Hira Lal Agarwal, New Delhi V. DCIT, Circle - 1, Siliguri , Siliguri

ITA 146/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 5047 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-09-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 01-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH JCITSRDR
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 146 / KOL / 2018 ASSESSMENT YEAR :2011-12 HIRA LAL AGARWAL C/O KISHORE KUMAR LOHIA, 2 ND FLOOR, SMRITIDHAM BUILDING OPPOSITE HOTEL GATE WAY, SEVOKE ROAD, SILIGURI-734001 [ PAN NO.ACMPA 4071 B ] V/S . DCIT, CIRCLE-1, AAYAKAR BHAWAN, PARIBAHAN NAGAR, MATIGARA,SILIGURI /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SUBASH AGARWAL, ADVOCATE /BY RESPONDENT SHRI C.J. SINGH, JCIT SR-DR /DATE OF HEARING 03-09-2019 /DATE OF PRONOUNCEMENT 22-11-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2011-12 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-SILIGURIS ORD ER DATED 18.12.2017 PASSED IN CASE NO.95/CIT(A)/SLG/2015-16, INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. LEARNED COUNSEL SUBMITS AT THE OUTSET THAT THE A SSESSEE NO MORE WISHES TO PRESS FOR HIS LEGAL GROUND CHALLENGING VA LIDITY OF RE-OPENING. THE SAME IS THEREFORE REJECTED AS NOT PRESSED. 3. NEXT COMES THE LATTER ISSUE ON MERITS QUA CORREC T APPLICATION OF SEC. 10(13A) IN RESPECT OF ANY SPECIAL ALLOWANCE GRANTED TO AN ASSESSEE BY HIS EMPLOYER TO MEET EXPENDITURE ACTUALLY INCURRED ON P AYMENT OF RENT ( BY ITA NO.146/KOL/2018 A.Y. 2011- 12 HIRA LAL AGARWAL VS. DCIT CIR-1, SLG PAGE 2 WHATEVER NAME CALLED ) IN RESPECT OF RESIDENTIAL ACCOMMODATION OCCUPIED BY HIM . THERE IS NO DISPUTE THAT THE ASSESSEE PAID 12 LAKH TO HIS WIFE AS RENT @ 1 LAKH PER MONTH WHICH STANDS UPHELD IN THE CIT(A) S ORDER UNDER CHALLENGE THEREBY REVERSING THE ASSESSING OFFICERS ACTION DISALLOWING THE SAME @ 50% FOR THE REASON THAT PAYEE WIFE ALSO RESI DED IN THE VERY PREMISES. 3. IT IS IN THIS BACKDROP OF FACTS THAT WE ADVERT T O THE REMAIN ISSUE OF ABOUT CORRECT DETERMINATION ASSESSEES VARIABLE PAY OF 53,75,850/- U/S 1-(13A) OF THE ACT. BOTH THE LOWER AUTHORITIES HOLD THAT THE IMPUGNED VARIABLE PAY; RECEIVED IN NOVEMBER, 2010 ( AS PER ASSESSEES SALARY CHART IN PAGE OF 15 OF PAPER BOOK ), FORMS PART OF DEARNESS ALLOWANCE INCLUDIBLE FOR COMPUTING SEC.10(13A) EXEMPTION. LEARNED CIT(A) HAS GONE TO T HE EXTENT OF HOLDING THAT ABOVE VARIABLE PAY IS NOTHING BUT DEARNESS ALLOWANC E OR PERFORMANCE INCENTIVE WHICH IS RECEIVED ON FIXED BASIS PER MONT H. 4. WE FIND NO MERIT IN REVENUES ARGUMENTS SUPPORTI NG THE IMPUGNED INCLUSION OF ASSESSEES VARIABLE PAY FOR THE PURPOS E OF COMPUTING HIS HOUSE RENT ALLOWANCE. HIS EMPLOYER M/S OCL INDIA LTD. SUB MITTED ITS REPLY DATED 27.03.2015 MAKING IT CLEAR THAT THE SAID VARIABLE P AY IS NEITHER DEARNESS ALLOWANCE NOR A COMMISSION ON FIXED PERCENTAGE OF T HE TURNOVER AS UNDER:- SUBJECT: REQUISITION OF INFORMATION IN THE CASE OF SRI HIRA LAL AGARWAL,PAN: ACMPA 4071B FOR AY 2011-12-MATTER REG . DEAR SIR, THIS HAS REFERENCE TO YOUR ABOVE REFERRED LETTER ON THE ABOVE SAID SUBJECT. OUR POINT- WISE RESPONSE IS AS UNDER:- VARIABLE PAY (VP):- IT IS A PORTION OF THE ANNUAL COMPENSATION OF EACH EXECUTIVE WHICH IS RELATED TO AND DEPENDENT UPON TH E PERFORMANCE OF THE COMPANY / DIVISION, TEAM AND THE INDIVIDUAL. VP IS LINKED TO THE MOST CRITICAL FACTORS FOR THE YEAR LEADING TO ACHIEVEMENT OF BUSI NESS GOALS AS DEFINED FOR THAT YEAR. IN OUR CASES, FACTORS SUCH AS EBITDA, PR ODUCTION VOLUMES ETC., ARE CONSIDERED IN ADDITION TO TEAM AS WELL AS INDIVIDUA L ACHIEVEMENTS. VP IS NEITHER IN LIEU OF DA NOR A COMMISSION BASED OF FIXED % OF TURNOVER. IT IS PAID IN ACCORDANCE WITH THE TERMS OF EMPLOYME NT. THANKING YOU, YOURS FAITHFULLY, SD/-D.N.SINGH (D.N.SINGH) EXECUTIE DIRECTOR (FINANCE) & CHIEF FINANCIAL OFFIC ER. ITA NO.146/KOL/2018 A.Y. 2011- 12 HIRA LAL AGARWAL VS. DCIT CIR-1, SLG PAGE 3 ALL THIS MAKE IT SUFFICIENTLY CLEAR THAT THE LOWER AUTHORITIES HAVE ERRED IN TREATING THE ASSESSEES VARIABLE PAY AMOUNT PERTAKN G CHARACTER OF DEARNESS ALLOWANCE DESPITE THE SAME BEING RELATED TO TEAM AS WELL AS INDIVIDUAL ACHIEVEMENTS GOING BY THE RELEVANT TERMS OF APPOINT MENT. HON'BLE APEX COURTS DECISION IN GESTETNER DUPLICATORS (P) LTD. VS. COMMISSIONER OF INCOME TAX (1979) 117 ITR 1 (SC) SETTLED THE LAW LONG BACK TH AT SALARY; FOR THE PURPOSE OF COMPUTING SEC.10(13A) EXEMPTION, MEANS B ASIC SALARY INCLUDING DEARNESS ALLOWANCE AND COMMISSION BASED ON FIXED RA TES IF THE TERMS OF THE EMPLOYMENT SO PROVIDE. WE MAKE IT CLEAR THAT THE AS SESSEES TERMS OF EMPLOYMENT HAVE NOWHERE BEEN REFERRED BY THE LOWER AUTHORITIES TO THIS EFFECT. WE THUS ACCEPT THE ASSESSEES LATTER ISSUE SEEKING TO EXCLUDE THE VARIABLE PAY OF 53,75,850/- AS PART OF SALARY / DEARNESS ALLOWANCE. THE ASSESSING OFFICER IS DIRECTED TO CONSEQUENTIAL COMP UTATION AS PER LAW. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT 22/11/2019 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP )- 22 / 11 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-HIRA LAL AGARWAL C/O KISHORE KR. LOHIA, 2 ND FLOOR, SMRITIDHAM BUILDING OP. HOTE L GATE WAY, SEVOKE ROAD, SILIGURI-734001 2. /RESPONDENT-DCIT, CIR-1, AAYAKAR BHAWAN, PARIBAHANA NAGAR, B WINGH, MATIGARA, SILIGURI-734010 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ 4,