ACIT Circle-47 (1), New Delhi V. David Reekie Ferguson, New Delhi

ITA 3208/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9883 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 24-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER I.T.A.NO.3208/DEL/2008 ASSESSMENT YEAR : 2003-04 ASSTT. COMMISSIONER OF INCOME-TAX, SHRI DAVID REEK IE FERGUSON, CIRCLE 47(1), NEW DELHI. VS. C/O PARSONS BRIC KERHOFF INTERNATIONAL INC. NBCC PLACE, BHISHAM PITAMAH MARG, PRAGATI VIHAR, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANIS H GUPTA, DR. RESPONDENT BY : NONE. O R D E R PER DEEPAK R. SHAH, ACCOUNTANT MEMBER. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXX, NEW DELHI , DATED 30.07.2008 2 FOR THE ASSESSMENT YEAR 2003-04, IN AN APPEAL AGAIN ST THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS BEF ORE US:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO IN RESPECT OF: 1. INCLUSION OF TAX BORNE BY THE EMPLOYER IN SALARY FOR THE PURPOSES OF CALCULATING PERQUISITE VALUE FOR RENT-F REE ACCOMMODATION PROVIDED BY THE EMPLOYER RESULTING IN ADDITION OF RS.96,915/-. 2. GROSSING UP OF TAX BORNE BY THE EMPLOYER AMOUNTI NG TO RS.9,69,152/- BY REJECTING THE PLEA OF THE ASSESSEE FOR EXEMPTION U/S 10(10CC) OF I.T. ACT. 3. THE ASSESSEE IS AN EMPLOYEE OF PARSONS BRINCKERH OFF INTERNATIONAL INC., USA (HEREINAFTER REFERRED TO AS PB INC.) WH ICH HAS A PROJECT OFFICE IN INDIA. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON SEPTEMBER 15, 2003, DECLARING A TOTAL TAXAB LE INCOME OF RS.72,15,390/-. THE TOTAL TAX PAYABLE THEREON OF R S.22,45,548/- WAS DISCHARGED BY WAY OF TAX DEDUCTED AT SOURCE OF RS.2 4,19,430/- RESULTING IN A REFUND OF RS.1,73,882/-. THE REFUND OF RS.1,73,88 2/- WAS RECEIVED BY THE ASSESSEE VIDE INTIMATION ISSUED UNDER SECTION 143(1 ) OF THE ACT. SINCE THE TAXES ON SALARY OF THE ASSESSEE WERE BORNE BY THE E MPLOYER AND THE REFUND WAS OBTAINED BY THE ASSESSEE PERTAINED TO SUCH EXCE SS TAXES DEDUCTED AT SOURCE, THE ASSESSEE PAID BACK THE AMOUNT OF SUCH R EFUND TO THE EMPLOYER. 3 IN THIS REGARD, THE ASSESSEE HAD FILED EVIDENCE BEF ORE THE ASSESSING OFFICER SUBSTANTIATING THAT THE REFUND WAS PAID BACK TO PB INC. THE ASSESSING OFFICER ADDED THE TAX BORNE BY THE EMPLOYER IN THE SALARY FOR THE PURPOSE OF COMPUTING PERQUISITE VALUE OF RENT-FREE ACCOMMODATI ON PROVIDED TO THE ASSESSEE. 4. WE FIND THAT THE TAX BORNE BY THE EMPLOYER IS TO BE TREATED AS PERQUISITE WITHIN THE MEANING OF SECTION 17(2)(IV) OF THE ACT. THEREFORE, IN TERMS OF CLAUSE (D) OF EXPLANATION TO RULE 3 OF THE INCOME-TAX RULES, 1962, THE SALARY WILL NOT INCLUDE THE PERQUISITE FOR THE PURPOSE OF VALUATION OF RENT- FREE ACCOMMODATION. ACCORDINGLY THE TAX BORNE BY T HE EMPLOYER CANNOT BE ADDED TO THE AMOUNT OF SALARY FOR THE PURPOSE OF CALCULATING PERQUISITE VALUE OF RENT-FREE ACCOMMODATION. 5. AS REGARDS GROSSING UP OF THE TAX BORNE BY THE E MPLOYER FOR PURPOSE OF EXEMPTION UNDER SECTION 10(10CC) OF THE ACT, WE FIND THAT THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE SPECIAL BE NCH OF THE TRIBUNAL IN THE CASE OF RBF RIG CORPORATION, LLC. VS. ASSTT. CIT, 1 09 ITD 141. THE SPECIAL BENCH OF THE TRIBUNAL HELD THAT THE TAX BOR NE BY THE EMPLOYER IS EXEMPT AND THE SAME CANNOT BE ONCE AGAIN ADDED IN T HE VALUE OF PERQUISITE FOR THE PURPOSE OF COMPUTING TAX LIABILITY OF ASSES SEE, AN EMPLOYEE. THEREFORE, THERE IS NO SCOPE OF DOUBLE GROSSING UP. IN VIEW OF THE DECISION 4 OF SPECIAL BENCH OF THE TRIBUNAL, THE ADDITION WAS RIGHTLY DELETED BY THE LEARNED CIT(A) OF RS.9,69,152/-. 6. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2009. SD/- SD/- (I.P. BANSAL) (DEEPAK R. SHAH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH AUGUST, 2009. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.