S.Srinivasan, Tuticorin V. ITO, Tuticorin

ITA 1480/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7767 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 25-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B NAVEEN KUMAR
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Salary income
• Section: 143(3); 10(14)

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC C BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1480/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) SHRI S. SRINIVASAN, SUBAM, 97/G/C/5, TEACHERS COLONY, 2 ND STREET, 9-A, PALAYAMCOTTAI ROAD, WEST, TUTICORIN 628008 VS THE INCOME TAX OFFICER, WARD-4, TUTICORIN PAN: AWUPS5614C ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI V.S. JAYAKUMAR, ADVOCATE /RESPONDENT BY : SHRI B. NAVEEN KUMAR, JCIT ! /DATE OF HEARING : 06.02.2017 '# ! /DATE OF PRONOUNCEMENT : 23.02.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, MADURAI DATED 23.03.2016 IN ITA NO.0018/2015-16 PASSED U/S. 250(6) R.W.S.143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUND S IN HIS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD. CIT(A ) HAS ERRED IN UPHOLDING THE 2 I.T.A. NO.1480/MDS/2016 ORDER OF THE LD. AO WHO HAVE DISALLOWED THE EXEMPTI ON U/S. 10(14) OF THE ACT, THEREBY RESULTING IN ADDITION OF RS.35,54,456/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL EARNING SALARY INCOME FROM M/S. HALLIBURTON OFFSHORE SERVIC ES INC., MUMBAI FILED HIS RETURN FOR THE RELEVANT ASSESSMENT YEAR ON 30.08.20 12 ADMITTING HIS INCOME AS RS.8,55,743/-. INITIALLY, THE RETURN WAS PROCES SED U/S. 131(1) OF THE ACT, AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THEREAFTER THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 30.03.2015 WHEREIN THE LD. AO MADE CERTAIN ADDITION S, AMONGST WHICH ONE OF THE ADDITION WAS DUE TO DISALLOWANCE OF EXEMPTION C LAIMED BY THE ASSESSEE U/S.10(14) OF THE ACT WITH RESPECT TO OFFSHORE BONU S RECEIVED AMOUNTING TO RS.35,54,456/-. THE REASONS FOR THE DISALLOWANCE MA DE BY THE LD. AO ARE AS FOLLOWS: 1. THE EXEMPTION U/S. 10(14) OF THE ACT WAS NOT ALL OWED BY THE TAX- DEDUCTOR VIZ., THE EMPLOYER OF THE ASSESSEE IN THE FORM 16A AT THE TIME OF PAYMENT OF SALARY. 2. THE FINANCIAL MANAGER OF THE EMPLOYER COMPANY DI D NOT CONFIRM THE NATURE OF PAYMENT, HENCE IT COULD NOT BE ASCERTAINE D WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 10(14) OF T HE ACT. 3. THE PAY SLIP OF THE ASSESSEE CLEARLY MENTIONS TH AT THE PAYMENT IS ONLY TOWARDS OFFSHORE BONUS AND NOT OFFSHORE ALLOWANCE A S CLAIMED BY THE ASSESSEE. 3 I.T.A. NO.1480/MDS/2016 4. THE ASSESSEE HAD NOT CLAIMED SUCH DEDUCTION FOR THE EARLIER ASSESSMENT YEARS AGAINST SUCH PAYMENT RECEIVED. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE LD. AO BY OBSERVING AS UNDER: 3.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRE SENTATIVE AND PERUSED THE ASSESSMENT ORDER. ADMITTEDLY, THE APPELLANT REC EIVED OFFSHORE BONUS ON WHICH TAX WAS DEDUCTED AT SOURCE BY EMPLOYER WITHOU T ALLOWING ANY EXEMPTION. EVEN WHILE FILING RETURNS FOR ASSESSMENT YEARS 2008-09 TO 2010- 11, THE APPELLANT OFFERED THE OFFSHORE BONUS FOR TA XATION. ONLY FROM ASSESSMENT YEAR 2010-11 ONWARDS, THE APPELLANT CLAI MED THAT OFFSHORE BONUS IS EXEMPT U/S. 10(14)(II). AS PER SEC.10(14)(II) ON LY THE PRESCRIBED ALLOWANCES TO THE EXTENT PRESCRIBED ARE EXEMPT FROM TAX. HOWEVER, AS PER RULE 2 BB(2) OFFSHORE BONUS IS NOT EXEMPT U/S 10(14)( II). THE REPRESENTATIVE RELIED ON THE PROVISO TO SECTION 10(14)(II) TO ARGU E THAT LIMITS PRESCRIBED IN RULE 2 BB(2) SHALL NOT BE APPLICABLE IN A CASE WHERE THE PROVISO IS APPLICABLE. I FIND THAT THIS ARGUMENT OF THE ASSES SEE IS TOTALLY MISPLACED. 3.3.1 AS PER SECTION 10(14)(II) ONLY SUCH ALLOWANCE S WHICH ARE PRESCRIBED IN RULE 2BB(2) TO THE EXTENT SPECIFIED IN THE ABOVE RULE ARE EXEMPT. WHEN THE PROVISO TO SECTION 10(14)(II) IS INVOKED, THE A SSESSEE WILL NOT GET ANY EXEMPTION AT ALL AS NO EXEMPTION CAN BE ALLOWED IN RESPECT OF PERSONAL ALLOWANCES TO REMUNERATE OR COMPENSATE FOR PERFORMI NG DUTIES UNLESS SUCH ALLOWANCE IS RELATED TO THE PLACE OF HIS POSTING OR RESIDENCE. THIS MEANS THAT WHEN THE PROVISO IS INVOKED, THE APPELLANT WILL NOT GET ANY EXEMPTION AND THE ARGUMENT OF THE REPRESENTATIVE THAT WHEN THE PROVIS O IS INVOKED THE LIMITS PRESCRIBED UNDER RULE 2BB(2) CANNOT BE APPLIED IS TOT ALLY MISCONCEIVED. I, THEREFORE, FIND THAT THE ASSESSING OFFICER HAS CORR ECTLY TAXED THE BONUS AS THE TERM SALARY INCLUDES BONUS AND THE SAME IS NOT EX EMPT UNDER ANY PROVISION OF THE IT ACT. THE ADDITION IS CONFIRMED. 5. BEFORE US, THE LD. AR SUBMITTED THAT THE ASSESSE E HAD RECEIVED THE ALLOWANCE / BONUS, BE WHATEVER NAME IT MAY BE CALLE D, SPECIFICALLY TO MEET THE 4 I.T.A. NO.1480/MDS/2016 EXPENSES EXCLUSIVELY INCURRED FOR PERFORMING HIS OF FICIAL DUTIES. HE FURTHER REQUESTED THAT THE MATTER MAY BE REMITTED BACK TO T HE FILE OF THE LD. AO, SO THAT THE ASSESSEE WOULD BE ABLE TO PRODUCE THE BILL S AND VOUCHERS EVIDENCING THE EXPENSES INCURRED BY HIM DURING THE COURSE OF E MPLOYMENT. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD PERFORMED HIS DUTIE S OFFSHORE DUE TO WHICH SUCH BENEFITS WAS EXTENDED BY THE EMPLOYER CONSIDER ING THE EXPENDITURE HE HAS TO INCUR SOLELY FOR PERFORMING HIS OFFICIAL DUT IES. THE LD. AR ALSO RELIED ON THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL I N ITA NO.425/MDS/2016, ORDER DATED 06.05.2016, WHEREIN THE TRIBUNAL HAD TA KEN A LIBERAL VIEW CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE ON THE IDENTICAL ISSUE. 6. THE LD. DR ON THE OTHER HAND VEHEMENTLY ARGUED I N SUPPORT OF THE ORDERS OF THE REVENUE AUTHORITIES AND REQUESTED FOR CONFIRMING THEIR ORDERS. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON THE RECORD. ON READING THE PROVISIONS OF SECTION 10(14) OF THE ACT, I FIND MERIT IN THE SUBMISSION OF THE LD. AR. THE PROVISIONS OF SECTION 2(14)(I) AND (II) OF THE ACT, SPECIFICALLY PROVIDE EXEMPTION TOWARDS ANY SPECIAL ALLOWANCE OR BENEFITS RECEIVED BY THE ASSESSEE IN O RDER TO MEET HIS EXPENSES INCURRED EXCLUSIVELY FOR PERFORMING HIS OFFICIAL DU TIES OR FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. THUS THERE IS NO SCOPE F OR THE ASSESSEE TO ENRICH HIMSELF FROM SUCH BENEFIT DERIVED FROM THE EMPLOYER . NOW, IT IS UP TO THE ASSESSEE TO ESTABLISH THAT THE ASSESSEE HAS INCURRE D CERTAIN EXPENDITURE 5 I.T.A. NO.1480/MDS/2016 TOWARDS WHICH HE HAS RECEIVED OFFSHORE BONUS / ALLO WANCES. SINCE THE LD. AR HAD REQUESTED TO REMIT THE MATTER BACK TO THE LD. A O FOR VERIFYING THIS ASPECT, I DO NOT FIND ANY HARM IN COMPLYING WITH HIS REQUEST. THEREFORE IN THE INTEREST OF JUSTICE, I HEREBY REMIT THE MATTER BACK TO THE F ILE OF LD. AO AFRESH AND ALSO CONSIDER THE MATTER IN A REALISTIC MANNER BY EXAMIN ING THE EXPENSES INCURRED BY THE ASSESSEE AND THEREAFTER ALLOW EXEMPTION IN A CCORDANCE WITH MERIT AND LAW. WHILE DOING SO, THE LD. AO SHALL ALSO TAKE CUE FROM THE ORDER OF THE TRIBUNAL CITED BY THE LD. AR SUPRA. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE COURT ON THE 23 RD FEBRUARY, 2017. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER $% /CHENNAI, &' /DATED 23 RD FEBRUARY, 2017 JR. ' )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. *-. / /DR 6. .0 /GF.