Shri Nandinho Rebello, Ahmedabad V. The Dy.CIT, Circle-14, Ahmedabad

ITA 2378/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6204 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PR F VS DCIT CIRCLE AHMEDABAD
• Keywords: Salary income; Earning of tax free income; Corroborative evidences; Capital receipt
• Section: 143(3); 148; 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 2378/AHD/2013 / ASSESSMENT YEAR : 2010-11 SHRI NANDINHO REBELLO, A/301, SUFLAM FLATS, AMI KUNJ, NR. NARANPURA POST OFFICE, AHMEDABAD-380013 PAN : ABYPR 0637 F VS DCIT, CIRCLE-14, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI DEEPAK SUTARIA, SR DR / DATE OF HEARING : 29/03/2017 / DATE OF PRONOUNCEMENT: 18/04/2017 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXI, AHMEDABAD DATED 14.08.2013 FOR ASSESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER:- 1. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFI RMING THE DISALLOWANCE OF RS. 2,76,744/- ON THE GROUND THAT THE AMOUNT RECEIV ED AS NOTICE PAY IS LIABLE TO BE TAXED UNDER THE HEAD 'SALARY' U/S. 16 OF THE IT. ACT. IT IS SUBMITTED THAT THE AMOUNTS RECEIVED OF RS. 1,64,636/- AND RS. 1,10,550/- BOTH AS NOTICE PAY DO NOT FORM PART OF THE SALARY INCOME AS THEY A RE CAPITAL RECEIPTS. IT IS SUBMITTED THAT ON THE BASIS OF FACT AND DECISIONS B Y APPELLATE AUTHORITIES, THE AMOUNT RECEIVED AS NOTICE PAY OF RS. 2,76,744/- BE NOT TAXED AS SALARY INCOME AND THE ADDITION MADE BE DELETED. 2. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN ADDIN G RS. 23,310/- AS INTEREST RECEIVED ON EMPLOYEES PROVIDENT FUND. IT IS SUBMITT ED THAT NEITHER ASSESSEE NOR THE A.R. HAS ACCEPTED SUCH ADDITION AND THE ADD ITION MADE OF RS. 23,310/- BEING EXEMPT INCOME, THE SAME CANNOT BE AD DED UNDER THE ACT. IT IS SUBMITTED THAT THE ADDITION OF RS.23,310/- BE DELET ED. ITA NO. 2378/AHD/2013 SHRI NANDINHO REBELLO VS. DCIT AY : 2010-11 2 3. NONE APPEARED FOR THE ASSESSEE AT THE TIME OF HE ARING. THE ISSUE BEING SMALL, THE APPEAL IS DECIDED EX-PARTE QUA THE ASSESSEE, AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSING THE MA TERIAL AVAILABLE ON RECORD. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, DERIVING INCOME FROM SALARY, HOUSE PROPERTY AND OTH ER SOURCES. FOR THE YEAR UNDER CONSIDERATION, THE RETURN OF INCOME WAS FILED ON 16.03.2011, DECLARING TOTAL INCOME OF RS.11,45,880/-. SUBSEQUENTLY, THE CASE WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 04.0 7.2012 ON THE GROUND THAT THE ASSESSEE HAS NOT DISCLOSED THE SALARY RECEIVED FROM HIS PREVIOUS TWO EMPLOYERS NAMELY M/S. VIDEOCON TELE COMMUNICATION L TD AND RELIANCE COMMUNICATION LTD. DURING THE COURSE OF REASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD WO RKED WITH RELIANCE COMMUNICATION LTD FROM 01.04.2009 TO 09.05.2009, SI STEMA SHYAM TELESERVICES LTD FROM 18.05.2009 TO 24.02.2010 AND VIDEOCON TELE COMMUNICATION LTD FROM 03.03.2010 TO 31.03.2010 AND RECEIVED SALARY OF RS.1,64,636/-, RS. 13,95,880/- AND RS.5,46,060/- RE SPECTIVELY; OUT OF WHICH THE ASSESSEE HAS ONLY SHOWN THE SALARY INCOME OF RS .11,45,880/- RECEIVED FROM SISTEMA SHYAM TELESERVICES LTD AFTER CLAIMING DEDUCTION UNDER CHAPTER VI-A OF THE ACT. SINCE THE ASSESSEE WAS F AILED TO DISCLOSE THE SALARY INCOME FROM OTHER TWO EMPLOYERS, THE UNDISCLOSED SA LARY INCOME OF RS.1,64,636/- RECEIVED FROM RELIANCE COMMUNICATION LTD AND RS.5,46,060/- RECEIVED FROM VIDEOCON TELE COMMUNICATIONS LTD WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE VIDE ORDER DATED 15.10.2012, PASSED UNDER SECTION 143(3) R.W. 147 OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFI CER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO, AFTER C ONSIDERING THE ITA NO. 2378/AHD/2013 SHRI NANDINHO REBELLO VS. DCIT AY : 2010-11 3 SUBMISSIONS OF THE ASSESSEE, SUSTAINED THE ADDITION S MADE BY THE ASSESSING OFFICER AS UNDER:- 4.3 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT IN THIS REGARD. INCOME UNDER THE HEAD 'SA LARY' IS COMPUTED IN ACCORDANCE WITH SECTION 15,16 V& 17 OF INCOME-TAX A CT. AS PER SECTION 15, SALARY INCOME IS CHARGED ON THE DUE BASIS WHETHER P AID OR NOT. ACCORDINGLY, THE AO HAS CHARGED THE SALARY TO INCOME-TAX ON DUE BASIS. THE DEDUCTION ALLOWED UNDER THE HEAD 'SALARY' IS PROVIDED UNDER S ECTION 16, WHICH IS AS UNDER: '(II) A DEDUCTION IN RESPECT OF ANY ALLOWANCE IN TH E NATURE OF AN ENTERTAINMENT ALLOWANCE SPECIFICALLY GRANTED BY AN EMPLOYER TO THE ASSESSEE WHO IS IN RECEIPT OF A SALARY FROM THE GOVERNMENT, A SUM EQUAL TO ONE FIFTH OF HIS SALARY (EXCLUSIVE OF ANY ALLOWANCE, BENEFIT OR OTHER PERQUISITE) OR FIVE THOUSAND RUPEES, WHICHEVER IS LESS;] (III) A DEDUCTION OF ANY SUM PAID BY THE ASSESSEE O N ACCOUNT OF A TAX ON EMPLOYMENT WITHIN THE MEANING OF CLAUSE (2) OF ARTI CLE 276 OF THE CONSTITUTION, LEVIABLE BY OR UNDER ANY LAW.]' CLEARLY THE DEDUCTION MADE BY THE EMPLOYER FOR THE NOTICE PERIOD IS NOT PROVIDED IN SECTION 16. THE APPELLANT'S ARGUMENT OF THE TAXABILITY OF REAL INCOME IS NOT TENABLE AS THE DOCTRINE OF REAL INCOM E IS INAPPLICABLE, BECAUSE SECTION 15 OF THE I.T. ACT IMPOSES THE CHARGE WHEN SALARY BECOMES DUE WHETHER PAID OR NOT THE DEDUCTION OF NOTICE PERIOD IS ESSENTIALLY APPLICATION OF INCOME, AFTER IT HAS BECOME DUE. THE MADRAS HIGH COURT IN THE CASE OF CIT VS. P. NATRAJA SHASTRI (1976) 104 ITR 295 HAS HELD THAT WHERE REMUNERATION HAS ALREADY ACCRUED TO ASSESSEE AND IT WAS WAIVED, IT WAS RIGHTLY BROUGHT TO TAX BY THE ASSESSING OFFICER. THE APPELLANT DURING THE HEARING HAS RELIED UPON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF RAMCHANDRA DHONDE DATAR VS. CIT (1961) 43 ITR 22 (BOM). THE ABOVE CAS E-LAW IS IRRELEVANT TO THE FACT OF THE CASE, AS IT RELATES TO WHETHER COMP ENSATION PAID BY THE EMPLOYER FOR TERMINATION OF THE EMPLOYMENT IS TAXAB LE. THE INSTANT CASE IS ALLOWABILITY OF DEDUCTION MADE BY THE EMPLOYER FOR THE NOTICE PERIOD. ACCORDINGLY, THE GROUND OF THE APPELLANT IS DISMISS ED. 6. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND THE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DURI NG THE YEAR UNDER CONSIDERATION THE ASSESSEE SERVED WITH RELIANCE COM MUNICATION FOR 39 DAYS FOR THE PERIOD 01.04.2009 TO 09.05.2009 AND RECEIVE D A TOTAL SALARY OF RS.1,64,636/-, OUT OF WHICH RS.1,10,550/- WAS RECOV ERED AS NOTICE PAY AS PER ITA NO. 2378/AHD/2013 SHRI NANDINHO REBELLO VS. DCIT AY : 2010-11 4 AGREEMENT WITH THE EMPLOYER. THEREFORE, THE ASSESSE E DECLARED SALARY INCOME OF RS.54,086/- AFTER DEDUCTING NOTICE PAY OF RS.1,10,550/-. THEREAFTER, THE ASSESSEE JOINED IN SISTEMA SHYAM TE LESERVICES LTD WHERE HE SERVED FOR A PERIOD FROM 18.05.2009 TO 24.02.2010 A ND RECEIVED A TOTAL SALARY OF RS.13,95,880/- OUT OF WHICH RS.1,66,194/- WAS DE DUCTED AS NOTICE PAY AS PER AGREEMENT WITH EMPLOYER. THEREFORE, NOTICE PAY OF TOTAL RS.2,76,744/- WAS CLAIMED IN THE RETURN OF INCOME AS DEDUCTION WH ICH WAS RECOVERED FROM THE SALARY BY ASSESSEES PREVIOUS EMPLOYERS AS MENTIONED ABOVE. THE LD. CIT(A) WAS OF THE VIEW THAT NO SUCH DEDUCTION I S AVAILABLE UNDER SECTION 16 OF THE ACT AND THE SALARY INCOME IS TAXA BLE ON DUE BASIS OR ON PAID BASIS. AFTER CONSIDERING THE FACTS AS QUOTED ABOVE, WE FIND THAT EMPLOYERS HAVE MADE DEDUCTION FROM THE SALARY WHICH WAS PAID TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION BECAUS E OF LEAVING THE SERVICES AS PER AGREEMENT MADE BY THE ASSESSEE AND THE RESPE CTIVE EMPLOYER. WE FIND THAT THIS IS A CASE OF RECOVERY OF THE SALARY WHICH IS ALREADY MADE TO THE ASSESSEE FOR WHICH WE HAVE NOT TO REFER SECTION 16 OF THE ACT AS MENTIONED BY THE LD. CIT(A). IT IS PERTINENT TO NOTE THAT TH E ASSESSEE HAS ACTUALLY RECEIVED THE SALARY FROM HIS PREVIOUS EMPLOYERS AFT ER DEDUCTING THE NOTICE PERIOD AS PER THE JOB AGREEMENT WITH THEM. THEREFO RE, IN OUR CONSIDERED VIEW, THE ACTUAL SALARY RECEIVED BY THE ASSESSEE IS ONLY TAXABLE AND THEREFORE, WE ALLOW THIS GROUND OF APPEAL OF THE AS SESSEE. 8. WITH REGARD TO GROUND NO.2, WE OBSERVE THAT AT T HE TIME OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD ACCEPTED TH AT THE INTEREST INCOME FROM BANK AND INTEREST INCOME FROM RELIANCE INFOCOM LTD EMPLOYEE PROVIDENT FUND WAS REMAINED UNDISCLOSED IN THE RETU RN OF INCOME. THEREAFTER, THE ADDITION MADE BY THE ASSESSING OFFI CER WAS SUSTAINED BY THE LD. CIT(A). ITA NO. 2378/AHD/2013 SHRI NANDINHO REBELLO VS. DCIT AY : 2010-11 5 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND FIND THAT THE ASSESSEE HAS NOT PROVIDED SUPPORTING EVIDENCE THAT THE PARTI CULAR INCOME IS EXEMPT FROM THE INCOME TAX, THEREFORE WE DO NOT FIND ANY R EASON TO INTERFERE IN THE FINDING OF THE LD.CIT(A). THUS, THIS GROUND OF APPE AL OF THE ASSESSEE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18 TH APRIL, 2017 AT AHMEDABAD. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER AHMEDABAD; DATED 18/04/2017 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD