ITO, Ward - 27(4), Kolkata, Kolkata V. Shri Devjyoti Sengupta, Purulia

ITA 1206/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54617 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2010
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: S DUTTA ITA NOS
• Keywords: Double taxation relief
• Section: 10(14); 234B; 6

Judgement Text

1 , C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C, KOL KATA [ . . . . . .. . , !'# !'# !'# !'# , ] BEFORE SRI S.V.MEHROTRA, ACCOUNTANT MEMBER & SRI N.VIJAYAKUMAR AN, JUDICIAL MEMBER $ / I.T.A NO. 1206/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SHRI DEBJYOTI SENGUPTA KOLKATA. KOLKATA [PAN : ANIPS3951M] (+, /APPELLANT ) (./+,/ RESPONDENT ) $ / I.T.A NO. 1207/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SMT. PRIYADARSHINI BISWAS KOLKATA. KOLKATA [PAN : AGEPB5710K] (+, /APPELLANT ) (./+,/ RESPONDENT ) $ / I.T.A NO. 1209/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SMT. SATARUPA GHOSH KOLKATA. KOLKATA [PAN : AGFPG7233E] (+, /APPELLANT ) (./+,/ RESPONDENT ) $ / I.T.A NO. 1210/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SHRI SUDEEP DAS KOLKATA. KOLKATA [PAN : AFDPD9113R] (+, /APPELLANT ) (./+,/ RESPONDENT ) $ / I.T.A NO. 1211/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SHRI SANDIP KUMAR DEY KOLKATA. KOLKATA [PAN : AHLPD9671L] (+, /APPELLANT ) (./+,/ RESPONDENT ) 2 $ / I.T.A NO. 1212/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SHRI SUDIPTA SARKAR KOLKATA. KOLKATA [PAN : ATCPS2677N] (+, /APPELLANT ) (./+,/ RESPONDENT ) & 0 !1 /C.O.NO. 103/KOL/2010 $ / A/O ITA NO. 1212/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 SHRI SUDIPTA SARKAR -VS- INCOME TAX OFFICER, WARD-27(4) KOLKATA [PAN : ATCPS2677N] KOLKATA. [ 0 !1 /CROSS OBJECTOR] [ ./+,/ RESPONDENT] $ / I.T.A NO. 1213/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SHRI SANTANU SARKAR KOLKATA. KOLKATA [PAN : AQHPS3360A] (+, /APPELLANT ) (./+,/ RESPONDENT ) $ / I.T.A NO. 1214/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SMT. SHRUTI BHATTACHARYA, KOLKATA. KOLKATA [PAN : AFIPB6591C] (+, /APPELLANT ) (./+,/ RESPONDENT ) $ / I.T.A NO. 1215/KOL/2010 % & '(/ ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-27(4) -VS- SHRI SUBRATA KUMAR DEY KOLKATA. KOLKATA [PAN : AEDPD6698G] (+, /APPELLANT ) (./+,/ RESPONDENT ) +, / FOR THE DEPARTMENT : 2 /SHRI S. K. ROY ./+, / FOR THE ASSESSEE : MS. S. DUTTA [FOR ITA NOS.12 07,1209,1212,1214/K/10] FOR ITA NOS.1206,1210,1211,1213,1215/K /10 - NONE # 3 4 5 /DATE OF HEARING : 19/10/2011 6' 4 5 /DATE OF PRONOUNCEMENT : 19/10/2011 3 7 7 7 7 / ORDER PER BENCH THE DEPARTMENT HAS FILED THESE APPEALS IN RESPECT OF THE AFORESAID ASSESSEES AGAINST THE SEPARATE ORDERS DATED 18/03/2010 & 22/0 3/2010 OF LD. C.I.T.(A)-XIV, KOLKATA AND THE ASSESSMENT YEAR INVOLVED IN ALL THE SE CASES IS 2006-07. THE ASSESSEE (SRI SUDIPTA SARKAR) HAS ALSO FILED A CROSS OBJECTI ON BEING NO. 103/KOL/2010 OUT OF ITA NO.1212/KOL/2010 IN HAVING CONFIRMED THE DENIAL OF EXEMPTION U/S. 10(14)(I) OF THE ACT READ WITH RULE 2BB(1) OF THE RULES IN RESPECT OF LI VING ALLOWANCE OF RS.11,49,972/- BY THE LD. C.I.T.(A). AS THE ONLY ISSUE INVOLVED IN A LL THESE DEPARTMENTAL APPEALS AS WELL AS FACTS AND CIRCUMSTANCES OF THESE CASES ARE IDENTICA L, THE SAME ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUND RAISED BY THE DEPARTMENT, WHICH IS COMMON TO ALL ITS APPEALS, READS AS UNDER :- THE LD. CIT(A) ERRED IN FACT AND IN LAW IN DELET ING THE INTEREST LEVIED U/S. 234B OF THE I.T.ACT IN RESPECT OF DISALLOWANCE OF L IVING ALLOWANCE U/S. 10(14) AS INTEREST U/S. 234B HAS TO BE MANDATORILY LEVIED UND ER THE STATUTE AND THE LD. CIT(A) DOES NOT HAVE ANY AUTHORITY UNDER THE INCOME TAX ACT TO DELETE THE SAID INTEREST, THE POWER OF WHICH IS VESTED ONLY WI TH CCIT U/S 119(2)(A) SUBJECT TO CERTAIN CONDITIONS. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. LD. C.I.T.(A) HAD CONFIRMED THE ADDITION ON ACCOUNT OF LIVING ALLOWANCE. IT IS PERTINENT TO MENTION HERE THAT AS PER RECORD, EXCEPT SRI SUDIPTA SARKAR, NO OTHER ASSESSEES HAVE FILED THEIR CROSS-OBJECTIONS/APPEALS AGAINST THE OR DER OF LD. C.I.T.(A). HOWEVER, SINCE LIVING ALLOWANCE WAS ELIGIBLE FOR EXEMPTION U/S. 10 (14) AND, IN ANY CASE, EVEN IF TAXABLE, EMPLOYER WAS REQUIRED TO DEDUCT TDS, THEREFORE, IN VIEW OF SPECIAL BENCH DECISION IN THE CASE OF SUMIT BHATTACHARYA VS. ACIT, REPORTED I N (2008) 300 ITR 347, INTEREST U/S. 234B OF THE ACT COULD NOT BE LEVIED. THE OBSE RVATIONS OF THE SPECIAL BENCH IN THE SAID CASE ARE AS UNDER :- LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSU E IS COVERED BY THE SPECIAL BENCH DECISION IN THE CASE OF MOTOROLA INC. V. DEPU TY CIT [2005] 95 ITD 269 (DELHI) WHEREIN IT IS HELD THAT WHEN ALL THE MONIES RECEIVED BY THE ASSESSEE ARE SUBJECT TO TAX DEDUCTION AT SOURCE, HE CANNOT BE SA ID TO HAVE COMMITTED 4 DEFAULT IN NOT PAYING THE ADVANCE TAX AND HE IS ENT ITLED TO TAKE INTO ACCOUNT THE TAX WHICH IS DEDUCTIBLE BY THE PAYER THOUGH NOT ACT UALLY DEDUCTED. AS THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE-EMPLOYE R HAD A DUTY TO DEDUCT TAX AT SOURCE IN RESPECT OF THE ENTIRE AMOUNT TAXABLE U NDER THE HEAD INCOME FROM SALARIES AND ALL THE RELEVANT FACTS WERE IN THE NO TICE OF THE EMPLOYER, THE ASSESSEE IS ENTITLED TO TAKE INTO ACCOUNT THE AMOUN T OF TAX DEDUCTIBLE, THOUGH NOT ACTUALLY DEDUCTED. IN THIS VIEW OF THE MATTER, WE DEEM IT FIT AND PROPER TO DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED LEVY OF INTEREST UNDER SECTION 234B. THE ASSESSEE GETS THE RELIEF ACCORDI NGLY. 4. FURTHER, THE ABOVE ISSUE OF INTEREST U/S. 234B OF THE ACT IN RESPECT OF DISALLOWANCE OF LIVING ALLOWANCE U/S. 10(14) OF THE ACT, WHICH WAS DELETED BY THE LD. C.I.T.(A), WAS SUBJECT MATTER OF APPEALS FILED BY T HE DEPARTMENT IN RESPECT OF SEVERAL ASSESSEES WHO WERE SALARIED EMPLOYEES OF M/S.TCS LT D. THE I.T.A.T., KOLKATA BENCH B VIDE ITS CONSOLIDATED ORDER DATED 30/09/2011 DISMIS SED THE DEPARTMENTS APPEALS BY HOLDING AS UNDER :- 26. WITH REGARD TO THE DEPARTMENTAL APPEALS, WE HAVE ALREADY HELD THAT LIVING ALLOWANCE IS NOT TAXABLE. THEREFORE, INTERE ST LEVIED UNDER SECTION 234B CANNOT BE SUSTAINED. EVEN OTHERWISE, WE FIND THAT THE ISSUE IS COVERED BY THE DECISION OF ITAT, SPECIAL BENCH IN THE CASE OF SUMI T BHATTACHARYA VS. ACIT REPORTED IN [2008] 300 ITR PAGE 347 (MUMBAI)(SB). IN VIEW OF THE ABOVE, THE DEPARTMENTAL APPEALS ARE DISMISSED. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE A FORESAID DECISION OF SPECIAL BENCH OF I.T.A.T. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE FIND NO MERIT IN THE COMMON GROUND RAISED BY THE DE PARTMENT IN THE ABOVE APPEALS. WE, THEREFORE, UPHOLD THE ORDER OF THE LD. C.I.T.(A) ON THIS ISSUE AND DISMISSED THE APPEALS OF THE DEPARTMENT. 5. ONE OF THE ASSESSEES, SRI SUDIPTA SARKAR, HAS A LSO FILED A CROSS-OBJECTION BEARING NO. 103 (KOL)/2010 ARISING OUT OF ITA NO.12 12 (KOL)/2010. SEVERAL GROUNDS HAVE BEEN RAISED IN THIS CROSS-OBJECTION WHICH ARE ALL DIRECTED AGAINST THE ORDER OF LD. C.I.T.(A) IN CONFIRMING THE DENIAL OF EXEMPTION U/S . 10(14)(I) OF THE ACT READ WITH RULE 2BB(1) OF THE RULES IN RESPECT OF LIVING ALLOWANCE OF RS.11,49,972/- RECEIVED BY THE ASSESSEE FROM HIS EMPLOYER WHILE HE WAS ON DEPUTATI ON IN USA. 5 6. THIS VERY ISSUE HAS ALREADY BEEN CONSIDERED AND ADJUDICATED UPON BY ITAT, KOLKATA BENCH B VIDE ITS CONSOLIDATED ORDER DATED 30/9/2011 IN THE CASE OF GROUP OF EMPLOYEES OF M/S. TCS LTD., WHEREIN THE TRIBUNAL AF TER DETAILED DISCUSSIONS DISMISSED THE DEPARTMENTAL APPEALS BY HOLDING THAT LIVING ALL OWANCE IS NOT TAXABLE IN INDIA AND, THEREFORE, ASSESSEES ARE ENTITLED FOR EXEMPTION U/S . 10(14)(I) OF THE ACT. THE RELEVANT PORTION OF THE FINDING OF THE TRIBUNAL IS AS UNDER :- 24. FROM THE ABOVE NOTED CONTENTS OF DEPUTATION LETTER AND ARGUMENT, ETC. IT IS CLEAR THAT THE PLACE OF POSTING DID NOT CHANGE TO U SA AND THE EMPLOYEES WERE SENT THERE WITH REFERENCE TO THE SPECIFIC PROJECTS THOUGH THE PROJECTS COULD CHANGE AT THE INSTANCE OF EMPLOYER. THE EMPLOYEES WERE TO REPORT BACK TO THE EMPLOYER AND SERVE THE EMPLOYER AFTER ACQUIRING SKI LL FROM USA PROJECTS. THE SALARY STRUCTURE OF EMPLOYEES REMAINED SAME AND THE ADDITIONAL AMOUNTS WERE PAID ONLY FOR THE PURPOSES OF ADDITIONAL ROUTINE EXPENSE S IN USA. THIS IS EVIDENT FROM DEPUTATION AGREEMENT, WHICH DEALS WITH COMPENSATION AND BENEFITS NOTED ABOVE. IT IS SPECIFICALLY MENTIONED IN PARA 2.3 THAT DURIN G THE PERIOD OF DEPUTATION, THE EMPLOYEE WILL CONTINUE TO RECEIVE HIS SALARY AND BE NEFITS IN INDIA. THIS CLEARLY SHOWS THAT PLACE OF POSTING HAD NOT CHANGED, WHICH IS BASIC INGREDIENT FOR DECIDING WHETHER A PERSON HAD BEEN TRANSFERRED OR WAS ON TOU R. LD. CIT(APPEALS) HAS WRONGLY CONCLUDED THAT HEADQUARTERS HAD BEEN SHIFTE D FROM KOLKATA TO USA. LD. CIT(APPEALS) HAS ALSO POINTED OUT THAT EMPLOYEES HA D A CHOICE TO SAY NO ALSO. IN THE PRESENT CASE, THE EMPLOYEES WERE TO BE SENT TO USA AND, THEREFORE, THEIR CHOICE HAD TO BE TAKEN BEFORE SENDING THEM ABROAD. SINCE THE ASSESSEES WERE TO BE SENT ABROAD, THEY HAD TO OBTAIN VISA ALSO FOR TH AT PURPOSE. IN THAT REGARD, ALL THE SPECIFIC REQUIREMENTS HAD TO BE FULFILLED BY TH E EMPLOYER. BUT THAT SHOULD NOT DETRACT US FROM EXAMINING THE TRUE IMPORT OF THE TE RM TOUR. LD. CIT(APPEALS) HAS ALSO POINTED OUT THAT AS PER THE DEPUTATION AGR EEMENT, THE ASSESSEES WERE ENTITLED TO TAKE THEIR FAMILIES BUT THAT ALSO CANNO T BE A BASIS FOR DECIDING WHETHER THE ASSESSEES WERE TO BE TREATED ON TOUR IN TERMS O F RULE 2BB(1)(B) OR NOT BECAUSE THAT RULE DOES NOT PROHIBIT TAKING THE FAMI LY ON TOUR. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT KEEPING IN VIEW THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ASSESSEES WERE TO BE TRE ATED ON TOUR AND, THEREFORE, ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 10(14 )(I) READ WITH RULE 2BB(1)(B). FURTHER, WE FIND THAT THE ISSUE RELATING TO LIVING ALLOWANCE HAS BEEN CONSIDERED BY VARIOUS DECISIONS RELIED UPON BY THE LD. SENIOR COU NSEL FOR THE ASSESSEES WITH REFERENCE TO NON-RESIDENTS. LD. CIT(APPEALS) HAS DI STINGUISHED ALL SUCH CASE LAWS ON THE GROUND THAT THEY RELATE TO NON-RESIDENTS AND NOT WITH REFERENCE TO THE EMPLOYEES BEING SENT ABROAD. WE DO NOT FIND ANY RAT IONALE IN DISTINGUISHING THE CASE LAWS NOTED IN LD. SENIOR COUNSELS SUBMISSIONS MERELY ON THE GROUND THAT THEY RELATED TO NON-RESIDENTS. NON-RESIDENTS COMING TO I NDIA AND INDIAN GOING ABROAD, ARE TO BE CONSIDERED ON SAME FOOTING AS FAR AS THE ISSUE IS IN RESPECT OF EXEMPTION 6 UNDER SECTION 10(14)(I) READ WITH RULE 2BB(1). IT D OES NOT LAY DOWN SEPARATE CONSIDERATION FOR NON-RESIDENTS VIS--VIS RESIDENTS . 25. FURTHER, ONE MORE ASPECT WHICH IS TO BE CONS IDERED IS WITH REGARD TO ACTUAL INCURRING OF EXPENDITURE. IN THIS REGARD, WE FIND T HAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT, MUMHAI DATED 21.04.2006 IN ITA NOS. 5561 & 5570/MUM/2002 FOR THE ASSESSMENT YEARS 1997-98 AND 1998-99 IN THE EASE OF MADANLAL MOHANLAL NARANG VS. ACII (SUPRA) WHEREIN IT HAS BEEN HELD THAT IT IS NOT OPEN TO THE REVENUE TO CALL FOR THE DETAILS OF EXPE NSES ACTUALLY INCURRED UNLESS THE SPECIFIC ALLOWANCE ARE DISPROPORTIONATELY HIGH COMP ARED TO THE SALARY RECEIVED BY HIM OR UNREASONABLE WITH REFERENCE TO THE NATURE OF THE DUTIES PERFORMED BY THE ASSESSEE. FURTHER, THE ASSESSEES HAD SUBMITTED THAT FBT MUS T HAVE BEEN PAID BY THE EMPLOYER. HOWEVER, AS NOTED EARLIER, EMPLOYER HAS N OT PAID FBT. IN OUR OPINION, THE CONSIDERATIONS FOR ELIGIBILITY OF EXEMPTION UNDER S ECTION 10(14)(1) ARE ENTIRELY DIFFERENT AND NOTHING TURNS AROUND ON THE APPLICABI LITY OR NON-APPLICABILITY OF THE PROVISIONS OF FBT. IN VIEW OF ABOVE DISCUSSIONS, THE APPEALS OF THE ASSESSEES AS WELL AS THE CROSS OBJECTIONS ARE ALLOWED. . . 27. BEFORE PARTING, WE MAY FURTHER OBSERVE THAT, IN ANY VIEW OF THE MATTER, THE ENTIRE CONTROVERSY IS ALMOST REVENUE NEUTRAL BECAUS E EVEN IF IT IS HELD THAT ASSESSEES WERE NOT ELIGIBLE FOR EXEMPTION UNDER SEC TION 10(14)(I) IN RESPECT O LIVING ALLOWANCE, THEN IN VIEW OF DTAA WITH USA, THE ASSES SEE WOULD BECOME ENTITLED TO GET TAX CREDIT IN RESPECT TAX PAID ON LIVING ALLOWA NCE IN USA. HOWEVER, AS WE HAVE ALREADY HELD THAT LIVING ALLOWANCE IS NOT TAXABLE I N INDIA, THEREFORE, ASSESSEES ARE ENTITLED FOR EXEMPTION UNDER SCCTION 10(14)(I). TH EREFORE, THEY CANNOT CLAIM TAX CREDIT IN RESPECT OF TAX PAID IN USA ON LIVING ALLO WANCE BECAUSE AS VERY FAIRLY POINTED OUT BY THE LD. SENIOR COUNSEL FOR THE ASSES SEES. DTAA WOULD COME INTO PLAY ONLY WHEN A PARTICULAR RECEIPT IS TAXABLE IN B OTH THE COUNTRIES. 7. RESPECTFULLY FOLLOWING THE AFORESAID OBSERVATIO NS/FINDINGS OF THE TRIBUNAL AND CONSIDERING THAT THE FACTS AND ISSUE IN THIS CROSS- OBJECTION ARE ALSO SQUARELY COVERED BY THE AFORESAID DECISION OF THE TRIBUNAL, WE HOLD THA T THE LD. C.I.T.(A) WAS NOT JUSTIFIED IN CONFIRMING THE DENIAL OF EXEMPTION CLAIMED BY THE A SSESSEE U/S. 10(14)(I) OF THE ACT IN RESPECT OF LIVING ALLOWANCE RECEIVED BY THE ASSESSE E FROM HIS EMPLOYER. WE, THEREFORE, REJECT HIS ORDER ON THIS ISSUE AND ALLOW THE CROSS- OBJECTION OF THE ASSESSEE. IN THE RESULT, THE CROSS-OBJECTION IS ALLOWED. 7 8. IN THE RESULT, THE APPEALS OF THE DEPARTMENT AR E DISMISSED AND THE CROSS- OBJECTION IN C.O.NO.103/KOL/2010 (IN ITA NO.1212/KO L/2010) OF THE ASSESSEE IS ALLOWED. SD/- SD/- ( !'# !'# !'# !'# ) ( . . . . . .. . ) (N.VIJAYAKUMARAN) JUDICIAL MEMBER (S.V.MEHROT RA), ACCOUNTANT MEMBER ( (( (5 5 5 5) )) ) DATE: 19-10-2011 7 4 .%%! 8!'9- COPY OF THE ORDER FORWARDED TO: 1. +, / THE APPELLANT : ITO, WARD-27(4), KOLKATA 2 ./+, / THE RESPONDENT : ASSESSEES, 3. %7 () : THE CIT(A)-XIV, KOLKATA. 4. %7 / THE C.I.T., KOL - 5 >%? .% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . /! .%/ TRUE COPY, 7 #/ BY ORDER, (DKP) ASSTT. REGISTRAR .