Salary vs professional income distinction requires proving master-servant relationship from contract; control over manner of work key test, not administrative rules; TDS and books definitions inapplicable.

ORDER

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

Both these appeals filed by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AYs 2017-18 & 2018- 19 dated 23.05.2025. Since the issues are common, both the appeals were heard together and are being decided vide this common order for the sake of convenience and brevity.

2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

I. ITA No. 354/PAT/2025; AY 2017-18:

“1. For that the Ld. CIT (A), NFAC, Delhi has erred in passing the order without considering the materials available on record.

2. For that the Ld. CIT (A), NFAC, Delhi has erred in relying on Section 194J read with Section 44A for the purposes of holding that teaching activity is not a profession.

3. For that the Ld. CIT (A), NFAC, Delhi has erred in holding that the agreement between the institute and the faculty member imposes various restrictions such as the process of recruitment, biometric attendance and scheduling of classes and imposition of monetary penalty in certain cases clearly indicate that the faculty members are salaried employee.

4. For that the Ld. CIT(A), NFAC, Delhi has erred in treating the income declared under the head profession as salary income and erred in disallowing expenses of Rs.7,32,030/-

5. For that the Ld. CIT (A), NFAC, Delhi has erred in holding that the relation between the appellant and the Institute is a 'contract of service’ and not 'contract for service’.

6. For that the Ld. CIT (A), NFAC, Delhi has failed to consider that the rules, regulations and guidelines have been imposed for the smooth functioning of the Institute and shall not be viewed as exercise of control by the employer.

7. For that the Ld. CIT (A), NFAC, Delhi has failed to consider that the restriction or regulation imposed was only on administrative requirements and not on the exercise and discharge of profession of the appellant.

8. For that the Ld. CIT (A), NFAC, Delhi has failed to consider that the in making variation in the income although there was no incriminating material to indicate any falsity in declaration of income under the head profession and the claim of expense against professional income. The TDS of appellant Shekhar Narayan presently working at Mentors Eduserv is also being deducted u/s 194 JB (Fee for Professional Services). For AY 2017-18 TDS return of Anand Kumar Jaiswal with TAN No.DELA17915C was accepted by Income Tax Department in which nature of payment of Faculty Member has been shown as Professional Payment and these return has not been rejected by the same till date.

9. For that the Ld. CIT(A), NFAC, Delhi has erred in relying on the Supreme Court Judgment in the cases of Shivnandan Sharma vs. Punjab National Bank Ltd. reported in AIR 1955 SC 404, Dharangadhra Chemical Works Ltd. Vs. State of Saurashtra reported in AIR 1957 SC 264 and order of the ITAT in Deputy CIT, Hyderabad Vs. Wockhardt Hospital Ltd. and also in the case of Max Mueller Bhawan reported in (2004) 264 ITR 31 (AAR) and has accordingly erred in holding that the institute supervises and controls the work of its faculty members through adopting different methods/restrictions and for the purposes of treating the income as salary income and disallowance of expense of Rs. 07,32,030/-.

10. For that the Ld. CIT (A), NFAC, Delhi has failed to consider that the as per section 13 of service agreement of Mentors Eduserv (first party) with