a “regular workman” and specifically contemplated employees employed for 240 days or more. Since the relevant eligibility conditions were found to have been satisfied, the Tribunal directed the Assessing Officer to allow the deduction.
