Thota Srinivasa Babu Development Officer LIC of India, Palakol V. The ITO, Palakol

ITA 242/VIZ/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2663 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Section: 10(14); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 242 / VIZ /201 7 (ASST. YEAR : 2009 - 10 ) THOTA SRINIVASA BABU, DEVELOPMENT OFFICER, LIC OF INDIA, 1 ST LANE, BRODIPET, PALKOL, W.G. DISTRICT. V S . IT O , WARD - 1, PALKOL, W.G. DIST . PAN NO. ACIPT 1620 R (APPELLANT) (RESPONDENT) ITA NO. 243 / VIZ /201 7 (ASST. YEAR : 20 1 0 - 1 1 ) AVADHANULA SRINIVASA RAO , DEVELOPMENT OFFICER, LIC OF INDIA, 1 ST LANE, BRODIPET, PALKOL, W.G. DISTRICT. VS. IT O , WARD - 1, PALKOL, W.G. DIST . PAN NO. ACFPA 0588 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 25 / 1 0 /201 8 . DATE OF PRONOUNCEMENT : 09 / 1 1 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE APPEAL S BY THE DIFFERENT ASSESSEE S ARE DIRECTED AGAINST THE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) , VIJAYAWADA , BOTH DATED 29 / 12 /201 6 FOR THE ASSESSMENT YEARS 200 9 - 1 0 TO 2 ITA NO. 242 & 243 /VIZ/2017 ( THOTA SRINIVASA BABU & ANO. ) 20 1 0 - 1 1 . SINCE THE ISSUES AND FACTS ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA 242/VIZ/2017 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A DEVELOPMENT OFFICER IN LIC OF INDIA, FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 4,94,860/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') . SUBSEQUENTLY, THE ASSESSING OFFI CER ISSUED NOTICE UNDER SECTION 148 ON THE GROUND THAT THERE IS AN ESCAPEMENT OF INCOME IN RESPECT OF DEDUCTION CLAIMED BY THE ASSESSEE. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED , FIXED CONVEYANCE ALLOWANCE OF RS. 45,000/ - AND CONVEYANCE EXPENSES OF RS. 37,511/ - , AS EXEMPT UNDER SECTION 10( 14 ) OF THE ACT. THE ASSESSING OFFICER HAS HELD THAT T HE ASSESSEE IS NOT ABLE TO ESTABLISH THAT HE HAS FULFILLED ALL THE CONDITIONS LAID DOWN IN SECTION 10(14) AND ALSO KEEP ING IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. B. CHINNAIAH & OTHERS [(1995) 214 ITR 368)] , DISALLOWED THE EXEMPTION CLAIMED BY THE ASSESSEE. 3 ITA NO. 242 & 243 /VIZ/2017 ( THOTA SRINIVASA BABU & ANO. ) 3 . ON APPEAL, LD. CIT(A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE ALLOWANCES RECEIVED BY THE ASSESSEE HAS INCURRED FOR THE PURPOSE , FOR IT IS RECEIVED. 4 . ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL FOR THE ASSESSEE H AS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF K. PULLARAO VS. ITO IN ITA NO. 1647/HYD/1995, DATED 31/01/2002 , WHEREIN THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN APPEAL NO. 117/1992 AND SUBMITTED THAT SAME MAY BE FOLLOWED. INSOFAR AS CASE - LAW RELIED ON BY THE ASSESSING OFFICER IN THE CASE OF B. CHINNAIAH & OTHERS , IS RELATING TO INCENTIVE BONUS, WHICH IS NO T APPLICABLE TO THE CASE OF THE ASSESSEE. 6 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE ASSESSEE HAS RECEIVED FIXED CONVEYANCE ALLOWANCE AND CONVEYANCE EXPENSES AND THE SAME HAS BEEN CLAIMED DEDUCTION UNDER SECTION 10(14) OF THE ACT. THE ASSESSING OFFICER I S OF THE 4 ITA NO. 242 & 243 /VIZ/2017 ( THOTA SRINIVASA BABU & ANO. ) OPINION THAT THE ASSESSEE IS FAILED TO PROVE THE CONDITIONS LAID DOWN IN SECTION 10(14), THEREFORE, THE CLAIM OF THE ASSESSEE IS DIS ALLOWED. O N APPEAL, LD. CIT(A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING TH A T THE ASSESSEE HAS FAILED TO PROVE THAT THE AMOUNT RECEIVED ARE SPENT / INCURRED FOR THE PURPOSE FOR WHICH IT IS RECEIVED, THEREFORE REJECTED THE CLAIM OF THE ASSESSEE. I N THIS CONNECTION, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ABOVE REFERRED TO CASE HAS OBSERVED THAT IN THE CASE OF EMPLOYEES OF THE STATE OR CORPORATIONS, WHETHER STATUTORY OR OTHERWISE, WHERE THE EMPLOYER AFTER HAVING SURVEYED THE ACTUAL EXPENDITURE NECESSARY FOR PERFORMANCE OF THE DUTY, GRANTS ACTUAL ALLOWANCE GENERALLY TO ALL THE EMPLOYEES, IT IS TO BE PRESUMED TH A T THE ENTIRE EXPENDITURE HAS BEEN INCURRED FOR THE PURPO S E FOR WHICH IT HAS BEEN GRAN T ED, FOR IF IT NOT INCURRED FOR WHICH IS HAS BEEN GIVEN, IT WOULD ENTAIL DISCIPLINARY ACTION AGAINST THE EMPLOYEE. UNLESS SUCH A CASE HAS BEEN INITIATED A GAINST AN EMPLOYEE BY AN EMPLOYER, THE SAID PRESUMPTION THAT THE EMPLOYEE HAS INCURRED THE EXPENDITURE FOR WHICH IT IS GRANTED, WILL APPLY AND IT WILL NOT BE NECESSARY FOR THE EMPLOYEES TO SUBMIT ACCOUNTS EVERY MONTH TO THE EMPLOYER AND ALONG WITH RETURN T O THE ASSESSING AUTHORITY . IF, IN SUCH MATTERS, FILING OF THE ACCOUNTS AND VOUCHERS/RECEIPTS ARE INSISTED UPON TO CLAIM EXEMPTION UNDER SECTION 10(14) OF THE ACT 5 ITA NO. 242 & 243 /VIZ/2017 ( THOTA SRINIVASA BABU & ANO. ) BY THE INCOME - TAX AUTHORITIES, IT WILL LEAD TO VOIDABLE WASTE OF TIME AND EXPENDITURE AND WOU LD SERVE NO USEFUL PURPOSE BUT ON THE CONTRARY IT WOULD BE COUNTER - PRODUCTIVE . THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF K. PULLARAO (SUPRA) HAS CONSIDERED THE RATIO LAID DOWN BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT AND ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE. FOR THE SAKE OF CONVENIENCE , THE RELEVANT PORTION OF THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT, WHICH IS EXTRACTED BY THE ITAT , AS UNDER: - WE APPROVE THE REASONING OF THE TRIBUNAL. IN OUR VIEW WHERE AMOUN TS ARE PAID TO THE EMPLOYEES BY AN EMPLOYER TO MEET EXPENSES WHOLLY, NECESSARILY AND EXCLUSIVELY FOR THE PERFORMANCE OF THE DUTIES, SUCH AMOUNTS CAN BE EXEMPTED TO THE EXTENT IT IS SHOWN THAT IT HAS BEEN INCURRED FOR THE PURPOSE FOR WHICH IT WAS GRANTED. I N THE CASE OF EMPLOYEES OF THE STATE OR CORPORATIONS, WHETHER STATUTORY OR OTHERWISE, WHERE THE EMPLOYER AFTER HAVING SURVEYED THE ACTUAL EXPENDITURE NECESSARY FOR PERFORMANCE OF THE DUTY, GRANTS ACTUAL ALLOWANCE GENERALLY TO ALL THE EMPLOYEES, IT IS TO BE PRESUMED TH A T THE ENTIRE EXPENDITURE HAS BEEN INCURRED FOR THE PURPOS E FOR WHICH IT HAS BEEN GRAN T ED, FOR IF IT NOT INCURRED FOR WHICH IS HAS BEEN GIVEN, IT WOULD ENTAIL DISCIPLINARY ACTION AGAINST THE EMPLOYEE. UNLESS SUCH A CASE HAS BEEN INITIATED A GAINST AN EMPLOYEE BY AN EMPLOYER, THE SAID PRESUMPTION THAT THE EMPLOYEE HAS INCURRED THE EXPENDITURE FOR WHICH IT IS GRANTED, WILL APPLY AND IT WILL NOT BE NECESSARY FOR THE EMPLOYEES TO SUBMIT ACCOUNTS EVERY MONTH TO THE EMPLOYER AND ALONG WITH RETURN T O THE ASSESSING AUTHORITY. IF, IN SUCH MATTERS, FILING OF THE ACCOUNTS AND VOUCHERS/RECEIPTS ARE INSISTED UPON TO CLAIM EXEMPTION UNDER SECTION 10(14) OF THE ACT BY THE INCOME - TAX AUTHORITIES, IT WILL LEAD TO VOIDABLE WASTE OF TIME AND EXPENDITURE AND WOU LD SERVE NO USEFUL PURPOSE BUT ON THE CONTRARY IT WOULD BE COUNTER - PRODUCTIVE. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF B. CHINNAIAH & OTHERS (SUPRA) HAS CONSIDERED THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT AND ALLOWED THE DE DUCTION CLAIMED BY THE ASSESSEE. IN THIS 6 ITA NO. 242 & 243 /VIZ/2017 ( THOTA SRINIVASA BABU & ANO. ) VIEW OF THE MATTER, WE HOLD THAT THE ADDITIONAL CONVEYANCE ALLOWANCE IS EXEMPT UNDER SECTION 10(14) OF THE ACT. 9. BY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO KEEPING IN VIEW OF THE RATIO LAID DOWN BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT (SUPRA), WE ARE OF THE OPINION THAT THE EXEMPTION CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED. INSOFAR AS CASE - LAW RELIED ON BY THE ASSESSING OFFICER IN THE CASE OF B. CHINNAIAH & OTHERS (SUPRA) IS CONCERNED, IT RELATES TO INCENTIVE BONUS AND IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, THE ORDER PASSED BY THE LD. CIT(A) IS SET ASIDE AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA 24 3 /VIZ/2017 10 . THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS INVOLVED IN ITA NO.242/VIZ/2017. THEREFORE, OUR DECISION IN ITA NO. 242/VIZ/2017 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. 11 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 9 T H DAY OF NOV ., 201 8 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 9 T H NOVEMBER , 201 8 . VR/ - 7 ITA NO. 242 & 243 /VIZ/2017 ( THOTA SRINIVASA BABU & ANO. ) COPY TO: 1. THE ASSESSEE 1) THOTA SRINIVASA BABU, DEVELOPMENT OFFICER, LIC OF INDIA, 1 ST LANE, BRODIPET, PALKOL, W.G. DISTRICT. 2) AVADHANULA SRINIVASA RAO, DEVELOPMENT OFFICER, LIC OF INDIA, 1ST LANE, BRODIPET, PALKOL, W.G. DISTRICT . 2. THE REVENUE ITO, WARD - 1, PALKOL, W.G. DIST. 3. THE PR. CIT , RAJAMAHENDRAVARAM. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.