Dr. Muthian Sivathanu, CHENNAI V. ACIT Non Corporate Circle 17, CHENNAI

ITA 1294/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8202 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 17-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M SIVATHANU
• Keywords: Residential status; Salary income; Double taxation relief; Ignorance of law; Set aside
• Section: 143(3); 90

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , ! ' , # '$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1294/CHNY/2018 % &% /ASSESSMENT YEAR: 2013-14 DR. MUTHIAN SIVATHANU, 19/136, BABANAGAR, 6 TH STREET, VILLIVAKKAM, CHENNAI 600 049. VS. ASST. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-17, CHENNAI. [PAN: CBSPS 6453G ] ( '( /APPELLANT) ( )*'( /RESPONDENT) '( + , / APPELLANT BY : SHRI M. SIVATHANU, ADVOCATE )*'( + , /RESPONDENT BY : SHRI ARV SREENIVASAN, JCIT - + .# /DATE OF HEARING : 21.02.2019 /0 & + .# / DATE OF PRONOUNCEMENT : 28.03.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -5, CHENNAI (HEREINAFTER CALLED AS CIT(A)) DATED 13.12.2014 F OR THE ASSESSMENT YEAR (AY) 2013-14. 2. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF AP PEAL: A. THE IMPUGNED ORDER DT. 12-3-18 OF THE LEARNED C IT(A) IS ERRONEOUS ON FACTS AND LAW AND HENCE LIABLE TO BE S ET ASIDE. ITA NO.1294/CHNY/2018 (AY: 2013-14) :- 2 -: B. THE IMPUGNED ORDER OF THE CIT(A) IN LIABLE TO BE SET ASIDE BECAUSE THE CIT(A) COMPLETELY IGNORED WITHOUT EVEN MENTIONI NG IN THE IMPUGNED ORDER A VERY VITAL POINT IN THE APPELLANT S RECTIFICATION PETITION DT. 8-1-18 IN PARA 5(C) THAT THE CASE LAWS CITED BY THE CIT(A) ON THE POINT OF WHETHER THE ASSESSMENT ORDER OF AO WAS TIME-BARRED UNDER SEC. 153(1)(A) WERE UTTERLY IRRELEVANT AS IT PERTAINED TO THE DATE OF RECEIPT AND NOT THE DATE OF POSTING THE LETTER. WHEN THE APPELLANT FURNISHED IRREFUTABLE DOCUMENTARY PROOF THAT THE TH E ASSESSMENT ORDER DT. 30-3-16 WAS POSTED ONLY LATE NIGHT AT 9.1 5PM ON 1-4-16, I.E. AFTER THE TIME LIMIT STIPULATED IN SEC. 1 53(1)(A) AND STATED THAT THE ASSESSING OFFICER MUST HAVE DELIBERATELY ANTE-DATED THE SAID ORDER AS 30-3-16 ESPECIALLY TAKING INTO ACCOUNT THE OTHER MA LAFIDE AND GLARING ERRORS OF FACT AND UTTER FALSEHOOD IN THE ORDER DT. 30-3-16 OF THE AC CLEARLY DETAILED BY THE APPELLANT, THE CIT(A) CHOSE TO IGNORE AND SWEEP UNDER THE RUG SUCH A SERIOUS ISSUE OF FRAUD/D ISHONESTY ON THE PART OF THE ASSESSING OFFICER C. THE IMPUGNED ORDER OF THE CIT(APPEALS) IS LIABLE TO BE SET ASIDE IN VIEW OF THE UTTERLY ERRONEOUS, SURPRISINGLY ABSURD, AND INEXPLICABLY STRANGE REASONING GIVEN IN THE IMPUGNED ORDER IN PA RA 7, VIZ: THUS IT IS EVIDENT THAT THE TAXES WITHHELD, SHOWN IN THE FORM W-2 (FORM W-2 WAGE & TAX STATEMENT 2011 AND FORM W-2 WA GE & TAX STATEMENT 2012) WERE NOT PERTAINING TO THE GAIN ON ESOPS AS CLAIMED BY THE ASSESSEE THE ABOVE FICTITIOUS IMAGINATION BY THE CIT(A) CO UCHED IN A LANGUAGE AS IF IT IS EVIDENT CONVEYS UTTER NON-AP PLICATION OF MIND AND/OR LACK OF BASIC KNOWLEDGE ABOUT TAXATION IN TH E USA, FOR THE FOLLOWING REASONS: (A) THE W-2 STATEMENT, WHICH IS THE TAX DEDUCTION C ERTIFICATE ISSUED IN USA AND CONCLUSIVE PROOF OF INCOME TAX PA ID IN USA, IS AN AGGREGATE STATEMENT THAT CONTAINS THE TO TAL INCOME PAID TO THE EMPLOYEE BY EMPLOYER, AND THE TOTAL TAX DEDUCTED AND PAID IN USA FOR THE YEAR AND SAID W-2 TAX DEDUC TION CERTIFICATE DOES NOT HAVE ANY PROVISION WHATSOEVER TO INDICATE THE BREAK-UP OF THE INCOME, WHETHER IT BELONGS TO S ALARY OR ESOP OR BONUS. (B) IN THE APPEAL IN PARA 7 OF THE STATEMENT OF FAC TS, IT IS CLEARLY MENTIONED THAT THE TOTAL INCOME REPORTED IN THE TWO W-2 STATEMENTS (TAX DEDUCTION CERTIFICATES ISSUED IN US A) FOR 2011 AND 2012 (RESPECTIVELY USD 272139 + USD 166684 = 438823) MATCHES THE TOTAL OF THE FOREIGN INCOME VOL UNTARILY DECLARED BY THE APPELLANT FOR THE TWO AYS 2012-13 A ND 2013- 14 (RESPECTIVELY USD 301427 AND USD 137396 USD 438823), SINCE THE ACCOUNTING YEAR IN USA AND INDIA ARE DIFFERENT IN THAT IN USA THE ACCOUNTING YEAR IS FRO M JANUARY TO DECEMBER AND IN INDIA THE ACCOUNTING YEAR IS FROM A PRIL TO MARCH. ITA NO.1294/CHNY/2018 (AY: 2013-14) :- 3 -: (C) IN VIEW OF POINT (B) ABOVE, THE WILD/ABSURD/LAU GHABLE IMAGINATION OF THE CIT(A) AS IF THE SAID INCOME OF RS. 76,07,725/- VIZ. USD 137396 RECEIVED IN USA AND COV ERED UNDER SEC. 90 OF IT ACT PERTAINING TO AY 2013-14 (B REAK-UP DETAILS OF WHICH WERE QUOTED IN PARA 3 OF THE IMPUG NED ORDER ITSELF), DOES NOT PERTAIN TO ESOP IMPLIES AS IF THE W-2 AMOUNT PERTAINED TO SOME OTHER MYSTERIOUS INCOME THAT SOME HOW MAGICALLY EXACTLY MATCHED THE INCOME REPORTED BY TH E APPELLANT, BUT SOMEHOW THE APPELLANT CHOSE TO SUPPR ESS THE SAID MYSTERIOUS INCOME EVEN WHILE VOLUNTARILY REPOR TING THE ESOP INCOME. IF AT ALL THE CIT(A) WAS UTTERLY IGNORANT OF THE SC OPE VALIDITY AND PURPOSE OF W-2 STATEMENT(VIZ TAX DEDUCTION CERTIFIC ATE ISSUED IN USA), NOTHING PREVENTED HIM FROM ASKING A SPECIFIC QUERY TO THE APPELLANT, OR CONSULTING SOMEONE IN THE INCOME TAX DEPARTMENT WHO HAS DEALT WITH SECTION 90 OF INCOME TAX ACT. INSTEA D, THE CIT(A) STOOPED TO THE SURPRISING LEVEL OF INVENTING IMAGIN ATIVE STORY BY QUOTING THE DESCRIPTION OF THE VARIOUS FIELDS IN TH E W-2 STATEMENT VIZ TAX DEDUCTION CERTIFICATE ISSUED IN USA AND USING T HAT TO SOMEHOW MAGICALLY ARRIVE AT THE ERRONEOUS AND ABSURD CONCL USION AS IF IT DOES NOT PERTAIN TO STOCK OPTION INCOME. D. THE IMPUGNED ORDER DT. 12-3-18 OF THE CIT(APPEA LS) IS LIABLE TO BE SET ASIDE SINCE IT REFERS IN PARA 1(U) AND ALSO IN PARA 7.4.2 OF CIT ORDERDT. 13-12-17 A CASE LAW THAT IS DIRECTLY FAVOR ABLE TO THE APPELLANT AND SOMEHOW USES THAT VERY SAME CASE LAW TO RULE AGAINST THE APPELLANT. THE QUOTED PORTION OF THE SAID CASE LAW IN [2008] 26 SOT 208 (DELHI) STATES: FOR CLAIMING CREDIT UNDER SECTION 90 THERE SHOULD BE REAL DOUBLE TAXATION OF SAME INCOME IN BOTH THE COUNTRIES. THE COUNTRY WHERE THE PERSON IS RESIDENT IS TO GRANT CREDIT FOR TAXES PAID IN THE COUNTRY WHERE THE INCOME ARISES BUT ONLY TO THE EXTENT TO WHICH IT ITSELF LEVIES TAX. IN THE PRESENT CASE, AS STATED IN GROUND 0 OF THE A PPEAL TO CIT(A), A TAX OF RS. 24,11,401/- WAS ACTUALLY PAID BY THE APP ELLANT TO THE USA ON THE SUBJECT INCOME OF RS. 76,07,725/-, BUT ON TH E SAID SUBJECT INCOME, THE INDIA TAX LIABILITY IS ONLY RS. 23,50,7 87/-. HENCE ONLY THE LOWER AMOUNT OF RS. 23,50,787/- WAS ALONE CLAIMED A S TAX RELIEF BY THE APPELLANT, AS THE ABOVE ORDER CLEARLY STATES. H ENCE QUOTING THE ABOVE CASE LAW WHICH IS DIRECTLY FAVORABLE TO THE A PPELLANT, AND USING IT TO DISMISS THE APPELLANTS APPLICATION CONVEYS U TTER NON-APPLICATION OF MIND BY THE CIT(A) AND/OR HIS IGNORANCE OF LAW. E. THE IMPUGNED ORDER DT. 12-3-18 OF THE CIT(A) IS LIABLE TO BE SET ASIDE BECAUSE IT FAILED TO RECTIFY THE UTTERLY ERRO NEOUS AND ABSURD REASONING OF THE CIT(A) IN HIS ORDER DT. 13-12-17, VIZ. ITA NO.1294/CHNY/2018 (AY: 2013-14) :- 4 -: MOREOVER THE ASSESSEE DID NOT PRODUCE THE CERTIFIC ATE FROM USA TAX AUTHORITIES TO SUPPORT THE CLAIM THAT THE SAME INCOME WAS SUBJECTED TO TAX IN USA. WHICH CONVEYS UTTER NON-APPLICATION OF MIND BY THE CIT(A) FOR THE REASONS: (A) DOCUMENTS FILED BEFORE THE CIT AS PART OF THE A PPEAL (NOW ALSO ENCLOSED AS DOCUMENT NOS. 5(D) AND 5(E) OF THE TYPED SET), CONTAIN THE W-2 TAX DEDUCTION CERTIFICATE CLE ARLY PROVING THE TAX DEDUCTED AND PAID TO USA TAX AUTHORITIES BY GOOGLE INC ON THE SAID INCOME. DESPITE REPRODUCING THE GRO UNDS THAT REFERENCE THE SAID W-2 STATEMENTS (ESP. GROUND J & L QUOTED IN PAGES 6-8 OF THE ORDER DT. 13-12-17), THE CIT(A) HAS CHOSEN TO MAKE A CONTRADICTORY OBSERVATION AS QUOTED ABOVE . (B) IF AT ALL THE CIT(A) OR THE AC TOOK AN UNUSUAL, PECULIAR, AND LAUGHABLE STAND AS IF THE W-2 (TAX DEDUCTION CERTIF ICATE) ISSUED BY USA AUTHORITIES WAS NOT A CONCLUSIVE PROO F OF TAX DEDUCTED/PAID TO THE USA AND AS IF SOME OTHER CERT IFICATE WAS NEEDED, NOTHING PREVENTED THEM TO SPECIFICALLY ASK THE ASSESSEE WHATEVER REASONABLE ADDITIONAL SOME OTHERCERTIFICATE IS NEEDED, OR TO WRITE TO GOOGL E OR USA TAX AUTHORITIES IN THE MATTER. (C) EVEN IF THE AC OR CIT(A) WANTED TO BE UNUSUALLY AND LAUGHABLY SUSPICIOUS AND WANTED A DIRECT CERTIFICA TE FROM THE USA TAX DEPARTMENT OR THE PRESIDENT OF THE UNITED S TATES DIRECTLY, SCHEDULE TR IN THE ITR FILED BY THE ASSES SEE AND THE W-2 DOCUMENTS, HAVE THE USA TAXPAYER ID NUMBER OF T HE ASSESSEE WHICH CAN BE USED TO CROSS-CHECK WITH THE USA TAX AUTHORITIES THROUGH THEIR EXCHANGE CHANNELS TO REMO VE THEIR LAUGHABLE, PERVERSE, ILLOGICAL, AND UNWARRANTED SUS PICION AS IF THE ASSESSEE. (I) WHO IS AN INTERNATIONAL EXPERT AND A SALARIED A SSESSEE WHO PAID MORE THAN 2 CRORES INCOME TAX THAT YEAR ALONE, (II) WHO VOLUNTARILY DECLARED THE SUBJECT INCOME IN THE ITR, AS THE FORM-16 DID NOT HAVE THE INCOME AT ALL MAY HAVE MADE A CRIMINAL FALSE DECLARATION PERTAINI NG TO THE VERY INCOME THAT HE VOLUNTARY DECLARED, WHEN IT WOULD BE OBVIOUS TO ANY RIGHT-THINKING PERSON THAT AN EASIER ROUTE WOUL D HAVE BEEN TO NOT REPORT THE SAID INCOME AT ALL. F. THE IMPUGNED ORDER OF THE CIT(A) IS LIABLE TO BE SET ASIDE SINCE IT UPHOLDS THE BASELESS AND UNTENABLE WILD IMAGINATION OF LEARNED AC AND CIT(A) AS IF A WORLD RENOWNED COMPANY GOOGLE IN DIA PVT. LTD. WOULD HAVE MISERABLY FAILED TO REPORT IN THE FORM-1 6 A PART OF THE SALARY INCOME PAID TO ITS EMPLOYEE AND MISERABLY FA ILED TO DEDUCT AND REMIT TAX ON THE SAID AMOUNT, IF AT ALL THE SAI D INCOME IS LIABLE TO BE TAXED IN INDIA AS ERRONEOUSLY CLAIMED BY THE AC IN HIS ITA NO.1294/CHNY/2018 (AY: 2013-14) :- 5 -: ASSESSMENT ORDER DT. 30-3-16 AND CONFIRMED BY THE I MPUGNED ORDERDT. 12-3-18. G. THE IMPUGNED ORDER OF THE CIT(A) IS INVALID IN L AW AND IS LIABLE TO BE SET ASIDE SINCE IT UPHOLDS THE BASELESS AND UNTE NABLE WILD/ABSURD IMAGINATION OF LEARNED AC AS IF WORLD RENOWNED COMP ANY GOOGLE INC. WOULD HAVE WRONGLY DEDUCTED AND PAID USA TAX ON AN INCOME THAT IS ALLEGEDLY LIABLE TO BE TAXED IN INDIA AS ERRONEOUSL Y HELD BY THE AC. H. THE IMPUGNED ORDER IS INVALID IN LAW AND IS LIAB LE TO BE SET ASIDE SINCE IT FORCED THE ASSESSEE TO PAY DOUBLE TAX, IN ADDITION TO THE TAX ALREADY PAID TO THE USA, BY UPHOLDING THE ILLEGAL T AX DEMAND AND RECOVERY OF RS. 31,86,620/- AND IS THUS GROSSLY VIO LATIVE OF THE STATUTORY PROVISIONS IN SEC. 90 OF INCOME TAX ACT A ND ART. 25(2)(A) OF THE US-INDIA DOUBLE TAX AVOIDANCE TREATY. I. THE IMPUGNED ORDER DT. 12-3-18 OF THE CIT(A) IS LIABLE TO BE SET ASIDE SINCE IT FAILED TO DISCUSS OR DISTINGUISH AS TO WHY THE ASSESSMENT ORDER DT. 30-3-16 WAS VALID DESPITE ITS DIRECT VIOLATION OF TWO CLEAR PRECEDENTS AS DETAILED IN GROUND G OF THE APPEAL TO CIT(A) VIZ. A. FOR AY 12-13, THE SAME ISSUE OF RELIEF U/S 90 / 90A WITH IDENTICAL FACTS WERE RAISED DURING SCRUTINY BY THE CONCERNED ASSESSING OFFICER MS JAMUNA DEVI, DCIT, NON-CORPORA TE CIRCLE-17 WHO ALLOWED THE RELIEF U/S 90. B. IN ANOTHER SIMILAR CASE FOR AY 13-14 PERTAINING TO ANOTHER EMPLOYEE OF GOOGLE INDIA, VIZ. DR. S. GOPALAN (PAN NO. AGKPG85O7E), THE VERY SAME FACTS AROSE AND THE CONC ERNED AO MR. A.B. KARPE, ACIT, NON-CORPORATE CIRCLE-16 VI DE HIS ASSESSMENT ORDER DT. 4-3-16 U/S 143(3) ALLOWED THE RELIEF CLAIMED U/S 90. 14. PRAYER THE APPELLANT THEREFORE PRAYS THAT THE ASSESSMENT O RDER DT 30-3- 2016 OF THE RESPONDENT MAY BE SET ASIDE WITH A DIRE CTION FOR REFUND OF EXCESS TAX OF RS. 31 86,6201-WRONGFULLY ATTACHED AN D RECOVERED BY THE RESPONDENT AND THUS RENDER JUSTICE. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL DERIVING INCOME FROM SALARY. THE RETURN OF INCOME FOR THE AY 2013-14 WAS FILED ON 31 .07.2013 DISCLOSING TOTAL INCOME OF RS. 7,88,87,650/-. SUBSEQUENTLY, T HE RETURN OF INCOME WAS REVISED ON 04.08.2013 DISCLOSING THE SAME TOTAL INCOME. AGAINST ITA NO.1294/CHNY/2018 (AY: 2013-14) :- 6 -: THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPL ETED BY THE ASST. CIT, NON-CORPORATE CIRCLE-17(1), CHENNAI (HEREINAFT ER CALLED AS AO) VIDE ORDER DATED 30.03.2016 ACCEPTING THE RETURNED INCOME. HOWEVER, THE AO HAD NOT ALLOWED THE TAX RELIEF U/S. 90 OF TH E INCOME TAX ACT, 1961 (IN SHORT THE ACT) READ WITH TERMS OF THE DT AA TREATY WITH USA. IT IS THE CONTENTION OF THE APPELLANT THAT THE PROFIT ARISING ON ACCOUNT OF ESOP HAD ALREADY SUFFERED TAX IN USA AND THEREFORE, TAX RELIEF OF RS. 23,50,787/- SHOULD BE ALLOWED. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), CONTENDING THAT THE ASSESSMENT ORDER DATED 30.03.20 16 PASSED IS BARRED BY LIMITATION, ON THE ASSESSMENT ORDER RECEI VED BY THE ASSESSEE ON 04.04.2016. FURTHER, IT IS CONTENDED THAT THE D ENIAL OF BENEFIT OF TAX REBATE IS IN FLAGRANT VIOLATION OF THE PROVISIONS O F S. 90 OF THE ACT AS WELL AS THE DTAA. HOWEVER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO, AS THERE WAS NO DISCLOSURE OF CAPITAL GAINS ON THE SALE OF ESOP SHARES IN USA AND NO CERTIFICATE WAS PRODUCED FROM USA TAX AUTHORITIES IN SUPPORT OF THE CONTENTION THAT THE SAME INCOME WAS SUBJECT TO TAX IN USA. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BE FORE US IN THE PRESENT APPEAL. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER OR NOT THE ITA NO.1294/CHNY/2018 (AY: 2013-14) :- 7 -: APPELLANT IS ENTITLED FOR REBATE U/S. 90 R/W PROVIS IONS OF US TAX TREATY. THE INDISPUTED FACTS OF THE CASE ARE THAT THE APPEL LANT IS RESIDENT OF INDIA DURING THE PREVIOUS YEAR RELEVANT TO ASSESSME NT ORDER UNDER CONSIDERATION HE EXERCISED THE STOCK OPTION RELATIN G TO HIS EMPLOYMENT AT USA. THERE IS NO DISPUTE ON THE PROPOSITION THAT THE PERQUISITE VALUE OF ESOP IS TAXABLE AT THE TIME OF EXERCISING OPTION BUT, THE AO HAD NOT EXAMINED THE TERMS OF ESOP. THESE ARE THE MATERIAL FACTS WHICH ARE DETERMINATIVE WHETHER THE ESOPS ARE TAXABLE IN INDI A OR NOT AND TO APPLY THE PROVISIONS OF DTAA BETWEEN INDIA AND USA AND THEREFORE, IN OUR CONSIDERED OPINION THE MATTER REQUIRES TO BE RE MITTED BACK TO AO TO EXAMINE THE TERMS OF ESOPS AND THEN, ADJUDICATE THE MATTER AFRESH IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 28 TH DAY OF MARCH, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! ' ) (INTURI RAMA RAO) # /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 28 TH MARCH, 2019. EDN, SR. P.S + ).23 43&. /COPY TO: 1. '( /APPELLANT 2. )*'( /RESPONDENT 3. - 5. ( )/CIT(A) 4. - 5. /CIT 5. 36 ). /DR 6. 7% 8 /GF