Anil Bhansali, Hyderabad V. ITO,Ward 12(2), Hyderabad

ITA 220/HYD/2014

• Counselvise Citation: 22022514 RSA 2014
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 12-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: SANJIV CHAUDHARY
• Keywords: Residential status; Salary income; Double taxation relief; Opportunity of being heard; Earning of tax free income; Services rendered outside India; Deemed to accrue or arise in india; Fair market value
• Section: 143(3); 234B; 133(6); 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE : SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.220/HYD/2014 ASSESSMENT YEAR 2007-2008 MR. ANIL BHANSALI HYDERABAD. PAN AEHPB1389J VS. INCOME TAX OFFICER, WARD 12(2) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. SANJIV CHAUDHARY FOR REVENUE : MR. RAJAT MITRA DATE OF HEARING : 25.11.2014 DATE OF PRONOUNCEMENT : 21.01.2015 ORDER PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 31.10.2013 PASSED BY THE LEARNED CIT(A), HYDE RABAD PERTAINING TO ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED, ASSESSEE AN INDIVIDUAL IS EMPLO YED WITH M/S. MICROSOFT INDIA (R & D), HYDERABAD. FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE FILED ITS RETURN OF INCOME ON 19.03.2008 DECLARING TOTAL INCOME OF RS.2,25,66,227 UNDER THE HEAD SALARY. ASSESSEE FI LED THE RETURN AS RESIDENT BUT NOT ORDINARILY RESIDENT. O N VERIFICATION OF INFORMATION AVAILABLE ON RECORD, THE A.O. NOTICE D THAT IN FORM 12BA, ASSESSEE CLAIMED TO HAVE RECEIVED PERQUI SITES AMOUNTING TO RS.1,50,29,713 BUT THE SAME WAS NOT OF FERED TO TAX THOUGH, THE EMPLOYER DEDUCTED TAX AT SOURCE ON SUCH AMOUNT. FOR FURTHER VERIFICATION, A.O. IN EXERCISE OF POWER UNDER SECTION 133(6) OF THE ACT CALLED FOR INFORMAT ION FROM 2 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. M/S. MICROSOFT INDIA AND ALSO ICICI BANK, MADHAPUR BRANCH, HYDERABAD WHEREIN THE ASSESSEE WAS HAVING HIS BANK ACCOUNT. AS PER THE INFORMATION OBTAINED FROM THE BANK, THE AO NOTICED THAT DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAS RECEIVED US $ 2 LAKH ON 24.04.2006 AND ANOTHER AMOUNT OF US $ 2 LAKH ON 24.07.2006, CONVERTED TO INDIAN R UPEE BOTH AMOUNTING IN TOTAL TO RS.1,80,76,000. ON THE BASIS OF THE AFORESAID BANK STATEMENT AND THE INFORMATION SUBMIT TED BY MICROSOFT INDIA LTD., IN THEIR LETTER DATED 10.03.2 009, THE AO FORMED A BELIEF THAT THE AMOUNT OF RS.1,80,76,000 R ECEIVED BY THE ASSESSEE WHICH IS MORE THAN THE VALUE OF PERQUI SITE DECLARED BY THE ASSESSEE HAS ESCAPED ASSESSMENT. AC CORDINGLY, ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SEC TION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148. THE GIST OF REASONS RECORDED BY THE AO FOR REOPENING THE ASSESS MENT ARE AS UNDER : WHEN THE RECEIPTS ARE ABOUT RS.1,80,76,000 APART F ROM THE OTHER CREDIT IN THE BANK ACCOUNT THE ASSESSEE C LAIMED THE VALUE OF THE PERQUISITES AT RS.1,34,06,282 LEAV ING A DIFFERENCE OF RS.46,69,717 WHICH REQUIRES CONSIDERA TION AS UNEXPLAINED INCOME. THOUGH THE ASSESSEE CLAIMED THE VALUE OF PERQUISITE S AT RS.1,34,06,283 AS EXEMPTED INCOME NOT LIABLE TO TAX , HIS EMPLOYER CONSIDERED THE VALUE OF PERQUISITES AMOUNT ING TO RS.1,50,29,713 AS CLEAR TAXABLE PORTION OF SALARY A ND DEDUCTED THE TAX THEREON ON RECEIPT BASIS, AS PER I T LAW. THE SAME POINT OF VIEW WAS REITERATED BY THE MICROS OFT INDIA (R&D) PRIVATE LTD. IN ITS LETTER DT.10.03.09 ALSO. 3. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148, THE ASSESSEE FILED A LETTER BEFORE THE A.O. ON 23.09.2009 REQUESTING TO TREAT THE RETURN FILED ORIGINALLY AS A RETURN IN RESPONSE TO NOTICE UNDER SECTION 148. IN COURSE OF ASSESSMENT PROCEEDINGS, IN RESPONSE TO THE QUERY RAISED BY THE A.O. 3 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. ASSESSEE SUBMITTED THAT THE STOCK OPTION TRANSFER P ROCEEDS (IN SHORT SOTP) WHICH VESTED WITH THE ASSESSEE IN F.Y. 2006- 07 WERE GRANTED TO HIM BY MICROSOFT CORPORATION, US A UNDER WHOSE EMPLOYMENT THE ASSESSEE THE THEN WAS BETWEEN AUGUST, 2002 AND SEPTEMBER, 2005. IT WAS SUBMITTED THAT THE SE STOCK AWARDS WERE RECEIVED BY THE ASSESSEE IN HIS U.S. BR OKERAGE ACCOUNT AND PERTAINS TO THE SERVICES RENDERED BY HI M IN USA AND INDIA. IT WAS SUBMITTED THAT ASSESSEE WAS NOT O RDINARILY RESIDENT IN INDIA DURING THE F.Y. 2006-07 AND ACCOR DINGLY, THE TAXABLE PORTION OF STOCK AWARDS HAS BEEN COMPUTED B ASED ON THE PERIOD OF HIS SERVICES IN INDIA BETWEEN THE DAT E OF GRANT AND VEST AND THE PORTION OF STOCK AWARD PERTAINING TO HIS SERVICES IN USA HAS BEEN CLAIMED AS EXEMPT. IN SUPP ORT OF SUCH CLAIM, ASSESSEE SUBMITTED THE DETAILS OF HIS S TAY IN INDIA DURING THE SEVEN PREVIOUS YEAR PRECEDING FINANCIAL YEAR 2006- 07 AND ALSO RELIED UPON THE PROVISIONS OF INCOME TA X ACT AS WELL AS INDO-USA DTAA TO CLAIM THAT IN CASE OF A PE RSON WHO IS NOT ORDINARILY RESIDENT, ONLY THE INCOME ACCRUING O R ARISING IN INDIA CAN BE TAXABLE IN INDIA IN TERMS OF SECTION 5 (1)(C.) AND SECTION 9(1) (II) OF THE ACT. THE ASSESSEE ALSO SUB MITTED THAT ACCORDING TO THE PROVISIONS OF THE ACT AND INDO-US DTAA THE ASSESSEE HAS COMPUTED HIS INCOME BY TAKING INTO ACC OUNT THE TAXABLE INCOME WHICH ACCRUED AND AROSE IN INDIA. TH E A.O. THOUGH ACCEPTED THE FACT THAT THE ASSESSEE IS NOT O RDINARILY RESIDENT IN INDIA AS HIS STAY IN INDIA DURING THE L AST SEVEN YEARS PRECEDING FINANCIAL YEAR 2006-07 IS LESS THAN 730 DAYS BUT HE DID NOT ACCEPT ASSESSEES CONTENTION THAT TH E SOTP WHICH VESTED WITH THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE ACTUA LLY RELATE TO THE PERIOD HE WAS UNDER EMPLOYMENT OF MS, USA AN D WAS 4 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. STAYING IN USA. HENCE, EXEMPT FROM TAX IN INDIA. TH E A.O. RELYING UPON THE INFORMATION OBTAINED FROM MICROSOF T INDIA, CONCLUDED THAT THE EMPLOYER HAD RIGHTLY DEDUCTED TD S AND THE PERQUISITES OF RS.1.33 CRORES AS AGAINST RS.1,50,29 ,712 AS CLAIMED IN FORM NO.12BA WHICH ALSO INCLUDES AN AMOU NT OF RS.49,000 TOWARDS ACCOMMODATION. THE A.O. ALSO REJE CTED ASSESSEES RELIANCE UPON FBT PROVISIONS AND OECD MO DEL TAX, 2010 BY OBSERVING THAT THIS PROVISIONS ARE APPLICAB LE FOR A.Y. 2008-09 ONWARDS. AS FAR AS THE INDO-US DTAA IS CONC ERNED, THE A.O. OBSERVED THAT THE ASSESSEE HAD NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT TAX WAS PAID IN USA AND M OREOVER, THE EMPLOYER WAS NOT AWARE OF ANY TAX PAID BY THE A SSESSEE. THUS, THE A.O. CONCLUDED THAT THE AMOUNT OF RS.1,49 ,80,713 BEING THE STOCK AWARD/SOTP HAS TO BE TREATED AS INC OME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. 4. FURTHER, THE A.O. OBSERVED THAT AS PER THE ICIC I BANK STATEMENT, THE TOTAL CREDITS ARE TO THE TUNE O F RS.1,80,76,000 WHEREAS, AS PER FORM NO.16, THE AMOU NT SHOWN TOWARDS PERQUISITES IS RS.1,49,80,713 THEREBY , LEAVING A BALANCE OF RS.30,46,287 WHICH REQUIRED CLARIFICATIO N FROM THE ASSESSEE. IN THIS REGARD, THE ASSESSEE SUBMITTED TH AT THOUGH AS PER THE BANK STATEMENT, ASSESSEE RECEIVED THE AM OUNT OF RS.1,80,76,000 IN INDIA DURING F.Y. 2006-07, BUT TH E SAME WAS IN THE NATURE OF MERE REMITTANCE INTO INDIA THR OUGH NORMAL BANKING CHANNEL FROM ASSESSEES POST TAX SAV INGS LOCATED IN USA AND DOES NOT REPRESENT/INCLUDE ANY I NCOME EITHER UNDER THE HEAD SALARY OR ANY OTHER HEAD OF INCOME IN INDIA DURING F.Y. 2006-07. HENCE, THE REMITTANCES W ERE NOT OFFERED TO TAX. THE A.O. HOWEVER, WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. ACCORDINGLY, THE A.O. MADE THE 5 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. ADDITIONS OF RS.1,49,80,713 AND RS.30,46,287 TO THE INCOME RETURNED BY THE ASSESSEE WHICH RESULTED IN DETERMIN ATION OF TOTAL INCOME AT RS.4,05,93,227. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LEA RNED CIT(A). HOWEVER, LEARNED CIT(A) PASSED THE IMPUGNED ORDER C ONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER. BEING AGGRIEVED OF THE ORDER PASSED BY LEARNED CIT(A) ASSESSEE IS IN A PPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCO E TAX (APPEALS)-V, HYDERABAD [HEREAFTER REFERRED TO 'LD. CIT(A)], HAS GROSSLY ERRED IN CONFIRMING THE ENTIRE ADDITION OF RS. 1,80,27,000 MADE BY LEARNED INCOME TAX OFFICER, WARD 12(2) HYDERABAD ('LD. AO') UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT BY PASSING THE IMPUGNED ON-SPEAKING ORDER (DATED 31 ST OCTOBER 2013) WITHOUT CONSIDERING AND DISCUSSING TH E FACTUAL AND LEGAL SUBMISSION MADE BY THE APPELLANT. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATIN G THE FACT THAT LD. AO, WHILE ADMITTING THAT THE ASSESSEE WAS 'NOT ORDINARY RESIDENT DURING SUBJECT ASSESSMENT YEAR, HAS WRONGLY HELD THAT THE PROVISIONS OF THE S ECTION 5(1)(C) AND SECTION 9(1)(II) OF THE ACT ARE NOT APP LICABLE TO THE APPELLANT. 3.(A) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRM ING THE ADDITION RS. 14,980,713 TOWARDS STOCK AWARDS/ SOTP, IGNORING THE FACT THAT INCOME ACCRUED OVER THE VESTING PERIOD WHICH INCLUDED THE SERVICES RENDERED OUTSIDE INDIA AND TO THAT EXTENT INCOME OF RS.4,418,625 PERTAINING TO THE PERIOD OF SERVICES RENDERED OUTSI D E INDIA SHOULD BE CONSIDERED NON-TAXABLE IN THE HANDS OF THE APPELLANT. 6 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. (B) WITHOUT PREJUDICE TO THE ABOVE, THE ADDITION ON THIS ACCOUNT SHOULD BE RESTRICTED TO RS.4,418,625 ONLY CONSIDERING THE FACT THAT OUT OF TOTAL BENEFIT OF R S. 14,980,713, THE AMOUNT OF RS.10,562,088 HAS ALREADY BEEN OFFERED TO TAX. IN CASE THE ADDITION OF RS.44, 18,625 IS SUSTAINED, THEN THE FOREIGN TAX CREDIT IN RESPEC T OF FEDERAL TAXES PAID BY THE APPELLANT IN THE USA ATTRIBUTABLE TO SAID AMOUNT, SHOULD BE ALLOWED AS P ER PROVISIONS OF SECTION 90(2) OF THE ACT. 4(A) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING HAT ADDITION OF AMOUNT OF RS. 89,87,658 RECEIVED BY THE APPELLANT AS FINAL INSTALMENT IN RESPECT OF THE TRA NSFER OF RIGHT OF STOCK OPTION UNDER STOCK OPTION TRANSFER PLAN(SOTP) IN THE YEAR 2003 WHEN THE APPELLANT WAS NON-RESIDENT IN INDIA. (B) WITHOUT PREJUDICE TO ABOVE GROUND, THE LD. CIT( A) HAS ERRED IN NOT ALLOWING THE REQUEST OF THE APPELLANT TO ALLOW FOREIGN TAX CREDIT IN RESPECT OF FEDERAL TAXES PAID IN THE USA ON AMOUNT OF 89,87,658, AS PER PROVISIONS OF SECTION 90(2) OF THE ACT IN CASE SUCH ADDITION IS SUSTAINED. 5. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF 30,46,287, BEING THE DIFFERENCE OF RS. 1,80,76,000 (THE AMOUNT OF REMITTANCES RECEIVED BY THE APPELLANT'S OUT OF HIS POST-TAX SAVINGS FROM HIS BA NK ACCOUNT IN USA) AND RS. 1,50,29,713 (VALUE OF PERQUISITES REPORTED IN FORM 12BA ISSUED BY APPELLA NTS EMPLOYER) COMPLETELY FAILING TO APPRECIATE THE FACT S OF THE CASE THAT BOTH SUCH AMOUNTS HAVE NO CO-RELATION WIT H EACH OTHER AND THIS AMOUNT CANNOT BE TAXED IN THE HANDS OF APPELLANT. 6. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LD. CIT(A) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, HAS GROSSLY ERRED IN UPHOLDING THE INTEREST CHARGED BY THE LD. AO OF RS 13 43 UNDER SECTION 234A OF THE AC T AND OF RS. 742,181 UNDER SECTION 234B OF THE ACT. 7 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND/OR ALTER THE ABOVE GROUND OF APPEAL, AT ANY TIME BEFOR E OR AT THE TIME OF HEARING OF THE APPEAL. THE AFORESAID GROUNDS OF APPEAL ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANOTHER. ANY CONSEQUENTIAL RELIEF, TO WHICH THE APPELLANT MAY BE ENTITLED UNDE R THE LAW IN PURSUANCE OF THE AFORESAID GROUNDS OF APPEAL , OR OTHERWISE, MAY BE THUS GRANTED. 6. AS CAN BE SEEN, GROUND NO.7 IS A GENERAL GROUND . HENCE, DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN GROUND NO.1 THE ASSESSEE HAS RAISED THE ISSUE OF THE IMPUG NED ORDER OF THE LEARNED CIT(A) BEING A NON-SPEAKING ORDER. L EARNED A.R. THOUGH RAISED THE ISSUE BUT HE HASTENED TO ADD THAT FOR THAT REASON ALONE HE DOES NOT WANT THE MATTER TO BE AGAI N REMITTED BACK TO THE LD. CIT(A) AND REQUESTED FOR DISPOSAL O N MERITS. 7. SO FAR AS THE NEXT ISSUE IN GROUND NO. 2 AND 3 ARE CONCERNED, THEY RELATE TO THE ADDITION OF RS.1,49,8 0,713. THE LEARNED A.R. MORE OR LESS REITERATING THE SUBMISSIO NS MADE BEFORE THE DEPARTMENTAL AUTHORITIES CONTENDED THAT AS PER SECTION 6(1) A PERSON IS SAID TO BE A RESIDENT IN I NDIA IN CASE HE IS IN INDIA FOR 180 DAYS OR MORE IN THE RELEVANT FI NANCIAL YEAR OR HE IS IN INDIA FOR 60 DAYS OR MORE IN THE RELEVA NT FINANCIAL YEAR AND 365 DAYS OR MORE IN THE FOUR YEARS PRECED ING THE RELEVANT FINANCIAL YEAR. AS PER SUB-SECTION (6) OF SECTION 6 OF THE ACT, A PERSON IS TO BE TREATED AS NOT ORDINARIL Y RESIDENT IN INDIA IN ANY FINANCIAL YEAR, IN CASE ANY ONE OF THE FOLLOWING TWO CONDITIONS ARE SATISFIED. (I) AN INDIVIDUAL HAS BEEN NON-RESIDENT IN INDIA IN 9 OUT OF 10 FINANCIAL YEARS PRECEDING THE RELEVANT FINANCIAL YEAR OR 8 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. (II) HE HAS BEEN IN INDIA FOR 729 DAYS OR LESS DURING THE 7 FINANCIAL YEARS PRECEDING THE RELEVANT FINANCIAL YEAR. 7.1. IT WAS SUBMITTED SECTION 5(1)(C) OF THE ACT, PROVIDES THAT IN CASE OF A PERSON WHO IS NOT ORDINARILY RESI DENT IN INDIA IN A PARTICULAR FINANCIAL YEAR, ANY INCOME EARNED B Y HIM OUTSIDE INDIA SHALL NOT BE TAXABLE IN INDIA UNLESS IT IS DERIVED FROM A BUSINESS CONTROLLED IN OR A PROFESSION SET U P IN INDIA. THE LEARNED A.R. SUBMITTED THAT ASSESSEE WAS PRESEN T IN INDIA FOR 300 DAYS DURING F.Y. 2006-07 RELEVANT TO THE AS SESSMENT YEAR UNDER CONSIDERATION. THEREFORE, AS PER THE PRO VISIONS OF SECTION 6(1)(A) OF THE ACT, HE WAS A RESIDENT IN I NDIA IN F.Y. 2006-07. FURTHER, DURING THE SEVEN FINANCIAL YEARS PRECEDING F.Y. 2006-07 THE ASSESSEE WAS PRESENT IN INDIA FOR 704 DAYS. IN THIS CONTEXT, LEARNED A.R. REFERRED TO THE DETAI LS OF STAY IN INDIA, YEAR-WISE AT PAGE-5 OF THE PAPER BOOK. HE SU BMITTED THAT THE ASSESSEE WAS IN EMPLOYMENT WITH MICROSOFT, USA PRIOR TO HIS EMPLOYMENT WITH MICROSOFT INDIA FROM 1 ST JANUARY, 2004. DURING THIS PERIOD, THE ASSESSEE USED TO VISI T INDIA FOR A COUPLE OF WEEKS PER YEAR FOR PERSONAL PURPOSES. THE REFORE, AS THE ASSESSEE WAS PRESENT IN INDIA FOR LESS THAN 729 DAYS IN THE SEVEN FINANCIAL YEARS, PRECEDING F.Y. 2006-07, AS P ER SECTION 6 (6)(A)THE ASSESSEE WAS NOT ORDINARILY RESIDENT IN I NDIA IN F.Y. 2006-07. HENCE, AS PER THE PROVISIONS OF SECTION 5( 1)(C) ANY INCOME EARNED OUTSIDE INDIA DURING THE SAID FINANCI AL YEAR IS NOT LIABLE TO TAX IN INDIA. ONLY THE INCOME, IN ASS ESSEES CASE SALARY, EARNED FOR SERVICES RENDERED IN INDIA IS TA XABLE IN INDIA AS PER SECTION 9(1)(II) OF THE ACT. IN THIS CONTEXT , THE LEARNED A.R. REFERRED TO THE DETAILS OF INCOME EARNED IN IN DIA AND IN USA AS PROVIDED IN A TABULAR FORMAT AT PAGE 49 OF T HE PAPER BOOK. HE ALSO RELIED UPON CERTAIN JUDICIAL PRECEDEN TS HOLDING 9 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. THAT ONLY SALARY INCOME EARNED TOWARDS SERVICES REN DERED IN INDIA CAN BE TAXABLE IN INDIA. THE LEARNED A.R. SUB MITTED THAT EVEN AS PER ARTICLE 16(1) OF INDO US DTAA SALARY DE RIVED BY A RESIDENT OF USA IN RESPECT OF AN EMPLOYMENT EXERCIS ED IN USA SHALL BE TAXABLE ONLY IN USA. IT WAS SUBMITTED THAT SINCE THE STOCK OPTION IS DERIVED FROM EMPLOYMENT EXERCISED I N BOTH USA AND INDIA, THE INCOME DERIVED THERE FROM HAS TO BE APPORTIONED ACCORDINGLY. THE LEARNED A.R. SUBMITTED THAT AS PER MICROSOFT, USA STOCK AWARD SCHEME, STOCK AWARDS GRANTED TO THE EMPLOYEE VESTS OVER THE SPECIFIED VESTING PERIOD RA NGING FROM 3 YEARS TO 5 YEARS. ACCORDINGLY, THE STOCK AWARD INCO ME IS EARNED OVER THE VESTING PERIOD I.E., FROM THE DATE OF GRANT TO DATE OF VEST. IT WAS SUBMITTED, THE STOCK AWARDS WH ICH VESTED WITH ASSESSEE DURING ASSESSMENT YEAR 2007-08 WERE G RANTED BY MICROSOFT, USA BETWEEN AUGUST, 2002 TO SEPTEMBER , 2005. THIS STOCK AWARDS WERE RECEIVED BY THE ASSESSEE IN HIS BROKERAGE ACCOUNT IN USA AND PERTAINS TO HIS SERVIC ES RENDERED IN THE USA AS WELL AS IN INDIA. THEREFORE, IN VIEW OF ASSESSEES RESIDENTIAL STATUS OF NOT ORDINARILY RE SIDENT FOR THE ASSESSMENT YEAR 2007-08, THE TAXABLE PORTION OF THE STOCK AWARD INCOME IN INDIA WAS COMPUTED BASED ON THE PER IOD OF SERVICES RENDERED IN INDIA BETWEEN THE DATE OF GRAN T AND VEST AND THE BALANCE PORTION OF STOCK AWARD INCOME PERTA INING TO SERVICES RENDERED IN USA WAS CLAIMED EXEMPT IN THE RETURN OF INCOME FILED BY THE ASSESSEE. IT WAS SUBMITTED OUT OF THE TOTAL STOCK AWARD OF RS.1,49,80,713 THE INCOME ATTRIBUTAB LE TOWARDS SERVICES RENDERED IN THE USA WAS RS.44,18,625 AND T OWARDS SERVICES RENDERED IN INDIA WAS RS.1,05,62,088. IN T HIS REGARD, THE LD. A.R. REFERRED TO THE DETAILED COMPUTATION O F STOCK OPTION AWARDS AS SUBMITTED IN THE PAPER BOOK. THE L EARNED 10 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. A.R. SUBMITTED THAT THE A.O. HAS MADE THE ADDITION SOLELY RELYING UPON THE INFORMATION OBTAINED FROM MICROSOF T INDIA. IN THIS REGARD IT WAS SUBMITTED THAT EMPLOYER IS REQUI RED TO DEDUCT TDS ON THE INCOME CHARGEABLE TO TAX UNDER TH E HEAD SALARIES ON AN ESTIMATED BASIS. THEREFORE, IN CAS E OF THE ASSESSEE ALSO THE EMPLOYER HAS DEDUCTED TAX AT SOUR CE ON A CONSERVATIVE BASIS TO MITIGATE THE POSSIBILITY OF A NY ADVERSE IMPLICATION THAT MAY ARISE IN CASE OF NON-COMPLIANC E OF TDS PROVISIONS UNDER THE ACT. BUT, THAT BY ITSELF CANNO T BE A REASON TO CONCLUDE THAT THE STOCK AWARDS OF RS.1,49,80,713 IS TAXABLE IN INDIA. IT WAS SUBMITTED, WHILE FILING THE INCOME TAX RETURN, THE ASSESSEE HAS CONSIDERED THE CORRECT TAX POSITIO N IN RESPECT OF NON TAXABILITY OF STOCK AWARDS INCOME ATTRIBUTAB LE TO SERVICES RENDERED IN THE USA. IT WAS SUBMITTED OUT OF THE STOCK AWARDS AMOUNTING TO RS.1,49,80,713 VESTED DURING TH E ASSESSMENT YEAR UNDER CONSIDERATION, THE INCOME ATT RIBUTABLE TO THE SERVICES RENDERED IN INDIA IS TO THE TUNE OF RS.1,05,62,088 WHICH WAS OFFERED TO TAX IN THE INCO ME TAX RETURN FILED AND THE BALANCE INCOME ATTRIBUTABLE TO THE SERVICES RENDERED OUTSIDE INDIA OF RS.44,18,625 WAS CLAIMED AS EXEMPT. THUS, IT WAS SUBMITTED BY THE LEARNED A.R. THAT NEC ESSARY RELIEF MAY BE GRANTED. IN SUPPORT OF ITS CONTENTION , THE LEARNED A.R. RELIED ON THE FOLLOWING DECISIONS : (I) CIT-XVI VS. ROBERT ARTHUR KELTZ ITA.NO.57 OF 2014 DATED 23.07.2014 OF DELHI HIGH COURT. (II) ROBERT ARTHUR KELTZ, NEW DELHI VS. ACIT, CIRCLE 48(1), ITAT, DELHI F BENCH, NEW DELHI ITA.NO.3452/DEL/2011 DATED 24 TH MAY, 2013 (III) ACIT, CIRCLE 46(1) VS. SHRI ELLIS D ROZARIO ITAT, DELHI8 I BENCH, NEW DELHI, ITA.NO.2918/DEL/05 DATED 05.12.2008. 11 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. (IV) DCIT, CIRCLE 42(1) VS. MR. ERIC MOROUX, C/O. AIR FRANCE, OF ITAT, DELHI G BENCH, NEW DELHI, ITA.NO.1175/DEL/2005 DATED 15 TH FEBRUARY, 2008. 8. THE LEARNED D.R. ON THE OTHER HAND, RELYING UPO N THE REASONING OF THE ASSESSING OFFICER SUBMITTED TH AT WHEN THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS RECEIVED THE AMOUNT IN QUESTION IN INDIA, AND THE EMPLOYER H AS ALSO TREATED IT AS PART OF SALARY AND DEDUCTED TAX AT SO URCE, THE ASSESSEES CLAIM THAT A PORTION OF THE SAID INCOME AROSE IN USA HENCE, NOT TAXABLE IN INDIA CANNOT BE ACCEPTED. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WE LL AS OTHER MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY EXAMINE D THE DECISIONS CITED BY LEARNED A.R. FROM THE FACTS AND MATERIALS ON RECORD IT IS CLEAR THAT OUT OF TOTAL FMV OF STOCK A WARDS OF RS.1,49,80,713, THE ASSESSEE HIMSELF ACCEPTS THAT A N AMOUNT OF RS.1,05,62,088 IS ATTRIBUTABLE TOWARDS SERVICES RENDERED IN INDIA, HENCE, TAXABLE IN INDIA. THEREFORE, DISPUTE REMAINS WITH REGARD TO AN AMOUNT OF RS.44,18,625 WHICH THE ASSES SEE CLAIMS TO BE IN RELATION TO SERVICES RENDERED IN US A, HENCE, NOT TAXABLE IN INDIA AS ASSESSEES RESIDENTIAL STATUS I S NOT ORDINARILY RESIDENT. BEFORE WE DWELL UPON THE ISSU E IN DISPUTE, IT IS NECESSARY TO LOOK INTO THE RELEVANT STATUTORY PROVISIONS. SECTION-6 SPEAKS OF RESIDENTIAL STATUS UNDER THE IN COME TAX ACT, 1961. SECTION 6(1) OF THE ACT TREATS AN INDIVI DUAL TO BE RESIDENT IN INDIA ON SATISFACTION OF ANY ONE OF THE FOLLOWING TWO CONDITIONS : (A) HE IS IN INDIA FOR 182 DAYS OR MORE DURING THE RELEVANT FINANCIAL YEAR; OR 12 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. (B) HE IS IN INDIA FOR 60 DAYS OR MORE IN THE RELE VANT FINANCIAL YEAR AND 365 DAYS OR MORE IN THE FOUR YEARS PRECEDING THE RELEVANT FINANCIAL YEAR. 9.1. HOWEVER, SUB-SECTION (6) OF SECTION 6 TREATS A PERSON TO BE NOT ORDINARILY RESIDENT IN INDIA IN AN Y FINANCIAL YEAR, IF EITHER HE HAS BEEN A NON-RESIDENT IN INDIA IN 9 OUT OF 10 PREVIOUS YEARS PRECEDING THE RELEVANT PREVIOUS Y EAR OR HE HAS BEEN IN INDIA FOR A PERIOD OF 729 DAYS OR LESS DURING THE SEVEN PREVIOUS YEARS PRECEDING THE RELEVANT PREVIOU S YEAR. AS PER PROVISO TO SECTION 5(1) IN CASE OF A PERSON WHO IS NOT ORDINARILY RESIDENT IN INDIA IN TERMS WITH SECTION 6(6), THE INCOME WHICH ACCRUES OR ARISES TO HIM OUTSIDE INDIA SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE RELEVANT PRE VIOUS YEAR, UNLESS IT IS DERIVED FROM A BUSINESS CONTROLLED IN OR A PROFESSION SET UP IN INDIA. 9.2. KEEPING IN VIEW AFORESAID STATUTORY PROVISION S, THE ISSUE IN DISPUTE NEEDS TO BE EXAMINED. BEFORE THE A .O. ASSESSEE HAS FURNISHED THE DETAILS OF STAY IN INDIA DURING THE SEVEN PREVIOUS YEARS PRECEDING THE RELEVANT FINANCI AL YEAR WHICH IS AS UNDER : S.NO. F.Y. NO. OF DAYS 1. 2005-06 310 2. 2004-05 321 3. 2003-04 40 4. 2002-03 NIL 5. 2001-02 14 6. 2000-01 19 7. 1999-00 NIL TOTAL 704 9.3. AS PER THE AFORESAID DETAILS, ASSESSEES STAY DURING THE PRECEDING SEVEN FINANCIAL YEARS AGGREGATED TO 7 04 DAYS. HENCE, AS PER SECTION 6(6) ASSESSEE HAS TO BE TREAT ED AS NOT 13 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. ORDINARILY RESIDENT. EVEN, THE A.O. ALSO HAS ACCEP TED THIS POSITION BY TREATING THE RESIDENTIAL STATUS OF ASSE SSEE AS NOT ORDINARILY RESIDENT. THEREFORE, WE HAVE TO EXAMINE WHETHER THE AMOUNT OF RS.44,18,625 RELATING TO STOCK AWARDS CAN FORM PART OF TOTAL INCOME AS PER SECTION 5(1). AS CAN BE SEEN FROM FACTS ON RECORD, PRIOR TO HIS JOINING MICROSOFT INDIA (R & D) P. LTD., ON 01.01.2004, ASSESSEE WAS AN EMPLOYEE OF MICROSOF T CORPORATION, USA AND WAS A NON-RESIDENT. WHILE, HE WAS EMPLOYED WITH MICROSOFT, USA ASSESSEE WAS GRANTED S TOCK AWARDS AS PER STOCK AWARDS SCHEME OF MICROSOFT USA. AS PER THE SCHEME, STOCK AWARDS GRANTED TO ASSESSEE BETWEE N AUGUST, 2002 AND SEPTEMBER, 2005, AMOUNTING TO RS.1,49,80,7 13 VESTED WITH THE ASSESSEE DURING PREVIOUS YEAR 2006- 07 RELEVANT TO ASSESSMENT YEAR UNDER DISPUTE. IT IS TH E CLAIM OF THE ASSESSEE THAT OUT OF STOCK AMOUNT VESTED OF RS.1,49,80,713, AN AMOUNT OF RS.1,05,62,088 WAS ATT RIBUTABLE TO SERVICES RENDERED IN INDIA AND RS.44,18,625 IS R ELATABLE TO SERVICES RENDERED IN USA. TO SUBSTANTIATE SUCH CLAI M ASSESSEE HAS ALSO SUBMITTED BEFORE THE A.O. A WORKING SHOWIN G THE DETAILS OF STOCK AMOUNT GRANTED. A PERUSAL OF THE W ORKING, A COPY OF WHICH IS AT PAGE 49 OF ASSESSEES PAPER BOO K, REVEALS ASSESSEE HAS FURNISHED ALL DETAILS RELATING TO STOC K AWARD GRANTED, DATE OF GRANT, DATE OF VEST OF STOCK AMOUN T, TOTAL PERIOD BETWEEN GRANT DATE AND VEST DATE, NO. OF DAY S PRESENT IN INDIA BETWEEN THE GRANT DATE AND VEST DATE ETC., TH ROUGH THIS WORKING ASSESSEE HAS ALSO DEMONSTRATED THE PERQUISI TE VALUE OF STOCK AWARD WHICH CAN BE APPORTIONED TOWARDS SER VICES RENDERED IN INDIA, DEPENDING UPON THE NUMBER OF DAY S STAYED IN INDIA. 14 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. 9.4. AS IT APPEARS, THESE FACTS AND FIGURES HAVE N OT AT ALL BEEN EXAMINED BY THE ASSESSING OFFICER. LD. CIT (A) HAS ALSO NOT EXAMINED THIS ISSUE WITH THE ATTENTION IT DESER VED. THE ORDER OF THE LD. CIT(A) IS NON-SPEAKING AND BEREFT OF ANY REASONING. WHEN THE RESIDENTIAL STATUS OF THE ASSES SEE IS ACCEPTED AS NOT ORDINARILY RESIDENT, INCOME WHICH ACCRUES OR ARISES TO HIM OUTSIDE INDIA CANNOT AND SHOULD NOT F ORM PART OF THE TOTAL INCOME, UNLESS THE OTHER CONDITIONS OF PR OVISO TO SECTION 5(1) ARE SATISFIED. MOREOVER, SECTION 9(1)( II) ALSO MAKES IT CLEAR, INCOME UNDER THE HEAD SALARIES SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA IF IT IS EARNED IN INDIA T OWARDS SERVICES RENDERED IN INDIA. ARTICLE 16(1) OF INDIA-USA DTAA ALSO PROVIDES THAT SALARY DERIVED BY A RESIDENT OF USA I N RESPECT OF AN EMPLOYMENT EXERCISED IN USA SHALL BE TAXABLE IN USA. LEARNED A.R. HAS ALSO REFERRED TO THE COMMENTARY ON OECD MODEL TAX CONVENTION RELATING TO TAXATION OF STOCK OPTION INCOME DERIVED BY AN EMPLOYEE WHILE WORKING IN TWO COUNTRIES WHICH PROVIDES, EMPLOYMENT BENEFIT ATTRIBUTABLE TO THE STOCK OPTION SHOULD BE CONSIDERED TO BE DERIVED FROM A PA RTICULAR COUNTRY IN PROPORTION OF THE NUMBER OF DAYS DURING WHICH EMPLOYMENT HAS BEEN EXERCISED IN THAT COUNTRY TO TH E TOTAL NUMBER OF DAYS DURING WHICH THE EMPLOYMENT SERVICES FROM WHICH THE STOCK OPTION IS DERIVED IS EXERCISED. IN OUR VIEW, ALL THESE ASPECTS HAVE TO BE EXAMINED BEFORE COMING TO THE CONCLUSION THAT THE PERQUISITE VALUE OF STOCK AWARD S ARE TAXABLE IN INDIA. FURTHERMORE, ASSESSEES CLAIM THA T STOCK AWARDS AMOUNTING TO RS.44,18,625, ATTRIBUTABLE TO S ERVICES RENDERED IN USA, WAS OFFERED TO TAX IN USA ALSO NEE DS TO BE LOOKED INTO BY EXAMINING THE RETURNS FILED BEFORE T HE USA TAX AUTHORITIES, COPIES OF WHICH WERE SUBMITTED BEFORE A.O. AND 15 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. FORMS PART OF PAPER BOOK. AS IT APPEARS, NEITHER TH E A.O. NOR THE LD. CIT(A) HAVE MADE ANY ENDEAVOUR TO EXAMINE T HESE FACTUAL DETAILS. ONLY BECAUSE THE STOCK AWARD WERE TREATED AS PART OF SALARY IN THE TDS CERTIFICATE ISSUED IN FOR M NO.16 ISSUED BY EMPLOYER, FOR THAT REASON ALONE, IT CANNO T BE CONCLUDED THAT THE ENTIRE STOCK AMOUNT IS TAXABLE I N INDIA. THE INFORMATION SUBMITTED BY THE EMPLOYER UNDER SECTION 133(6) IN LETTER DATED 10.03.2009 ALSO DOES NOT CONCLUSIVELY PROVE THAT AMOUNT RECEIVED UNDER SOTP IS ENTIRELY RELATABLE TO SERVICES RENDERED IN INDIA. THE EMPLOYER HAS ONLY STATED THA T THE STOCK AWARDS PROCEEDS WERE RECEIVED BY THE ASSESSEE IN IN DIA. RATHER, IN THE AFORESAID LETTER THE EMPLOYER HAS CL ARIFIED THAT STOCKS WERE ALLOTTED TO ASSESSEE WHEN HE WAS UNDER EMPLOYMENT OF MICROSOFT CORPORATION, USA. FURTHER, ASSESSEE SOLD THE STOCKS TO BROKER APPOINTED BY MICROSOFT, U SA IN THE YEAR 2003. ASSESSEE ONLY RECEIVED THE FINAL INSTALL MENT OF SOTP SALES IN FINANCIAL YEAR 2006-07. THEREFORE, WITHOUT ASCERTAINING HOW MUCH OF THE SOTP IS ATTRIBUTABLE T O SERVICES RENDERED IN INDIA, THE ENTIRE AMOUNT CANNOT BE MADE TAXABLE ONLY BECAUSE THE MONEY WAS RECEIVED IN INDIA. THERE FORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAVING RESIDENTIA L STATUS OF NOT ORDINARILY RESIDENT, ONLY THAT PORTION OF THE STOCK AWARDS AND SOTP ATTRIBUTABLE TO SERVICES RENDERED IN INDIA CAN FORM PART OF TOTAL INCOME FOR THE IMPUGNED ASSESSMENT YE AR. AS NEITHER THE A.O. NOR LD. CIT(A) HAVE EXAMINED THE F ACTS PROPERLY, WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF A.O. FOR TAKING A FRESH DECISION ON THE ISSUE OF TA XABILITY OF AMOUNT RECEIVED FROM STOCK AMOUNTS/SOTP. THE A.O. S HOULD VERIFY THE CORRECTNESS OF ASSESSEES CLAIM THAT HE HAS OFFERED FOR TAXATION AN AMOUNT OF RS.1,05,62,088 IN THE RET URN FILED FOR 16 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. THE IMPUGNED ASSESSMENT YEAR. IN CASE ASSESSEES CL AIM IS FOUND TO BE CORRECT, THE A.O. CANNOT ADD IT AGAIN. AS FAR AS BALANCE AMOUNT OF RS.44,18,625 IS CONCERNED, IF THE ASSESSEE IS ABLE TO ESTABLISH THE FACT THAT SAID AMOUNT IS R ELATABLE TO SERVICES RENDERED IN USA, SAME CANNOT BE SUBJECTED TO TAX IN INDIA. THE A.O. MUST GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. TH ESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN GROUND NO.4 ASSESSEE HAS CHALLENGED THE ADDITION OF AN AMOUNT OF RS.89,87,658 BEING FINAL I NSTALLMENT OF SOTP. 11. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AS CAN BE SEEN, FROM THE STAGE OF ASSESSMENT PROCEEDINGS ITSELF ASSESSEE HAS CONSISTE NTLY STATED THAT OUT OF RS.1,49,80,713 ADDED BY A.O. AN AMOUNT OF RS.44,18,625 IS ATTRIBUTABLE TOWARDS SERVICES RENDE RED IN USA, HENCE, NOT TAXABLE IN INDIA. WHEREAS, BALANCE AMOUN T OF RS.1,05,62,088 HAS BEEN OFFERED TO TAX BY THE ASSES SEE. ON A PERUSAL OF ASSESSMENT ORDER, IT IS CLEAR THAT THE A .O. HAS STARTED THE COMPUTATION ON THE BASIS OF INCOME RETU RNED BY THE ASSESSEE AT RS.2,25,66,227. THE ONLY ADDITIONS MADE BY A.O. ARE RS.1,49,80,713 TOWARDS STOCK AWARDS AND RS.30,46,287 TOWARDS POST TAX SAVINGS. OUT OF THE A DDITIONS OF RS.1,49,80,713, ASSESSEE ADMITS THAT AN AMOUNT OF RS.1,05,62,088 IS TAXABLE IN INDIA. THEREFORE, DISP UTE REMAINS WITH THE AMOUNT OF RS.44,18,625. THE A.O. HAS NOT S EPARATELY ADDED THE AMOUNT OF RS.89,87,658. IN THESE CIRCUMST ANCES, WE FAIL TO UNDERSTAND HOW THIS GROUND ARISES. HOWEVER, CONSIDERING THE FACT THAT ASSESSEE HAS RAISED THIS ISSUE IN THE 17 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. PETITION FILED UNDER SECTION 154 OF THE ACT, WHICH IS STILL PENDING BEFORE THE A.O., WE REMIT THE MATTER BACK T O THE FILE OF THE A.O. FOR DECIDING AFRESH AFTER PROVIDING AN OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN GROUND NO.5, ASSESSEE HAS CHALLENGED ADDITI ON OF AN AMOUNT OF RS.30,46,287. 13. BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, A.O. NOTICED THAT AS PER ICICI BANK ST ATEMENT, TOTAL CREDITS ARE TO THE TUNE OF RS.1,80,76,000. WH EREAS, AS PER FORM NO.16, AMOUNT SHOWN IS RS.1,50,29,713 GIVING R ISE TO A DIFFERENCE OF RS.30,46,287. THOUGH, ASSESSEE STATED THAT THE AMOUNT DOES NOT REPRESENT INCOME EITHER UNDER THE H EAD SALARY OR ANY OTHER HEAD BUT ONLY IN THE NATURE O F REMITTANCES THROUGH BANKING CHANNEL, A.O. REJECTING THE EXPLANATION OF THE ASSESSEE ADDED THE SAID AMOUNT. LD. CIT(A) ALSO CONFIRMED THE ADDITION. 14. LEARNED A.R. SUBMITTED BEFORE US AMOUNTS CREDITED TO THE ICICI BANK ACCOUNT ARE IN THE NATUR E OF MERE REMITTANCES TO INDIA THROUGH NORMAL BANKING CHANNEL S FROM ASSESSEES POST TAX SAVINGS LOCATED IN USA AND DOES NOT REPRESENT ANY INCOME TAXABLE IN INDIA DURING A.Y. 2 007-08. IN THIS CONTEXT, LEARNED A.R. RELIED UPON THE CERTIFIC ATES ISSUED BY ICICI BANK, COPIES OF WHICH ARE AT PAGES 119 AND 12 0 OF ASSESSEES PAPER BOOK. 15. LEARNED D.R. SUPPORTED THE FINDINGS OF A.O. AN D CIT(A). 18 ITA.NO.220/HYD/2014 MR. ANIL BHANSALI, HYDERABAD. 16. HAVING HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD, WE ARE OF THE VIEW THAT NEITHE R THE A.O. NOR THE LEARNED CIT(A) HAVE DECIDED THE ISSUE WITH REFERENCE TO EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE. ACCORD INGLY, WE CONSIDER IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF THE A.O. FOR DECIDING AFRESH AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS ALLO WED FOR STATISTICAL PURPOSES. 17. IN GROUND NO.6, ASSESSEE HAS CHALLENGED LEVY O F INTEREST UNDER SECTION 234A AND 234B OF THE ACT. CH ARGEABILITY OF INTEREST UNDER SECTION 234A AND 234B BEING CONSE QUENTIAL IN NATURE IS NOT REQUIRED TO BE ADJUDICATED AT THIS STAGE. 18. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.01.2015. SD/- SD/- (B.RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 21 ST JANUARY, 2015 VBP/- COPY TO 1. MR. ANIL BHANSALI, A-25, HILL RIDGE VILLAS, GACHIBO WLI, HYDERABAD. 2. INCOME TAX OFFICER, WARD 12(2), AAYAKAR BHAVAN, HYDERABAD. 3. CIT(A)-V, HYDERABAD. 4. CIT-1, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD.