ACIT, New Delhi V. Mr. T. Hosoi, New Delhi

ITA 1696/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58943 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 05-03-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 07-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C B SINGH
• Assessee Lawyers: DR RAKESH GUPTA; S KOCHHAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `H : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.1695/DEL./2011 (ASSESSMENT YEAR : 1996-97) ACIT, CIRCLE 47(1), VS. M. INOVE, NEW DELHI. C/O KOCHHAR & CO., ADVOCATES & LEGAL CONSULTANTS, 11 TH FLOOR, TOWER A, DLF TOWERS, JASOLA DISTRICT CENTRE, NEW DELHI. (PAN/GIR NO.N.A.) AND ITA NOS.1696/DEL./2011 (ASSESSMENT YEAR : 1996-97) ACIT, CIRCLE 47(1), VS. T. HOSOI, NEW DELHI. C/O KOCHHAR & CO., ADVOCATES & LEGAL CONSULTANTS, 11 TH FLOOR, TOWER A, DLF TOWERS, JASOLA DISTRICT CENTRE, NEW DELHI. (PAN/GIR NO.N.A.) (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, ADV. & S. KOCHHAR, CA REVENUE BY : SHRI C.B. SINGH, SR.DR ORDER PER U.B.S. BEDI, J.M. THESE TWO APPEALS OF THE REVENUE ARE DIRECTED IN THE CASE OF TWO DIFFERENT ASSESSEES AGAINST THE ORDERS PASSED BY THE CIT(A)-X XX, NEW DELHI DATED 24.01.2011, RELEVANT TO ASSESSMENT YEAR 1996-97, WHEREBY THROUG H COMMON GROUNDS, THE DEPARTMENT I.T.A. NOS.1695 & 1696/DEL./2011 (A.Y. : 1996-97) 2 HAS CHALLENGED THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER BY TREATING THE EMPLOYERS CONTRIBUTION TO PENSION PLAN, INSURANCE PLAN AS PERQUISITE IN THE HANDS OF THE ASSESSEE U/S 17 OF THE I.T. ACT, 1961 AND NOT CONSI DERING AND DISCUSSING IN THE APPELLATE ORDER THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM, WITH REFERENCE TO WELFARE PENSION SCHEME, THAT HE WAS NOT ENTITLED TO ANY BENEFIT TIL L HE ATTAINS THE AGE OF 65 OR TILL HIS DEATH AND IN SUCH CIRCUMSTANCES, CASE LAWS RELIED UPON BY THE ASSESSEE AND MENTIONED IN THE APPELLATE ORDER DO NOT APPLY TO THESE CASES. 2. THESE APPEALS WERE HEARD TOGETHER AND INVOLVED I DENTICAL FACTS AND SIMILAR ISSUE. THEREFORE BEING DISPOSED OF BY SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 3. BRIEF FACTS INDICATE THAT THREE EMPLOYEES OF MIT SUSHITA ELECTRIC INDUSTRIAL COMPANY, JAPAN (INDIA LIAISON OFFICE) (HEREINAFTER REFERRED TO AS MEI) WORKED IN INDIA DURING THE YEAR 1995-96 RELEVANT TO ASSESSMEN T YEAR 1996-97. DURING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE AS SESSING OFFICER MADE CERTAIN ADDITIONS IN RESPECT OF PAYMENTS MADE BY MEI ON ACCOUNT OF - A. HEALTH INSURANCE B. WELFARE PENSION INSURANCE C. EMPLOYMENT INSURANCE; AND D. EMPLOYMENT PENSION INSURANCE 4. ON FILING OF APPEAL, THE CIT(A) DELETED THE ADDI TION MADE BY THE ASSESSING OFFICER EXCEPT TO THE EXTENT OF RS.10,000/- RELATIN G TO TAX PREPARATION FEES. HOWEVER, THE TAX DEPARTMENT WENT INTO APPEAL BEFORE THE ITAT. T HE ENTIRE SEQUENCE OF EVENTS WAS SUMMARIZED BY THE ASSESSEE IN TABULAR FORM AS GIVEN BELOW: I.T.A. NOS.1695 & 1696/DEL./2011 (A.Y. : 1996-97) 3 PARTICULARS MR. T. HOSOI MR. M. INOUE MR. T. ADACHI ASSESSMENT YEAR 1996-97 1996-97 1996-97 DATE OF FILING RETURN OF INCOME 19 TH JUNE 1996 24 TH JUNE 1996 19 TH JUNE 1996 RETURNED INCOME RS.1,951,200 RS.3,085,720 RS.2,024, 871 VOLUNTARY DISCLOSURE OF FURTHER INCOME RS.4,486,017 RS.7,138,122 RS.3,231,992 ADDITIONS TO INCOME MADE BY THE ASSESSING OFFICER (A.O.) IN THE REVENUE AUDIT 1 SOCIAL SECURITY SCHEME HEALTH INSURANCE WELFARE PENSION INSURANCE EMPLOYMENT INSURANCE EMPLOYMENT PENSION INSURANCE 2. TAX PREPARATION EXPENSES 1 SOCIAL SECURITY SCHEME HEALTH INSURANCE WELFARE PENSION INSURANCE EMPLOYMENT INSURANCE EMPLOYMENT PENSION INSURANCE 2. TAX PREPARATION EXPENSES 1 SOCIAL SECURITY SCHEME HEALTH INSURANCE WELFARE PENSION INSURANCE EMPLOYMENT INSURANCE EMPLOYMENT PENSION INSURANCE 2. TAX PREPARATION EXPENSES AMOUNT OF ADDITION MADE BY THE A.O. SOCIAL SECURITY SCHEME TAX PREPARATION EXPENSES SOCIAL SECURITY SCHEME TAX PREPARATION EXPENSES SOCIAL SECURITY SCHEME TAX PREPARATION EXPENSES RECOMPUTED INCOME RS.8,793,186 RS.11,980,790 RS.6,0 67,876 APPEAL FILED BEFORE 1 ST APPELLATE AUTHORITY (THE COMMISSIONER OF INCOME TAX YES YES YES I.T.A. NOS.1695 & 1696/DEL./2011 (A.Y. : 1996-97) 4 (APPEALS)-CIT(A) ORDER OF CIT(A) ALLOWED THE RELIEF EXCEPT RS.10,000 RELATING TO TAX PREPARATION EXPENSES ALLOWED THE RELIEF EXCEPT RS.10,000 RELATING TO TAX PREPARATION EXPENSES ALLOWED THE RELIEF EXCEPT RS.10,000 RELATING TO TAX PREPARATION EXPENSES APPEAL BY THE REVENUE DEPARTMENT AGAINST THE ORDER OF THE CIT(A) TO THE 2 ND APPELLATE AUTHORITY (THE INCOME TAX APPELLATE TRIBUNAL (ITAT) YES YES YES ACTION BY ITAT NO ONE APPEARED ON BEHALF OF THE ASSESSEE REMANDED BACK TO A.O. SECOND GROUND OF LITIGATION NOW LISTED BEFORE THIS OFFICE NO ONE APPEARED ON BEHALF OF THE ASSESSEE REMANDED BACK TO A.O. SECOND GROUND OF LITIGATION NOW LISTED BEFORE THIS OFFICE SHRI V.S. RASTOGI APPEARED ON BEHALF OF THE ASSESSEE ORDER IN FAVOUR OF THE ASSESSEE IN TERMS OF CIT(A) ORDER ABOVE. 5. LD.AR OF THE ASSESSEE SUBMITTED BEFORE THE FIRST APPELLATE AUTHORITY THAT CASE OF THE ASSESSEE IS A COVERED MATTER IN TERMS OF ITAT BENCH A, DELHI ORDER DATED 30.11.2005 IN APPEAL NO. I.T.A. NO.2381/DEL./2000 P ASSED IN THE CASE OF THIRD EMPLOYEE (T. ADACHI) MENTIONED ABOVE. FURTHER, THE DEPARTME NT DID NOT GO IN APPEAL AFTER THE MATTER RELATING TO T. ADACHI WAS SETTLED. 6. LD.AR OF THE ASSESSEE HAS DRAWN ATTENTION TO PAR AS. 9 & 10 ON PAGES 5 & 6 OF ITAT, A BENCH, DELHI, ORDER RELATING TO T. ADACHI , WHICH READS AS UNDER: WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE T RIBUNAL IN THE CASE OF THOMAS WILLIAM FARREL AND YOSHIO KUBO (SUPRA). THE CASE OF THOMAS WILLIAM FARREL RELATED TO EMPLOYEES, WHO WERE NATIONAL OF U NITED STATES OF AMERICA AND HAD BEEN SENT TO INDIA ON EMPLOYMENT. THE PAYMENTS CONCERNED WERE SIMILAR TO THE PAYMENTS WITH WHICH WE ARE CONCERNED IN THE PRE SENT APPEAL. THE TRIBUNAL FOUND SUCH PAYMENTS TO BE PART OF THE SOCIAL SECURI TY SCHEME OF USA. IN THE PRESENT CASE ALSO THERE IS A FINDING RECORDED BY TH E CIT (A) THAT THE CONTRIBUTIONS I.T.A. NOS.1695 & 1696/DEL./2011 (A.Y. : 1996-97) 5 MADE BY THE 'MEI OF JAPAN ARE PART OF THE SOCIAL S ECURITY PLAN FORMULATED BY GOVERNMENT OF JAPAN IN WHICH THE PARTICIPATION OF E MPLOYERS AND THE EMPLOYEES IS MANDATORY. THE TRIBUNAL FURTHER FOUND THAT THE A BOVE ORDERS THAT THE BENEFITS UNDER THE PENSION SCHEMES VEST WITH THE EMPLOYEES O NLY WHEN THEY ATTAIN THE AGE OF SUPERANNUATION. IN FACT, THE CASE OF YOSHIO KUBO (SUPRA) WAS A CASE OF JAPANESE NATIONAL' WHO WAS AN EMPLOYEE OF M/S SONY CORPORATION OF JAPAN AND WAS DEPUTED TO RENDER SERVICES TO M/S SONY INDIA LT D., IT WAS NOTICED FROM THE DATE OF THE WELFARE PENSION SCHEME THAT: (A) THE CONTRIBUTION WAS COVERED BY THE WELFARE PEN SION LAW ENACTED BY THE GOVERNMENT OF JAPAN. (B) THE EMPLOYERS HAVING AT LEAST FIVE EMPLOYEES WE RE REQUIRED TO REGISTER WITH THE PENSION FUND AUTHORITIES AND BOTH THE EMPLOYER AND THE EMPLOYEE WERE REQUIRED TO CONTRIBUTE TO THE PENSION INSURANCE SCHEME. (C) THE MONTHLY CONTRIBUTION OF BOTH THE EMPLOYER A ND THE EMPLOYEES WERE TO BE DEPOSITED WITH THE NATIONAL BANK OF JAPA N. (D) THE BENEFIT FROM THE SCHEME TOOK THE FORM OF AN NUITY PAYMENT UNTIL DEATH AND THE INDIVIDUAL EMPLOYEES WERE ELIGI BLE TO RECEIVE THE FIRST TIER OF BENEFITS FROM THE WELFARE PENSION PLAN ONLY ON ATTAINING THE AGE OF 65 AND NOT PRIOR TO IT. E) THE CONTRIBUTION OF THE EMPLOYER WAS NOT REFUND ABLE. 10. IT WAS ON PERUSAL OF THE SOCIAL SECURITY SCHEME AND AFTER NOTICING THE SALIENT FEATURES THEREOF THAT THE TRIBUNAL HELD THA T BEFORE ATTAINING THE AGE OF 65 OR BEFORE DEATH, NEITHER THE ASSESSEE NOR HIS SURVIVOR S WERE ENTITLED TO GET ANY BENEFIT FROM THE SCHEME AND AT THE MOST THE EMPLOYEE ONLY H AD A CONTINGENT RIGHT WHICH CANNOT ATTRACT SECTION 17(2)(V) OF THE ACT. THE TRI BUNAL ALSO NOTICED THE SALIENT FEATURES OF THE WELFARE INSURANCE SCHEME AND HELD T HAT ANY BENEFITS ACTUALLY OBTAINED OR RECEIVED BY THE ASSESSEE UNDER THE SCHE ME DURING THE RELEVANT PREVIOUS YEAR WILL HAVE TO BE ASSESSED AS PER THE P ROVISIONS OF SEC. 17(2)(V) OF THE ACT. IN ALL OTHER RESPECTS, THE DECISION OTHERWISE WAS THAT THE ASSESSEE DID NOT GET ANY VESTED RIGHT IN SUCH CONTRIBUTIONS WHEN THEY WE RE ACTUALLY MADE.' 7. THE ASSESSEE HAS ALSO DRAWN ATTENTION TO THE HON BLE SUPREME COURT CASE OF CIT, KERALA & COIMBATORE VS. L.W. RUSSEL (1964) 53 I.T.R . 91 (SC), CIT VS. NHK JAPAN BROADCASTING CORPORATION (2007) 291 I.T.R. 331 (DEL .) AND JCIT, SPECIAL RANGE 30 VS. I.T.A. NOS.1695 & 1696/DEL./2011 (A.Y. : 1996-97) 6 PRAMOD BHASIN (2006) 8 SOT 72 (DEL.) WHEREIN THE SA ME LEGAL ISSUE IS DEALT WITH IN DETAIL. 8. THE CIT(A) DELETED THE IMPUGNED ADDITION WHILE AGREEING WITH THE SUBMISSION MADE BY THE ASSESSEES LD.AR. AGAINST WHICH DEPART MENT HAS COME UP IN APPEAL AND LD.AR. OF THE ASSESSEE, AT THE VERY OUTSET, SUBMITT ED THAT SINCE CASE OF THE ASSESSEE HAS BEEN DECIDED BY CIT(A) IN TERMS OF TRIBUNALS DECIS ION IN THE CASE OF T. ADACHI DATED 30.11.2005 AND NO OTHER HIGHER COURT DECISION OR AN Y CONTRARY MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVNEUE. THEREFORE, CONCLUSION AS DRAWN BY THE CIT(A) NEEDS TO BE CONFIRMED WHICH MAY BE CONFIRMED. 9. LD.DR RELIED UPON THE ORDER OF THE ASSESSING OFF ICER TO PLEAD FOR SETTING ASIDE THE ORDER OF CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER. 10. AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E MATERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON, WE FIND THAT CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING ITAT DECISION IN ONE OF THE THREE EMPLOYE ES (TWO OF THEM ARE RESPONDENTS BEFORE THIS BENCH) AND NEITHER ANY CONTRARY MATERIA L HAS BEEN PLACED ON RECORD NOR ANY HIGHER COURTS ORDER REVERSING THE ORDER OF THE TRIB UNAL IN THIRD EMPLOYEES CASE HAS BEEN PLACED ON RECORD. THEREFORE, WE DO NOT FIND ANY RE ASON TO INTERFERE IN THE ORDER PASSED BY THE CIT(A) BECAUSE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF ITAT, ORDERS OF LD.CIT(A) IN BOTH THESE CASES ARE UPHELD AND APPEALS OF REVENUE GETS DISMISSED. I.T.A. NOS.1695 & 1696/DEL./2011 (A.Y. : 1996-97) 7 11. AS SUCH, BOTH THE APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23/03/2012. SD/- SD/- (K.G. BANSAL) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : MARCH 23, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXX, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT