Dr. Mahendra Somabhai Patel, Dist.S.K. V. The Income tax Officer, S.K.Ward-4, Modasa.

ITA 1363/AHD/2004

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6561 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-04-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 26-04-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Section: 56; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 1363/AHD./2004 ASSESSMENT YEAR : 2001-2002 DR. MAHENDRA SOMABHAI PATEL, -VS.- INCOME TAX OFFICER, SABARKANTHA, WARD-4, BAYAD, DT. S.K. (PAN : ACPPP 7985 E) MODASA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N. DIVETIA RESPONDENT BY : SHRI ANAND MOHAN, SR . D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 01.03.2004 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IX, AHMEDABAD F OR THE ASSESSMENT YEAR 2001-02 CONFIRMING THE ACTION OF ASSESSING OFFICER THAT THE ALLOWANCES RECEIVED BY THE ASSESSEE BY VIRTUE OF MEMBERSHIP OF GUJARAT LEGISLATIVE ASSEMBLY WERE CHARGEABLE TO TAX. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE B Y PROFESSION A PRACTICING DOCTOR AND ALSO A MEMBER OF GUJARAT LEGISLATIVE ASSEMBLY. IN THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE RECEIVED SALARY (RS.18,0 00/-), CONSOLIDATED ALLOWANCE (RS.18,000/-), TELEPHONE (RS.36,000/-), POSTAL CHARGES (RS.19,200/ -) AND PERSONAL ASSISTANCE ALLOWANCE (RS.28,800/-), WHICH AGGREGATED TO RS.1,20,000/-. I N THE RETURN OF INCOME, HE CLAIMED DEDUCTION OF TRANSPORT ALLOWANCE AMOUNTING TO RS.24,000/-, ST ANDARD DEDUCTION OF RS.25,000/- , PROFESSIONAL TAX OF RS.480/- AND SEWAGE EXPENSES OF RS.30,000/-. IN THE ASSESSMENT ORDER, THE A.O. COMPUTED THE TOTAL INCOME OF THE ASSESSEE AMOU NTING TO RS.96,000/- [INCOME FROM LEGISLATIVE ASSEMBLY RS.1,20,000/- MINUS (LESS) E XEMPTION U/S. 10(17)(III) RS.24,000/-] AND TAXED THE SAME UNDER THE HEAD INCOME FROM OTHER SO URCES. 3. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BE FORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON THE GROUND THAT THE ASSESSIN G OFFICER ERRED IN TAXING THE AMOUNTS SPECIFICALLY GIVEN TO THE ASSESSEE AND INCURRED THE EXPENSES TO MEET HIS OBLIGATION AS MEMBER OF 2 ITA NO. 1363/AHD/200 4 THE GUJARAT LEGISLATIVE ASSEMBLY. BEFORE THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS), IT WAS CONTENDED THAT ONCE INCOME IS ASSESSED UNDER TH E HEAD INCOME FROM OTHER SOURCES, THE ASSESSEE IS ENTITLED TO ALLOWANCE OF DEDUCTION INCU RRED UNDER SECTION 57(III) OF THE INCOME TAX ACT, 1961. IN SUPPORT OF THIS, RELIANCE WAS PLACED ON THE CIRCULAR NO. F. 40/29/67/IT(A-1) DATED 27.05.1996 ISSUED BY C.B.D.T. IN THIS CIRCULAR, IT IS MENTIONED THAT INCOME IS REQUIRED TO BE ASSESSED UNDER SECTION 56 OF THE INCOME TAX ACT, 19 61. 4. IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE ACTION OF ASSESSING OFFICER IN PARA 4 & 4.1 FOR THE FOLLOWING REASONS :- (I) THE APPELLANT IS HON'BLE MEMBER OF THE LEGISLAT URE ASSEMBLY AND IS RECEIVING ALLOWANCES AS ADMISSIBLE. BUT THE PORT ION OF SUCH ALLOWANCE WHICH WILL NOT FORM PART OF HIS TOTAL INC OME WILL BE LIMITED TO THE PROVISIONS OF SECTION 10(17) OF I.T. ACT, 19 61. SUCH RELIEF HAS ALREADY BEEN GRANTED BY ASSESSING OFFICER. (II) THE EXPENDITURE INCURRED BY THE HON'BLE MEMBER MAY BE IN THE LINE OF HIS PUBLIC PROFILE, BUT THE RECEIPTS ARE NO T RELATABLE TO INCURRING OF SUCH EXPENSES. SO THESE EXPENSES ARE N OT SUCH WITHOUT WHICH HIS RECEIPTS WOULD BE CURTAILED. SO T HESE EXPENSES DO NOT FALL WITHIN THE TERMS OF INCURRED FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. (III) THE DECISION RELIED UPON IS DISTINCT ON FACTS AND D OES NOT APPLY TO FACTS OF APPELLANTS CASE. IN FACT, IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT IN CASE OF SUN ENGINEERING WO RKS 190 ITR 97 THAT A DECISION SHOULD BE SEEN IN CONTEXT OF QUESTION BEFORE THE COURT AND NOT APPLIED TO OTHER ISSUES WH ICH NOT IN THE CONTEXT. I, THEREFORE, DO NOT FIND SUBSTANCE IN THE ARGUMENT S ADVANCED AND UPHOLD THE DECISION OF THE ASSESSING OFFICER. G ROUNDS OF APPEAL NOS. 1 & 2 ARE REJECTED. 5. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING BEFORE US, SHRI S.N. DIVE TIA, ADVOCATE APPEARING ON BEHALF O ASSESSEE CONTENDED THAT IN THE ASSESSMENT ORDER, TH E ASSESSING OFFICER HAS ASSESSED THE ENTIRE RECEIPT AS M.L.A. FROM GUJARAT GOVERNMENT UNDER THE HEAD INCOME FROM OTHER SOURCES. THE 3 ITA NO. 1363/AHD/200 4 SAID INCOME INCLUDES THE ALLOWANCES, I.E. TELEPHONE ALLOWANCE RS.36,000/-, PETROL CHARGES RS.19,200/- AND PERSONAL ASSISTANT ALLOWANCES RS.28 ,800/-. BEFORE THE ASSESSING OFFICER, THE ASSESSEE CONTENDED THAT HE HAS INCURRED THE AFORESA ID EXPENSES DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THE ASSESSING OFFICER BE DIRECTED TO ALLOW THE SAME. 7. ON THE OTHER HAND, SHRI ANAND MOHAN, SR. D.R. AP PEARING ON BEHALF OF REVENUE VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW . 8. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUT HORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. IT IS PERTINENT TO NOTE THAT IN T HE ASSESSMENT ORDER, THE A.O. OUT OF TOTAL RECEIPT OF RS.1,20,000/- [FROM SALARY RS.18,000/-, CONSOLID ATED ALLOWANCE RS.18,000/-, TELEPHONE RS.36,000/-, POSTAL CHARGES RS.19,200/- AND PERSONA L ASSISTANCE ALLOWANCE RS.28,800/-], ALLOWED THE EXEMPTION UNDER SECTION 10(17)(III) OF RS.24,00 0/-. ACCORDING TO ASSESSEE, THE TOTAL EXPENSES ACTUALLY INCURRED BY HIM AS PER DETAILS FURNISHED B EFORE THE A.O. IS RS.49,080/-. IT IS PERTINENT TO NOTE THAT IN THE ASSESSMENT ORDER, THE A.O. HAS TAX ED ALL THE ALLOWANCES UNDER THE HEAD INCOME FROM OTHER SOURCES. SECTION 10(17) OF THE INCOME TAX ACT READS AS UNDER :- INCOMES NOT INCLUDIBLE IN TOTAL INCOME ANY INCOME BY WAY OF (I) DAILY ALLOWANCE RECEIVED BY ANY PERSON BY REASON OF HIS MEMBERSHIP OF PARLIAMENT OR OF ANY STATE LEGISLATUR E OR OF ANY COMMITTEE THEREOF; (II) ANY ALLOWANCE RECEIVED BY ANY PERSON BY REASON OF H IS MEMBERSHIP OF PARLIAMENT UNDER THE MEMBERS OF PARLI AMENT (CONSTITUENCY ALLOWANCE) RULES, 1986; (III) ANY CONSTITUENCY ALLOWANCE RECEIVED BY ANY PERSON B Y REASON OF HIS MEMBERSHIP OF ANY STATE LEGISLATURE UNDER ANY A CT OR RULES MADE BY THAT STATE LEGISLATURE. 9. A BARE READING OF SUB-SECTION (17) OF SECTION 10 OF THE INCOME TAX ACT, 1961 INDICATES THAT IT PROVIDES FOR EXEMPTION IN RESPECT OF ALLOWA NCES RECEIVED BY ANY PERSON BY REASON OF HI MEMBERSHIP OF PARLIAMENT OR OF ANY STATE LEGISLATUR E. THE AMOUNTS PAID FOR EXPENSES SUCH AS TELEPHONE AND POSTAL CHARGES, TO THIS EXTENT ARE NO T TAXABLE. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ALREADY ALLOWED RS.24,000/-. SINCE IN THE ASSESSMENT ORDER, THE ASSESSING 4 ITA NO. 1363/AHD/200 4 OFFICER HAS ALREADY ALLOWED RS.24,000/-, THEREFORE, IN OUR OPINION, IT WILL MEET THE END OF JUSTICE IF ASSESSING OFFICER IS DIRECTED TO ALLOW FURTHER A MOUNT OF RS.25,080/-. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 16.04.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16/ 04 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.