Umakanta Behera, Bhubaneswar V. ITO, Bhubaneswar

ITA 259/CTK/2011

• Counselvise Citation: 25922114 RSA 2011
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: P C MISHRA
• Keywords: Principle of natural justice; Set aside

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 259/CTK/2011 (ASSESSMENT YEAR 2005 - 06) UMAKANTA BEHERA, S/O. PADMA CHARAN BEH ERA, FLAT NO.B/9, RASHIMI TOWER, NAGESWARTANJI, BHUBANESWAR 751002 PAN: AAOPB 8061 A VERSUS INCOME - TAX OFFICER, WARD 2(4), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI P.C.MISHRA, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR ORDER S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.183,2011 FOR THE ASSESSMENT YEAR 2005 - 06 IN CASE OF THE ASSESSEE. 2. THE ASSESSEE IS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL, CHALLENGING - (1) THE DISALLOWANCE OF WHOLE AMOUNT OF CONVEYANCE ALLOWANCE OF 2,38,970. (2) THE DISALLOWANCE OF EXPENSES OUT OF THE INCENTIVE BONUS OF 3,26,978. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES AS WELL AS THE JUDICIAL AUTHORITIES RELIED UPON BY THEM, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A DEVELOPMENT OFFICER WORKING IN LIC OF IN DIA. THE ASSESSING OFFICER MADE THE ASSESSMENT U/S.143(3)/147 BY DETERMIN IN G THE SALARY TAXABLE IN THE HANDS OF THE ASSESSEE AT 7,43,063 AND DEMANDED TAX OF 1,45,354. AGGRIEVED BY THIS ASSESSMENT ORDER, THE ITA NO.259/CTK/2011 2 ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A) AND IS UNSUCCESSFUL. HENCE, THE PRESENT APPEAL IS FILED BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED CONTENDING INTER ALIA THAT THE LOWER AUTHORITIES ERRED IN TAXING THE ENTIRE AMOUNT OF INCENTIVE BONUS AS SALARY. THEY ALSO ERRED IN TAXING EH WHOLE AMOUNT OF CONVEYANCE ALLOWANCE WITHOUT ALLOWING ANY DEDUCTION THERE FROM TOWARDS EXPENSES AS PER CIRCULAR F.NO.173(3)/10/2009 - ITA - 1 DT.13.5.2009 OF GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL BOARD OF DIRECT TAXES, WHICH SAYS THAT THE INCENTIVE BONUS WOULD BE TAXABLE AS SALARY IN VIEW OF TH E EMPLOYER - EMPLOYEE RELATIONSHIP AND ONLY SUCH REIMBURSEMENTS THAT ARE ACTUAL REIMBURSEMENT OF THE EXPENDITURE INCURRED WOULD BE TREATED AS EXEMPT. REIMBURSEMENT OF EXPENDITURE WOULD NOT BE INCLUDED IN SALARY BUT WILL HAVE TO BE SHOWN SEPARATELY IN T HE SALARY CERTIFICATE. AS THE LOWER AUTHORITIES HAVE NOT FOLLOWED THIS CIRCULAR OF CBDT, THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE NOT SUSTAINABLE FOR LEGAL SCRUTINY AND ARE LIABLE TO BE SET ASIDE. 6. CONTRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE ORDERS PASSED BY THE LOWER AUTHORITIES AND SOUGHT FOR DISMISSAL OF THE ASSESSEES APPEAL BY UPHOLDING THE ORDER OF THE LEARNED CIT(A). 7. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSI ONS AS WELL AS THE AUTHORITIES RELIED UPON BY THEM SPECIFICALLY THE CIRCULAR OF CBDT STATED SUPRA, IT IS FOUND THAT AS PER THE SAID CIRCULAR OF CBDT INCENTIVE BONUS IS ENTIRELY TO BE TREATED AS SALARY AND LIABLE TO TAX AS SUCH BUT IN THE CASE OF CONVEYA NCE ALLOWANCE IT IS FOUND THAT THE ABOVE CBDT CIRCULAR CLEARLY MENTIONS THAT THE ACTUAL REIMBURSEMENT PORTION OF THE CONVEYANCE ALLOWANCE IS TO BE EXEMPTED. BUT AS CAN BE SEEN FROM THE ORDERS PASSED BY THE LOWER AUTHORITIES, THEY HAVE NOT CONSIDERED ITA NO.259/CTK/2011 3 THE A PPLICABILITY OF THIS CIRCULAR WHICH IS BINDING ON THE DEPARTMENTAL AUTHORITIES WHILE PASSING THE ORDERS IN QUESTION. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE TO BE RESTORED TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE CLAIM S OF THE ASSESSEE IN THE LIGHT OF THE CBDT CIRCULAR STATED SUPRA AND PASS NECESSARY CONSEQUENTIAL ORDER, OF COURSE STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONO UNCED IN OPEN COURT ON DT. 5 TH AUGUST, 2011 S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 5 TH AUGUST, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: UMAKANTA BEHERA, S/O. PADMA CHARAN BEHERA, FLAT NO.B/9, RASHIMI TOWER, NAGESWARTANJI, BHUBANESWAR 751002. 2. THE RESPONDENT: INCOME - TAX OFFICER, WARD 2(4), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.