ITO 16(1)(4), MUMBAI V. RAJAN P. KAICKER, MUMBAI

ITA 2680/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62414 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 07-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M V SUBRAMANIAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER. I.T.A. NO. 2680/MUM/2011. ASSESS MENT YEAR : 2003-04. THE INCOME-TAX OFFICER, SHRI RAJAN P. KAICHER, 16(1)(4), MUMBAI. VS. B-21 GRAND PARADI APTS, AUGUST KRANTI MARG, MUMBAI 400036. PAN AAFPK2122A. APPELLANT. RESPONDENT. APPELLANT BY : SHRI SANDEEP GOEL. RESPONDENT BY : SHRI M.V.SUBRAMANIAN. DATE OF HEARING : 24-04-2012 DATE OF PRONOUNCEMENT : 16-05-2012 O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(APPEALS)-27, MUMBAI DATED 6 TH DECEMBER, 2010 AND IN THE SOLITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTI ON OF THE LEARNED CIT(APPEALS) IN RESTRICTING THE AMOUNT OF SALARY RECEIVED U/S 17 (3) OF THE INCOME-TAX ACT, 1961 TO THE AMOUNT OF RECEIPT. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF PROVIDING CONSULTANCY IN MARKETING UNDE R THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S AAMARKAY. THE RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 28-11-2003 DECLAR ING TOTAL INCOME OF 2 ITA NO.2680/MUM/2011 RS.88,99,079/-. IN THE SAID RETURN, THE ASSESSEE HA D ALSO OFFERED A SUM OF RS,58,39,416/- BEING PROFIT IN LIEU OF SALARY U/S 1 7(3). AS PER THE DETAILS FILED BY THE ASSESSEE, THE SAID AMOUNT WAS RECEIVED IN TERMS OF AN AGREEMENT AS ONE TIME SETTLEMENT WITH M/S MODI ENTERTAINMENT LTD. IN THE ENQUIRY CONDUCTED BY THE AO, M/S MODI ENTERTAINMENT LTD. INFORMED THAT THE AMOUN T SETTLED WITH THE ASSESSEE WAS RS.38,17,339/- AND NOT RS.58,39,416/- AS CLAIME D BY THE ASSESSEE. ACCORDING TO THE ASSESSEE, THE SUM OF RS.58,39,416/- OFFERED BY HIM WAS INCLUSIVE OF INCOME- TAX WHICH M/S MODI ENTERTAINMENT LTD. WAS LIABLE TO DEDUCT FROM THE AMOUNT PAYABLE TO THE ASSESSEE. IT WAS ALSO SUBMITTED BY T HE ASSESSEE THAT HE WAS PURSUING THE MATTER WITH THE COMPANY FOR OBTAINING THE NECES SARY TDS CERTIFICATE. KEEPING IN VIEW THE SUBMISSION MADE BY THE ASSESSEE AND HAV ING REGARD TO THE FACT THAT THE MATTER RELATING TO TDS WAS STILL PENDING, THE AMOUN T OF RS.58,39,416/- OFFERED BY THE ASSESSEE U/S 17(3) WAS INCLUDED BY THE AO IN TH E TOTAL INCOME OF THE ASSESSEE AS ASSESSED VIDE AN ORDER DATED 28-02-2006 PASSED U /S 143(3). 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), A N APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) WHO IN ITIALLY DISMISSED THE SAME AS NOT ADMITTED ON THE GROUND THAT TAX DUE ON THE INCO ME OFFERED IN THE RETURN HAD NOT BEEN PAID BY THE ASSESSEE. HE NOTED THAT ALTHOUGH T HERE WAS A SHORTFALL IN PAYMENT OF TAX ON THE RETURNED INCOME IN RESPECT OF PROFITS IN LIEU OF SALARY FROM WHICH M/S MODI ENTERTAINMENT LTD. WAS OBLIGED TO DEDUCT TAX, THE CERTIFICATE FOR TDS WAS NOT FILED BY THE ASSESSEE. THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE TRIBUNAL WHO REMANDED THE MATTER TO THE LEARNED CIT(APPEALS) WITH A DIRECTION TO ADMIT THE APPEAL OF THE ASSESSEE AND DECIDE THE SAME ON MERIT S. MEANWHILE THE ASSESSEE HIMSELF PAID THE TAX DUE ON THE RETURNED INCOME TO REVIVE HIS APPEAL AND TAKING NOTE OF ALL THESE FACTS INCLUDING THE FACT THAT THE RE WAS NO DEDUCTION OF TAX AT SOURCE MADE BY M/S MODI ENTERTAINMENT LTD. FROM THE AMOUNT SETTLED WITH THE ASSESSEE, 3 ITA NO.2680/MUM/2011 THE LEARNED CIT(APPEALS) HELD THAT THE ASSESSEE WAS LIABLE TO BE TAXED ONLY ON THE AMOUNT OF RS.38,17,339/- ACTUALLY RECEIVED BY THE A SSESSEE AND NOT ON RS.58,39,416/- DECLARED BY THE ASSESSEE BY GROSSING UP THE AMOUNT OF TDS WHICH WAS NEVER MADE. ACCORDINGLY, THE APPEAL FILED BY TH E ASSESSEE WAS ALLOWED BY THE LEARNED CIT(APPEALS) AND AGGRIEVED BY THE SAME, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE AMOUNT OF R.58,39,416/- INITIALLY OFFERED BY THE ASSESSEE AS PROFIT IN LIEU OF SALARY U/S 17( 3) WAS INCLUSIVE OF TAX WHICH THE EMPLOYER M/S MODI ENTERTAINMENT LTD. WAS OBLIGED TO DEDUCT. THE SAID COMPANY, HOWEVER, DID NOT DEDUCT ANY TAX AT SOURCE AND IT WA S THE ASSESSEE WHO FINALLY PAID THE TAX ON THE AMOUNT RECEIVED FROM M/S MODI ENTERT AINMENT LTD. AS ONE TIME SETTLEMENT. IT IS THUS CLEAR THAT ONLY THE AMOUNT O F RS.38,17,338/- WAS ACTUALLY RECEIVED BY THE ASSESSEE FROM M/S MODI ENTERTAINMEN T LTD. AS PROFIT IN LIEU OF SALARY AND AS RIGHTLY HELD BY THE LEARNED CIT(APPEA LS), THE SAME ALONE WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE U/S 17(3) AND NOT RS.58,39,416/- WHICH WAS OFFERED BY THE ASSESSEE BY GROSSING UP T HE TDS AMOUNT. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEAR NED CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAM E, WE DISMISS THIS APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THIS 16 TH DAY OF MAY, 2012. SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 16 TH MAY, 2012 4 ITA NO.2680/MUM/2011 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, D-BENCH. (TRUE COPY) BY ORDE R ASSTT. REGI STRAR, ITAT, MUMBAI BEN CHES, MUMBA I, WAKODE