My client is a staffing company. The Assessing Officer says the people it hires and deputes to clients are not its employees, and separately that Form 10DA was a day late. Both grounds together have killed the whole s.80JJAA claim.
The Delhi Tribunal held for the assessee on both grounds for AY 2020-21. On the substantive point it held that the assessee is the employer of the personnel it employs and deputes, and that the employer-employee relationship is not to be intertwined with the service arrangement that gives the customer a mechanical and temporary right to supervise the work; it therefore held the assessee satisfies all the eligibility criteria under the amended s.80JJAA and directed the Assessing Officer to allow the deduction. On the procedural point it condoned a one-day delay in filing Form 10DA, which was due on 15 January 2021 against the extended return due date of 15 February 2021 and was filed on 16 January 2021. The claim spanning the first, second and third years was remitted to the Assessing Officer to verify the second and third year components.
Decided by the ITAT (Shri Mahavir Singh, Vice President and Shri Naveen Chandra, Accountant Member (ITAT Delhi 'I' Bench)) on 2025-09-25, reported as SA No. 371/DEL/2024 and ITA No. 3585/DEL/2024, assessment year 2020-21; heard 30 June 2025, pronounced 25 September 2025. It bears on section 80JJAA, section 192, section 143(3), section 139(1) of the Income Tax Act 1961, in Deductions & Disallowances and Salary & Perquisites matters.
This is the single most common s.80JJAA fight for staffing, security, facilities-management and payroll-outsourcing businesses, which are precisely the businesses the section was meant to reach. The Assessing Officer's case is always built the same way — the personnel work at the customer's premises, under the customer's supervision, on the customer's attendance records, on fixed-term contracts terminable at short notice — and the Tribunal's answer is to look at who actually bears the employment obligations: who deducts tax under s.192 and issues Form 16, who discharges provident fund and Employees' State Insurance, and who controls assignment, deputation, relocation, discipline, remuneration and termination. The Tribunal also gave weight to the Department having accepted the same claim in the immediately preceding year after a s.143(3) enquiry. On the Form 10DA point, note carefully what the delay was measured against: not the return due date but the earlier date the section fixes, and note that the Tribunal condoned it in a Covid year on the strength of decisions including a Madras High Court decision condoning a thirty-eight day delay. That is a condonation on the facts, not a holding that the requirement is directory in every case, and it is a very different situation from 360 One Distribution Services, where the claim was never made in the return at all and s.80A(5) was fatal.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For assessment year 2020-21 the assessee, a manpower and staffing company, claimed a deduction under s.80JJAA of Rs 36,28,32,847 in aggregate across three years — Rs 30,36,38,164 as the third year of the AY 2018-19 cohort, Rs 64,81,198 as the second year of the AY 2019-20 cohort and Rs 5,27,13,485 as the first year — restricted to gross total income of Rs 24,16,27,837. The return was filed under s.139(1) on 15 February 2021 declaring nil income. The Assessing Officer disallowed the whole claim on the grounds that the deduction is available only for regular employees whereas the new employees were temporary and on contract; that they were deputed to customers and worked at customers' premises under the customers' supervision, instructions, working hours and rules; that attendance sheets were maintained primarily by the customers and submitted to the assessee for payment of salary; that there was no element of continuity because services could be terminated on one day's notice if no assignment was available or the customer stopped paying; that the fixed-term employment contracts were not the same as those signed with regular employees; and that no employer-employee relationship existed. The Assessing Officer separately found that Form 10DA had not been filed by the due date, with a delay of one day. The assessee's case was that AY 2020-21 was a Covid year, that the statutory extended return due date was 15 February 2021 so that Form 10DA read with Rule 19AB was due by 15 January 2021, and that it was filed on 16 January 2021.
The appeal was partly allowed. The assessee is the employer of the employees it employs and there is an established relationship of employer and employee between them; the Tribunal held the assessee satisfies all the eligibility criteria under the amended s.80JJAA and directed the Assessing Officer to allow the deduction (paragraph 25). The one-day delay in filing Form 10DA was condoned (paragraph 27). On the composition of the claim, the Tribunal held the assessee eligible but directed the Assessing Officer to verify the third-year and second-year components against the requirements of s.80JJAA and allow them on verification, allowing that ground for statistical purposes (paragraph 29).
The Tribunal separated the employment relationship from the service arrangement with the customer: the assessee controls assignment of roles and responsibilities, deputation, relocation, imposition of disciplinary sanction, remuneration and termination, so the employer-employee relationship should not be intertwined with a service arrangement which only gives the customer a mechanical and temporary right to supervise the work performed by the assessee's employees (paragraph 25). It then pointed to the incidents of employment actually discharged by the assessee — a declaration by the customer acknowledging the deputed personnel as employees of the assessee, deduction of tax at source under s.192 with Form 16 issued annually by the assessee, and discharge of provident fund and Employees' State Insurance obligations by the assessee — and to the Department having accepted the same s.80JJAA claim in the immediately preceding AY 2019-20 after due enquiry under s.143(3) (paragraph 25). On the form, the Tribunal computed the delay against the date fixed by reference to the extended return due date, accepted the revision in timelines for Form 10DA from AY 2020-21 and the Covid-19 pandemic as the reasons for the inadvertent one-day delay, and followed the decisions cited to it, including a Madras High Court decision condoning a thirty-eight day delay on the ground of genuine hardship (paragraph 27).
the assessee is the employer qua the employees employed by it and there is an established relationship of employer-employee between them
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Handle my notice → Ask a CA on WhatsAppThe Delhi Tribunal held for the assessee on both grounds for AY 2020-21. On the substantive point it held that the assessee is the employer of the personnel it employs and deputes, and that the employer-employee relationship is not to be intertwined with the service arrangement that gives the customer a mechanical and temporary right to supervise the work; it therefore held the assessee satisfies all the eligibility criteria under the amended s.80JJAA and directed the Assessing Officer to allow the deduction. On the procedural point it condoned a one-day delay in filing Form 10DA, which was due on 15 January 2021 against the extended return due date of 15 February 2021 and was filed on 16 January 2021. The claim spanning the first, second and third years was remitted to the Assessing Officer to verify the second and third year components. This was decided by the ITAT (Shri Mahavir Singh, Vice President and Shri Naveen Chandra, Accountant Member (ITAT Delhi 'I' Bench)) and bears on section 80JJAA, section 192, section 143(3), section 139(1) of the Income Tax Act 1961. It is reported as SA No. 371/DEL/2024 and ITA No. 3585/DEL/2024, assessment year 2020-21; heard 30 June 2025, pronounced 25 September 2025. This is the single most common s.80JJAA fight for staffing, security, facilities-management and payroll-outsourcing businesses, which are precisely the businesses the section was meant to reach. The Assessing Officer's case is always built the same way — the personnel work at the customer's premises, under the customer's supervision, on the customer's attendance records, on fixed-term contracts terminable at short notice — and the Tribunal's answer is to look at who actually bears the employment obligations: who deducts tax under s.192 and issues Form 16, who discharges provident fund and Employees' State Insurance, and who controls assignment, deputation, relocation, discipline, remuneration and termination. The Tribunal also gave weight to the Department having accepted the same claim in the immediately preceding year after a s.143(3) enquiry. On the Form 10DA point, note carefully what the delay was measured against: not the return due date but the earlier date the section fixes, and note that the Tribunal condoned it in a Covid year on the strength of decisions including a Madras High Court decision condoning a thirty-eight day delay. That is a condonation on the facts, not a holding that the requirement is directory in every case, and it is a very different situation from 360 One Distribution Services, where the claim was never made in the return at all and s.80A(5) was fatal. If it applies to you, the first step is this: Assemble the employer-side evidence the Tribunal relied on: Form 16 and s.192 TDS records in the assessee's name, provident fund and Employees' State Insurance remittances, and the contractual terms showing the assessee controls assignment, deputation, relocation, discipline, remuneration and termination.
For assessment year 2020-21 the assessee, a manpower and staffing company, claimed a deduction under s.80JJAA of Rs 36,28,32,847 in aggregate across three years — Rs 30,36,38,164 as the third year of the AY 2018-19 cohort, Rs 64,81,198 as the second year of the AY 2019-20 cohort and Rs 5,27,13,485 as the first year — restricted to gross total income of Rs 24,16,27,837. The return was filed under s.139(1) on 15 February 2021 declaring nil income. The Assessing Officer disallowed the whole claim on the grounds that the deduction is available only for regular employees whereas the new employees were temporary and on contract; that they were deputed to customers and worked at customers' premises under the customers' supervision, instructions, working hours and rules; that attendance sheets were maintained primarily by the customers and submitted to the assessee for payment of salary; that there was no element of continuity because services could be terminated on one day's notice if no assignment was available or the customer stopped paying; that the fixed-term employment contracts were not the same as those signed with regular employees; and that no employer-employee relationship existed. The Assessing Officer separately found that Form 10DA had not been filed by the due date, with a delay of one day. The assessee's case was that AY 2020-21 was a Covid year, that the statutory extended return due date was 15 February 2021 so that Form 10DA read with Rule 19AB was due by 15 January 2021, and that it was filed on 16 January 2021. The matter was decided on 2025-09-25 by the ITAT (Shri Mahavir Singh, Vice President and Shri Naveen Chandra, Accountant Member (ITAT Delhi 'I' Bench)). On those facts the ITAT held as follows. The appeal was partly allowed. The assessee is the employer of the employees it employs and there is an established relationship of employer and employee between them; the Tribunal held the assessee satisfies all the eligibility criteria under the amended s.80JJAA and directed the Assessing Officer to allow the deduction (paragraph 25). The one-day delay in filing Form 10DA was condoned (paragraph 27). On the composition of the claim, the Tribunal held the assessee eligible but directed the Assessing Officer to verify the third-year and second-year components against the requirements of s.80JJAA and allow them on verification, allowing that ground for statistical purposes (paragraph 29).
The Tribunal separated the employment relationship from the service arrangement with the customer: the assessee controls assignment of roles and responsibilities, deputation, relocation, imposition of disciplinary sanction, remuneration and termination, so the employer-employee relationship should not be intertwined with a service arrangement which only gives the customer a mechanical and temporary right to supervise the work performed by the assessee's employees (paragraph 25). It then pointed to the incidents of employment actually discharged by the assessee — a declaration by the customer acknowledging the deputed personnel as employees of the assessee, deduction of tax at source under s.192 with Form 16 issued annually by the assessee, and discharge of provident fund and Employees' State Insurance obligations by the assessee — and to the Department having accepted the same s.80JJAA claim in the immediately preceding AY 2019-20 after due enquiry under s.143(3) (paragraph 25). On the form, the Tribunal computed the delay against the date fixed by reference to the extended return due date, accepted the revision in timelines for Form 10DA from AY 2020-21 and the Covid-19 pandemic as the reasons for the inadvertent one-day delay, and followed the decisions cited to it, including a Madras High Court decision condoning a thirty-eight day delay on the ground of genuine hardship (paragraph 27). In the words reproduced by the source cited on this page: "the assessee is the employer qua the employees employed by it and there is an established relationship of employer-employee between them" The decision followed or applied Shivalik Prints Ltd., ITA No. 2296/Del/2017 (Delhi Tribunal) — relied upon; Sai Computers Ltd. (2023) 155 taxmann.com 607 (Delhi-Trib.) — relied upon; Svasti Microfinance (P.) Ltd. (2024) 164 taxmann.com 229 (Madras) — relied upon.
It was decided by the ITAT on 2025-09-25 and is reported as SA No. 371/DEL/2024 and ITA No. 3585/DEL/2024, assessment year 2020-21; heard 30 June 2025, pronounced 25 September 2025. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 80JJAA, section 192, section 143(3), section 139(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was partly allowed. The assessee is the employer of the employees it employs and there is an established relationship of employer and employee between them; the Tribunal held the assessee satisfies all the eligibility criteria under the amended s.80JJAA and directed the Assessing Officer to allow the deduction (paragraph 25). The one-day delay in filing Form 10DA was condoned (paragraph 27). On the composition of the claim, the Tribunal held the assessee eligible but directed the Assessing Officer to verify the third-year and second-year components against the requirements of s.80JJAA and allow them on verification, allowing that ground for statistical purposes (paragraph 29). It arises in Deductions & Disallowances and Salary & Perquisites matters, on section 80JJAA, section 192, section 143(3), section 139(1) of the Income Tax Act 1961, and was decided by Shri Mahavir Singh, Vice President and Shri Naveen Chandra, Accountant Member (ITAT Delhi 'I' Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Obtain a declaration or acknowledgement from the customer that the deputed personnel are employees of the assessee — the Tribunal specifically relied on such a declaration at paragraph 25. Check whether the same claim was accepted in an earlier year in a s.143(3) assessment and put that at the front of the reply; the Tribunal treated it as material. Answer the 'no continuity / one day notice' point by distinguishing the service arrangement with the customer from the employment relationship, in the terms of paragraph 25. If Form 10DA is late, compute the delay against the specified date in s.44AB and not the return due date, and plead the reason for the delay specifically; but do not assume condonation — where the claim was not made in the return at all, s.80A(5) is a different and harder obstacle. Where a consolidated claim covers first, second and third year cohorts, be ready to substantiate each year separately; the Tribunal remitted the second and third year components for verification rather than allowing them outright.
Still good law. The citation graph shows nothing, but the Delhi Bench has expressly followed this order in the same assessee's later year. In ManpowerGroup Services India Pvt. Ltd. v. ACIT (25 August 2026) the Bench held the assessee eligible for the s.80JJAA deduction on the strength of this order, which it treated as covering the employer-employee relationship with contract staff and the condonation of the one-day delay in filing Form 10DA. The qualification is that this is the same assessee before a coordinate Bench rather than independent approval; no other Bench has taken the point up, nothing doubts it, and no s.260A appeal to the Delhi High Court was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
There are two inconsistencies on the face of the order. First, the disposal at paragraph 39 records 'the appeal of the assessee in ITA No. 2578/DEL/2023 is partly allowed', which does not match the appeal number in the cause title, ITA No. 3585/DEL/2024 (with stay application SA No. 371/DEL/2024) for AY 2020-21; this appears to be a typographical error in the order and the substantive findings are unambiguous. Second, the party name varies: the cause title as retrieved reads 'Manpowergroup Services India Private Limited', paragraph 5 reads 'Manpower Group Services India Private Limited', and the indiankanoon listing reads 'Manpowergroup Services India Private'. The order runs to forty numbered paragraphs; paragraphs 30 to 38 concern a transfer pricing ground and not s.80JJAA, and paragraph 40 disposes of the stay petition as academic. The decisions relied on at paragraph 27 — Shivalik Prints Ltd. (ITA No. 2296/Del/2017), Sai Computers Ltd. (2023) 155 taxmann.com 607 (Delhi-Trib.) and Svasti Microfinance (P.) Ltd. (2024) 164 taxmann.com 229 (Madras) — are named in the order and were not read; the propositions attributed to them are the Tribunal's account. The Tribunal states at paragraph 27 that the statutory extended due date for the return was 15 February 2021 and that Form 10DA was accordingly due by 15 January 2021; I did not independently verify the extension notification. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was partly allowed. The assessee is the employer of the employees it employs and there is an established relationship of employer and employee between them; the Tribunal held the assessee satisfies all the eligibility criteria under the amended s.80JJAA and directed the Assessing Officer to allow the deduction (paragraph 25). The one-day delay in filing Form 10DA was condoned (paragraph 27). On the composition of the claim, the Tribunal held the assessee eligible but directed the Assessing Officer to verify the third-year and second-year components against the requirements of s.80JJAA and allow them on verification, allowing that ground for statistical purposes (paragraph 29).
TaxSphere, “ManpowerGroup Services India v ACIT — staffing company's deputed employees qualify for s.80JJAA, and a one-day Form 10DA delay was condoned”, https://taxnotice.vittsphere.com/caselaw/case/manpower-group-services-80jjaa-contract-staff-and-one-day-delay-in-form-10da/ (validity last checked 2026-09-08)
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