ITO, New Delhi V. Sh. Brijendra Pal Singh, Meerut

ITA 3870/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6630 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ K CHOPRA SENIOR
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.3870/DEL./2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD 1 (1), VS. SHRI BRIJENDRA PAL SINGH, MEERUT. B 135, SHASTRI NAGAR, MEERUT. (PAN : ABZPS8358P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VINOD KUMAR GOEL, ADVOCATE REVENUE BY : SHRI MANOJ K. CHOPRA, SENIOR DR O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE REVENUE, IS FIL ED AGAINST THE ORDER OF THE CIT (APPEALS), MEERUT DATED 04.03.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE SOLITARY GROUND OF APPEAL IS REGARDING DELET ION OF ADDITION OF RS.25,67,236/- FROM M/S. ENGENDER HEALTH, NEW DELHI WHICH HAS BEEN CLAIMED EXEMPT UNDER SECTION 10 (8) OF THE INCOME-T AX ACT, 1961 (HEREINAFTER THE ACT). 3. THE AO WAS OF THE OPINION THAT THE ASSESSEE DOES NOT QUALIFY FOR THE EXEMPTION AND MADE ADDITION. AGGRIEVED THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT (A) WHO WAS PLEASED TO DELETE THE SA ME HOLDING THAT THE ITA NO.3870/DEL./2013 2 ASSESSEE IS IN FACT QUALIFY FOR THE EXEMPTION AS CL AIMED BY THE ASSESSEE. FOR THE SAKE OF CLARIFY, THE RELEVANT PORTION OF THE OR DER OF THE LD. CIT (A) IS REPRODUCED HEREUNDER :- 2.3 THE EXEMPTION UNDER SECTION 10(8) OF THE ACT I S ADMISSIBLE TO AN INDIVIDUAL WHO IS ASSIGNED TO DUTI ES IN INDIA IN CONNECTION WITH ANY COOPERATIVE TECHNICAL ASSISTANC E PROGRAM OR PROJECT IN PURSUANCE OF AN AGREEMENT BETWEEN THE GOVERNMENTS OF INDIA AND USA. TWO OTHER CONDITIONS ARE THAT THE TERNS OF THE AGREEMENT SHOULD PROVIDE FOR THE E XEMPTION UNDER THIS PROVISION AND SECONDLY THAT THE REMUNERA TION RECEIVED BY THE INDIVIDUAL SHOULD BE DIRECTLY OR IN DIRECTLY FROM THE GOVERNMENT OF THE FOREIGN STATE FOR SUCH DUTIES . A COPY OF THE AGREEMENT BETWEEN THE TWO COUNTRIES DATED 30. 0 9. 1992 HAS BEEN FILED AT PAGE 33 OF THE PAPER BOOK SUBMITTED D URING THE APPEAL PROCEEDINGS AND THE PROJECT IS TO ASSIST THE GOVERNMENT OF INDIA IN REORIENTING AND ANALYZING ITS FAMILY PL ANNING PROGRAMME. SECTION 8.3 OF THE SAID AGREEMENT PROVID ES THAT THE GOODS, SERVICES, TRAINING AND CONTRACTOR PERSONNEL FINANCED BY THE GRANT OR PROVIDED BY A.I.D/WASHINGTON WILL BE E XEMPT FROM ANY TAXATION, DUTIES 0] FEES IMPOSED UNDER LAWS IN EFFECT IN THE TERRITORY OF INDIA. THE SPECIFIC PROJECT UNDER THE AGREEMENT IN CONNECTION OF WHICH THE ASSESSEE APPEARS TO HAVE RE NDERED SERVICES IS THE INNOVATION IN FAMILY PLANNING SERVI CES (IFPS). THE IFPS PROJECT WAS ORIGINALLY DESIGNED IN 1992 TO ASSIST THE INDIAN GOVERNMENT IN REVITALIZING FAMILY PLANNING S ERVICES USING THE STATE OF UP AS THE PRIMARY SITE AND TESTI NG GROUND FOR PROGRAM INNOVATIONS. AN INDEPENDENT SOCIETY, THE ST ATE INNOVATION IN FAMILY PLANNING SERVICES PROJECT AGEN CY (SIFPSA) WAS CREATED TO OVERSEE THE IMPLEMENTATION OF ACTIVITIES. DURING THE ASSESSMENT PROCEEDINGS, A LE TTER HAD BEEN FILED BY THE EMPLOYER OF THE ASSESSEE TO THE EFFECT THAT THE ASSESSEE WAS WORKING AS A SPECIALIST UNDER THE QUAL ITY ASSURANCE PROJECT UNDER THE IFPS II TECHNICAL ASSIS TANCE PROJECT FUNDED BY THE USAID. FROM THE DETAILS SUBMI TTED, IT APPEARS THAT THE PRIME CONTRACTOR IN THE SAID PROJE CT WAS CONSTELLA FUTURES INTERNATIONAL AND ENGENDER HEALTH , THE EMPLOYER OF THE ASSESSEE, WAS A SUBCONTRACTOR. HOWE VER, THE SAID PARTY WAS A SUBCONTRACTOR SPECIFICALLY FOR THE IFPS II PROJECT. UNDER THE CIRCUMSTANCES, IT DOES APPEAR TH AT THE ITA NO.3870/DEL./2013 3 ASSESSEE WAS WORKING ON A PROJECT WHICH WAS FUNDED BY THE USAID. THAT BEING SO, IT CAN ALSO NOT BE SAID THAT THE ASSESSEES REMUNERATION WAS NOT INDIRECTLY PAID BY THE USAID. IN THE ASSESSMENT ORDER FOR A.Y. 2008-09, THE AO HAS REFER RED TO THE INSERTION OF SUBSECTIONS 8A & 8B IN SECTION 10 BY T HE FINANCE ACT 1991. THE AO HAS TRIED TO SHOW THAT THE CASE OF THE ASSESSEE WAS COVERED BY SECTION 10 (8A) RATHER THAN SECTION 10(8) ON THE GROUND THAT USAID WAS AN INTERNATIONAL AGENCY. THE AO HAS COMPLETELY IGNORED THE AGREEMENT DATED 3 0. 09. 1992 WHICH WAS BETWEEN THE GOVERNMENTS OF INDIA AND USA MOREOVER, AS IS EVIDENT FROM THE EXPLANATORY NOTES TO THE FINANCE BILL 1991, SUBSECTION 8A WAS INTENDED TO EX TEND THE BENEFIT OF SECTION 10(8) TO MULTILATERAL AGENCIES S UCH AS THE WORLD BANK. CERTAINLY, USAID CANNOT BE TERMED AS A MULTILATERAL AGENCY. FURTHER, THE RELEVANT AGREEMEN T CATEGORICALLY PROVIDES EXEMPTION NOT ONLY TO GOODS, SERVICES, TRAINING BUT ALSO TO THE, CONTRACTOR PERSONNEL. IF THE PRIME CONTRACTOR HAS SUBCONTRACTED PART OF THE WORK TO A SUBCONTRACTOR, THE PERSONNEL OF SUCH SUBCONTRACTOR, WHO IS DEPLOYED ON THE PROJECT BEING IMPLEMENTED IN TERMS OF THE INTERGOVERNMENTAL AGREEMENT, WOULD ALSO QUALIFY FOR THE EXEMPTION. 2.4 WITHOUT PREJUDICE TO THE ABOVE, THE FACTOR WHIC H WEIGHS MOST IN FAVOUR OF THE ASSESSEE, ARE THE ORDERS ISSU ED BY THE CIT (A) DATED 07.05.2002 AND OF THE HONORABLE ITAT, DEL HI DATED 28. 10. 2005 IN THE ASSES SEES OWN CASE FOR THE AY. 1999-2000 & 2000-01. THE FACTS FOR THE YEAR ARE SIMILAR TO TH E YEAR UNDER CONSIDERATION. IT IS TRUE THAT IN THOSE YEARS, THE APPEALS RELATED TO REJECTION OF RECTIFICATION APPLICATION MADE BY THE ASSESSEE. NEVERTHELESS, THERE IS A CATEGORICAL FINDING BY THE CIT (A) THAT 'THE REMUNERATIONS HAD BEEN RECEIVED BY THE ASSESSE E IN PURSUANCE OF PROJECT UNDER THE COOPERATIVE TECHNICA L ASSISTANCE PROGRAM AND THE PROJECT WAS A RESULT OF AN AGREEMENT ENTERED INTO BY THE GOVERNMENTS OF INDIA AND THE USA FOR INNOVATION IN FAMILY PLANNING SERVICES. THE CLAUSES OF THE AGREEMENT PROVIDES FOR EXEMPTION OF REMUNERATIO N FROM TAXATION. SINCE ALL THE CONDITIONS ARE SATISFIED, T HERE IS NO DOUBT THAT THE INCOME/REMUNERATION RECEIVED BY THE APPELL ANT WAS EXEMPT FROM TAX'. EVEN THE ITAT HAS HELD THAT ON TH E FACTS AVAILABLE ON RECORD THE INCOME OF THE ASSESSEE IS ' UNDISPUTEDLY EXEMPT FROM TAX'. ITA NO.3870/DEL./2013 4 2.5 IN VIEW OF THE ABOVE, IT IS HELD THAT ASSESSEE IS ENTITLED TO EXEMPTION. 4. AGGRIEVED BY THE SAID DELETION OF THE ADDITION O F RS.25,67,236/-, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR CONTENDED THAT THE ASSESSEE RECEIVED SALARY IN CONNECTION WITH TECHNICAL ASSISTANCE PROGRAMME WHEREAS IN OR DER TO QUALIFY EXEMPTION U/S 10 (8) OF THE ACT IT HAD TO BE FOR COOPERATIVE TECHNICAL ASSISTANCE PROGRAMME AND THE EMPLOYER OF THE ASSESSEE DID NOT HAD ANY AGREEMENT DIRECTLY WITH THE US AGENCY FOR INTERNATIONAL DEVEL OPMENT (USAID) AND THAT AGENCY WHICH HAD DIRECT AGREEMENT WAS CONSTELLA FUT URES INTERNATIONAL, LLC AND SINCE THE EMPLOYMENT OF THE ASSESSEE WAS WITH A SUB-CONTRACTOR IT DOES NOT QUALIFY FOR EXEMPTION U/S 10 (8) OF THE ACT. T HE LD. DR POINTED OUT THAT EMPLOYER OF THE ASSESSEE ENGENDER HEALTH COULD NOT CONFIRM THAT THE REMUNERATION OF THE ASSESSEE IS FROM US GOVERNMENT. THEREFORE, THE AO HAD RIGHTLY HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR THE EXEMPTION U/S 10(8) OF THE ACT AND MADE THE ADDITION WHICH HAS BEEN DELETE D BY THE CIT (A) ERRONEOUSLY, SO IT HAD TO BE SET RIGHT AND THE ORDE R OF THE CIT (A) MAY BE SET ASIDE AND ORDER OF THE AO MAY BE RESTORED. 6. LD. AR, AT THE OUTSET ITSELF, POINTED OUT THAT T HE ITAT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEARS 1999-00 AND 2000-01 AND TOOK OUR ATTENTION TO PAGES 11 TO 14 OF THE PAP ER BOOK. HE FURTHER ITA NO.3870/DEL./2013 5 SUBMITTED THAT THIS FACT WAS BROUGHT TO THE NOTICE BEFORE THE AO, HOWEVER, HE BRUSHED ASIDE THE ORDER OF THE ITAT STATING THAT RE S JUDICATA IS NOT APPLICABLE TO THE INCOME-TAX PROCEEDINGS. THE LD. AR BROUGHT TO OUR ATTENTION THE AGREEMENT BETWEEN THE US GOVERNMENT AND THE INDIAN GOVERNMENT, WHICH IS PLACED AT PAGE 15 TO 29 OF PAPER BOOK, AND LETTER F ROM USAID FOR TAX EXEMPTION AT PAGES 30 TO 32 AND THE APPOINTMENT LET TER DATED 30.06.2007, WHICH IS PLACED AT PAGE 33 OF THE PAPER BOOK, AND A LSO LETTER OF CONFIRMATION FROM THE EMPLOYER ENGENDER HEALTH TO ITO WHICH IS P LACED AT PAGE 34, TO SUPPORT THE ARGUMENT THAT THE ASSESSEE IS IN FACT E LIGIBLE FOR THE EXEMPTION U/S 10 (8) OF THE ACT. IN THE LIGHT OF THE SAME, THE L D. AR DOES NOT WANT US TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) AND WAN TS US NOT TO DISTURB THE SAME. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. SECTION 10 (8) OF THE ACT WHICH READS AS UNDER :- 10(8) IN THE CASE OF AN INDIVIDUAL WHO IS ASSIGNED TO DUTIES IN INDIA IN CONNECTION WITH ANY CO-OPERATIVE TECHNICAL ASSISTAN CE PROGRAMMES AND PROJECTS IN ACCORDANCE WITH AN AGREEMENT ENTERED IN TO BY THE CENTRAL GOVERNMENT AND THE GOVERNMENT OF A FOREIGN STATE (T HE TERMS WHEREOF PROVIDE FOR THE EXEMPTION GIVEN BY THIS CLAUSE) ( A ) THE REMUNERATION RECEIVED BY HIM DIRECTLY OR IND IRECTLY FROM THE GOVERNMENT OF THAT FOREIGN STATE FOR SUCH DUTIES, A ND ( B ) ANY OTHER INCOME OF SUCH INDIVIDUAL WHICH ACCRUES OR ARISES OUTSIDE INDIA, AND IS NOT DEEMED TO ACCRUE OR ARISE IN INDIA, IN RESPECT OF WHICH SUCH INDIVIDUAL IS REQUIRED TO PAY ANY INCOME OR SOCIAL SECURITY TAX TO THE GOVERNMENT OF THAT FOREIGN STATE; ITA NO.3870/DEL./2013 6 A BARE READING OF THE AFORESAID PROVISIONS OF LAW I S THAT THE CONDITIONS STIPULATED FOR CLAIMING THE EXEMPTION ARE THAT IF A N ASSESSEE IS ASSIGNED TO DUTIES IN INDIA IN CONNECTION WITH ANY COOPERATIVE TECHNICAL ASSISTANCE PROGRAMMES AND PROJECTS WHICH IS IN ACCORDANCE WITH THE AGREEMENT ENTERED INTO BY THE CENTRAL GOVERNMENT AND A FOREIGN STATE AND IN THE SAID AGREEMENT BETWEEN THE TWO COUNTRIES, THE TERMS FOR EXEMPTION ARE PROVIDED AS PER THE REQUIREMENT OF THIS SECTION I.E. SECTION 10 (8) OF THE ACT. ON THE PERUSAL OF THE RECORDS, WE FIND THAT THE ASSESSEE IS EMPLOYED BY E NGENDER HEALTH PREVIOUSLY KNOWN AS AVSC INTERNATIONAL WHICH IS AN INTERNATION AL NON-GOVERNMENT ORGANISATION AND A NOT FOR PROFIT ORGANISATION APPR OVED BY USAID TO WORK AS NGO. THE ASSESSEE WAS WORKING WITH THE SAID ORGANI ZATION AS QUALITY IMPROVEMENT SPECIALIST FOR THE USAID SUPPORTED PROJ ECT, SMASTHA. VIDE LETTER DATED 16.06.2010, PAGE 34 OF THE PAPER BOOK, THE EMPLOYER HAS SPECIFICALLY CONFIRMED THAT THE PAYMENTS MADE TO TH E ASSESSEE ARE MADE OUT OF FUNDS RECEIVED FROM AGENCY LIKE UNITED STATES AGENC Y FOR INTERNATIONAL DEVELOPMENT AND ALL THE FUNDS ARE RECEIVED IN DOLL ARS AND PAID TO ASSESSEE AFTER CONVERTING INTO INDIAN CURRENCY. THE AGREEME NT DATED 30.09.1992 BETWEEN THE UNITED STATES OF AMERICA AND THE UNION OF INDIA IS PLACED FROM PAGES 15 TO 29 OF THE PAPER BOOK IN WHICH THE TERM OF SECTION 8.3 STATES AS FOLLOWS :- SECTION 8.3. . ITA NO.3870/DEL./2013 7 THE PARTIES AGREE THAT REFERENCES TO THE GRANT IN ANNEX 2 SHALL INCLUDE ALL GOODS, SERVICES, TRAINING, AND CONTRACTOR PERSO NNEL PROVIDED BY A.I.D./WASHINGTON IN SUPPORT OF THE PROJECT. THERE FORE, FOR EXAMPLE, GOODS, SERVICES, TRAINING, AND CONTRACTOR PERSONNEL FINANCED BY THE GRANT OR PROVIDED BY A.I.D. / WASHINGTON WILL BE EXEMPT F ROM ANY TAXATION, DUTIES OR FEES IMPOSED UNDER LAWS IN EFFECT IN THE TERRITORY OF THE GRANTEE. AS PER THE CONDITIONS PRESCRIBED IN SECTI8ON 10 (8) , THE PROJECT SAMASTHA WHICH THE EMPLOYER OF THE ASSESSEE STEMS FROM THE A GREEMENT BETWEEN THE INDIAN AND THE FOREIGN STATE USA BY VIRTUE OF AGREE MENT DATED 30.09.1992 AND THE TERMS OF THE AGREEMENT SPECIFICALLY EXEMPTS INCOME OF THE PERSONNEL WORKING WITH THE USAID PROJECT AS REQUIRED BY THE S ECTION 10(8) OF THE ACT AND THE ASSESSEE BEING PAID INDIRECTLY BY THE UNITE D STATES AGENCY FOR INTERNATIONAL DEVELOPMENT SATISFIES THE REQUIREMENT OF LAW TO CLAIM EXEMPTION U/S 10 (8) OF THE ACT. MOREOVER, WE ALSO GET SUPPORT FROM THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL WH EREIN THE TRIBUNAL HAS ALSO ACCEPTED THE CLAIM OF THE ASSESSEE IN THE ASSE SSMENT YEARS 1999-00 AND 2000-01. IN THE SAID FACTUAL BACKDROP AND SINCE TH ERE IS NO CHANGE IN THE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT (A) AND, THEREFORE, WE UPHOLD THE ORDER OF THE CIT (A) AND DISMISS THE APP EAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF FEBRUARY, 2016. SD/- SD/- (J.S. REDDY) (A.T. VARKE Y) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 24 TH DAY OF FEBRUARY, 2016/TS ITA NO.3870/DEL./2013 8 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.