Shri Nitin Agrawal, V. The ITO Ward- 4(3),

ITA 110/IND/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8739 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-11-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 17-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: H P VERMA; SHRIASHISH GOYAL
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND S HRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : ABTPA5627P I.T.A.NO.110/IND/2008 A.Y. : 2004-05 SHRI NITIN AGRAWAL, ITO 401, GOLD RESIDENCY, VS 4(3), 7/2, MANORAMAGANJ, INDORE. INDORE APPELLANT RESPONDENT APPELLANT BY : SHRI H.P.VERMA, ADV. AND SHRIASHISH GOYAL, C.A. RESPONDENT BY : SHRI P.K.MITRA, SR. DR O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 7.12.2007 FOR THE ASSESSMENT YEAR 2004-05. 2. FIRST GRIEVANCE OF THE ASSESSEE RELATES TO THE TREA TMENT OF CONSULTANCY INCOME AS SALARY AND DECLINING CLAIM OF DEDUCTION FOR THE EXPENSES INCURRED IN EARNING THE CONSULTANCY INCOME . 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A LECTURER AT INDIAN INSTITUTE OF MANAGEMENT ( IIM). APART FROM SALARY, HE WAS ALSO I N RECEIPT OF CONSULTANCY INCOME OF RS.1 LAKH. AGAINST THIS INCOME, EXPENDITU RE OF RS. 93,104/- WAS -: 2: - 2 CLAIMED AND NET INCOME OF RS. 6896/-WAS OFFERED FOR TAXATION AND THE SAME ALSO INCORPORATED BY THE EMPLOYER IN FORM NO. 16. A S PER AO, THE AMOUNT WAS PAID BY IIM TO THE ASSESSEE FOR INHOUSE TRAININ G PROGRAMMES CONDUCTED FOR VARIOUS COMPANIES. AS PER AO, THE CONSULTANCY I NCOME WAS RECEIVED BY THE ASSESSEE BECAUSE OF RELATIONSHIP OF EMPLOYER AN D EMPLOYEE, THEREFORE, NO EXPENSES CAN BE ALLOWED AGAINST THE SAME EXCEPT DED UCTION ELIGIBLE U/S 16OF THE INCOME-TAX ACT, 1961. BY THE IMPUGNED ORDER, T HE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. 4. AGGRIEVED BY THE ABOVE ADDITION, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT IIM HAD ENTERED INTO AGREEMENT WITH VARIOUS COMPANI ES AND THESE COMPANIES HAVE ALLOTTED CONSULTANCY WORK TO IIM AND IIM HAD CONTRACTED THE WORK TO ITS FACULTY MEMBER. THE FACULTY GUIDELI NES ALSO PROVIDED THAT FACULTIES WERE ALLOWED MAXIMUM 52 DAYS CONSULTING I N A YEAR, WHICH MAY BE EXTENDED BY THE DIRECTOR. THE INCOME SO RECEIVED HA S TO BE SHARED BETWEEN THE ASSESSEE AND THE IIM. THE FEE SO RECEIVED WAS F IRST CREDITED TO THE ACCOUNT OF IIM AND THEREAFTER ASSESSEES SHARE WAS PAID TO HIM. THIS INCOME WAS NOT RECEIVED BY THE ASSESSEE FOR RENDERING NORM AL SERVICES AS AN EMPLOYEE BUT WAS PAID FOR ADDITIONAL CONSULTANCY PR OVIDED TO THESE -: 3: - 3 COMPANIES. IT WAS IN THE FORM OF PROFESSIONAL CHARG ES RECEIVED BY THE ASSESSEE FOR RENDERING PROFESSIONAL SERVICES AND TH AT WERE LIABLE TO BE ASSESSED AS INCOME FROM BUSINESS AND PROFESSION. SO FAR AS ALLOWABILITY OF EXPENDITURE OF RS. 93,104/- IS CONCERNED, THE SAME APPEARS TO BE ON HIGHER SIDE AND ALSO SOME OF THE EXPENSES HAVE ALREADY BEE N ALLOWED WHILE ALLOWING CLAIM OF STANDARD DEDUCTION U/S 16(I). KEE PING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT T HE AO TO BRING NET RS. 50,000/- AS INCOME FROM BUSINESS AND PROFESSION. 6. NEXT GRIEVANCE OF THE ASSESSEE RELATES TO ALLOWING EXEMPTION OF INTEREST INCOME FROM THE BANK ON RFC ACCOUNT U/S 10 (15)(IV) (FA). 7. DURING THE YEAR, THE ASSESSEE WAS IN RECEIPT OF INT EREST INCOME FROM RFC ACCOUNT WITH THE BANK. IT WAS CLAIMED AS E XEMPT U/S 10(15)(IV) (FA). THE CONDITION PRECEDENT FOR ALLOWING EXEMPTIO N UNDER SUB CLAUSE (FA) IS THAT THE ASSESSEE SHOULD BE NON-RESIDENT OR NOT ORD INARY RESIDENT IN INDIA IN ANY PREVIOUS YEAR IN NINE OUT OF TEN PREVIOUS YEARS , PRECEDING THAT YEAR, OR AS PER THE PREVIOUS YEARS PRECEDING THAT YEAR BEEN IN INDIA FOR A PERIOD OF, OR PERIODS AMOUNTING IN ALL TO 729 DAYS OR LESS. THE A O FOUND THAT DATE OF REPATRIATION TO INDIA IS 1998 (25.3.98 AS PER ENTRY IN THE PASSPORT). SO ASSESSEE WAS NOT ORDINARY-RESIDENT IN INDIA IN 9 OU T OF 10 PREVIOUS YEARS PRECEDING PREVIOUS YEAR 2003-04. MOREOVER DURING TH E 7 PREVIOUS YEARS -: 4: - 4 PRECEDING PREVIOUS YEAR 2003-04 ASSESSEE WAS NOT IN INDIA FOR A PERIOD OF, OR PERIODS AMOUNTING IN ALL TO 729 DAYS OR LESS. SO TH E STATUS OF THE ASSESSEE CANNOT BE TREATED AS NOT ORDINARILY RESIDENT. 8. THE ABOVE FINDING OF THE AO HAS NOT BEEN CONTROVERT ED BY THE LD. AUTHORIZED REPRESENTATIVE BY BRINGING ANY POSITIVE MATERIAL ON RECORD. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES FOR DECLINE OF CLAIM OF DEDUCTION IN RE SPECT OF INTEREST RECEIVED FROM BANK ON RFC ACCOUNT. 9. LAST GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDIT ION OF RS. 48,650/- ON ACCOUNT OF LOW HOUSE HOLD EXPENSES. 10. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAD SHO WN HOUSE HOLD EXPENSES AT RS. 73,650/-. THERE WAS WITHDRAWAL OF R S. 48,650/- BY THE ASSESSEE AND RS. 25,000/- BY WIFE OF THE ASSESSEE. AGAINST THIS WITHDRAWAL, THE AO ESTIMATED HOUSE HOLD EXPENSES AT RS. 1,20,00 0/-. WE FOUND THAT THE FAMILY OF THE ASSESSEE WAS CONSISTING OF HIMSELF AN D HIS WIFE. THERE WERE NO CHILDREN. KEEPING IN VIEW THE STATUS OF THE ASSESSE E, IT WOULD BE FAIR AND REASONABLE TO ESTIMATE THE HOUSE HOLD EXPENSES AT R S. 78,000/-. THE AO IS, ACCORDINGLY, DIRECTED TO RESTRICT THIS ADDITION FOR THE DIFFERENCE OF RS. 4350/-. WE DIRECT ACCORDINGLY. -: 5: - 5 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART, IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2010. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH NOVEMBER,2010. CPU*