DCIT, Trivandrum V. C. W. P. Taylor, Trivandrum

ITA 390/COCH/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58227 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 05-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 01-07-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: V SATYANARAYANAN
• Keywords: Salary income; Revised return

Judgement Text

ITA NO.390/COCH/2009, SRI C.W.P.TAYLOR 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE: SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 390/COCH/2009 ASSESSMENT YEAR : 2005-06 DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(1), RANGE-2, TRIVANDRUM. SRI C.W.P.TAYLOR, M/S TOKYO ENGINEERING CONSULTANTS CO. LTD, CORDIAL CENTRE, TC-6/1220, KANJIRAMPARA, TRIVANDRUM (APPELLANT) VS. (RESPONDENT) P.A. NO. ADSPT 7776 P APPELLANT BY: SHRI MS. S.VIJAYAPRABHA, JR. D.R RESPONDENT BY: SHRI V.SATYANARAYANAN DATE OF HEARING: 05-01-2012 DATE OF PRONOUNCEMENT: 20-01-2012 ORDER PER SHRI B.R.BASKARAN, ACCOUNTANT MEMBER:- THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10-02- 2009 PASSED BY LEARNED CIT(A)-I, TRIVANDRUM AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE RELATES TO THE FOLLOWING TWO ISSUES: (A) WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN HOL DING THAT ONLY THE TAX PAYABLE ON THE SALARY INCOME OF THE ASSESSEE IS INCOME INSTEAD OF THE ENTIRE AMOUNT OF TDS OF RS.53,14,092/-. (B) WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN HO LDING THAT THE VALUE OF ACCOMMODATION AMOUNTING TO RS.3,60,000/- PROVIDE D BY M/S KERALA WATER AUTHORITY DOES NOT FORM PART OF THE TOTAL IN COME OF THE ASSESSEE. 3. THE FACTS RELATING TO THE IMPUGNED ISSUES AR E STATED IN BRIEF. THE STATUS OF THE ASSESSEE HEREIN UNDER THE INCOME TAX ACT DUR ING THE YEAR UNDER ITA 390/COCH/2009, SRI C.W.P TAYLOR E 2 CONSIDERATION IS RESIDENT BUT NOT ORDINARILY RESID ENT. HE IS AN EMPLOYEE OF M/S TOKYO ENGINEERING CONSULTANTS CO LTD. (TECCL), JAPAN, WHICH UNDERTOOK A COMMERCIAL CONTRACT WITH M/S KERALA WATER AUTHORI TY (KWA). IN PURSUANCE OF THE SAID CONTRACT, THE ASSESSEE HEREIN WAS DEPUT ED TO INDIA. AS PER THE TERMS OF THE AGREEMENT ENTERED BETWEEN M/S TECCL AN D M/S KWA, THE SALARY OF THE ASSESSEE SHALL BE PAID BY M/S TECCL A ND THE INCOME TAX DUE ON SAID SALARY PAYMENT SHALL BE REIMBURSED BY M/S KWA. ACCORDINGLY A SUM OF RS.53,14,092/- WAS CALCULATED AS TAX PAYABLE ON THE SALARY INCOME OF THE ASSESSEE. IT WAS STATED THAT THE TDS ON SALARY WAS REMITTED TO THE INCOME- TAX DEPARTMENT BY M/S TECCL AND THE SAME WAS COLLEC TED FROM M/S KWA AS REIMBURSEMENT. THE ASSESSEE FILED HIS RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION DECLARING A TOTAL INCOME OF RS.1,58,7 4,224/-. SUBSEQUENTLY, HE FILED A REVISED RETURN OF INCOME, WHEREIN HE CLAIME D THE ENTIRE SALARY INCOME AS EXEMPT AND ACCORDINGLY CLAIMED REFUND OF ENTIRE TDS AMOUNT OF RS.53,14,092/-. IN THE SCRUTINY PROCEEDINGS, THE AS SESSING OFFICER REJECTED THE CLAIM OF EXEMPTION AND ACCORDINGLY ASSESSED THE SALARY RECEIVED BY THE ASSESSEE UNDER THE HEAD INCOME FROM SALARY. THE ASSESSING OFFICER ALSO ASSESSED THE TDS AMOUNT OF RS.53,14,092/- UNDER THE HEAD INCOME FROM OTHER SOURCES. THE AO ALSO NOTICED THAT THE ASSES SEE WAS PROVIDED AN ACCOMMODATION BY M/S KWA AND THE VALUE OF THE SAID ACCOMMODATION WAS TAKEN AT RS.3,60,000/-, WHICH WAS ALSO ASSESSED UND ER THE HEAD INCOME FROM OTHER SOURCES BY THE ASSESSING OFFICER, BY PL ACING RELIANCE ON THE DECISION OF HON'BLE KERALA HIGH COURT IN THE CASE O F G. EROPPIAD GOOVANNI (196 ITR 618). 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEF ORE LEARNED CIT(A). BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE SUBMITT ED THAT, ONLY THE AMOUNT OF TAX PAYABLE ON THE SALARY INCOME SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. HE ALSO CONTENTED THE ADDITIO N OF RS.3,60,000/- PERTAINING TO THE VALUE OF ACCOMMODATION PROVIDED T O THE ASSESSEE SHOULD NOT HAVE BEEN ASSESSED IN HIS HANDS. SINCE THE L EARNED CIT(A) ALLOWED THE APPEAL, THE REVENUE IS IN APPEAL BEFORE US. ITA 390/COCH/2009, SRI C.W.P TAYLOR E 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE DID NOT PURSUE BEFORE T HE LEARNED CIT(A) HIS CLAIM THAT THE SALARY INCOME IS EXEMPT FROM TAXATIO N. HE RESTRICTED HIS CLAIM WITH REGARD TO THE QUANTUM OF INCOME TAX THAT IS AS SESSABLE IN HIS HANDS UNDER THE HEAD INCOME FROM OTHER SOURCES AND ALSO WITH REGARD TO THE AMOUNT OF RS.3,60,000/-, BEING THE VALUE OF ACCOMMO DATION PROVIDED TO HIM MY M/S KWA. 6. WE SHALL FIRST CONSIDER THE ISSUE RELATING T O THE TAXABILITY OF INCOME TAX PAYABLE ON THE SALARY INCOME. THE IMPUGNED ISSUE A RISES ONLY FOR THE REASON THAT THE ASSESSEE HAS BEEN PAID SALARY NET OF TAX, I.E. THE INCOME TAX PAYABLE ON HIS SALARY IS BORNE BY M/S KWA. THERE IS NO DIS PUTE WITH REGARD TO THE FACT THAT A SUM OF RS.53,14,092/- WAS REMITTED AS T HE AMOUNT OF TDS ON THE SALARY PAID TO THE ASSESSEE, WHICH IS SAID TO INCLU DE THE INCOME TAX ON THE TAX COMPONENT OF THE SALARY, I.E., TAX ON INCOME TAX. T HUS THE AMOUNT OF RS.53,14,092/- IS THE GROSSED UP FIGURE. HOWEVER , THERE APPEARS TO BE CONFUSION ABOUT THE ACTUAL AMOUNT OF INCOME TAX PAY ABLE ON THE SALARY INCOME OF THE ASSESSEE. IN THE GROUNDS OF APPEAL FI LED BEFORE THE LEARNED CIT(A), THE TAX PAYABLE ON THE SALARY INCOME OF RS. 95,44,814/- IS STATED AS RS.31,21,186/- AND ACCORDINGLY IT WAS PLEADED BY TH E ASSESSEE THAT THE SAID AMOUNT OF RS.31,21,186/- SHOULD ONLY BE ASSESSED IN HIS HANDS INSTEAD OF RS.53,14,092/-. HOWEVER, IN THE WRITTEN SUBMISSION S FILED BEFORE THE BENCH, IT IS STATED THAT THE TAX PAYABLE ON SALARY INCOME OF THE ASSESSEE IS RS.49,93,640/-. 7. BE THAT AS IT MAY, NOW, WE SHALL TURN TO THE LEGAL ASPECTS PERTAINING TO THE TAXABILITY OF THE TAX DEDUCTED AT SOURCE FROM T HE SALARY INCOME. WE NOTICE THAT THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE INCOME TAX PAYABLE ON THE INCOME OF THE ASSESSEE IS TAXABLE AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES IN HIS HANDS. HOWEVER, THE DISPUTE IS WITH REGARD TO THE QUANTUM OF TAX THAT IS ASSESSABLE UND ER THE HEAD INCOME FROM OTHER SOURCES. ACCORDING TO THE ASSESSEE, THE IN COME TAX PAYABLE ON THE SALARY INCOME ONLY IS ASSESSABLE. HOWEVER, ACCORDI NG TO THE REVENUE, SINCE ITA 390/COCH/2009, SRI C.W.P TAYLOR E 4 THE ASSESSEE IS PAID SALARY FREE OF TAX, THE INCOME TAX ON THE SAID TAX COMPONENT IS ALSO ASSESSABLE, I.E. GROSSED UP FIGU RE. IN SUPPORT OF HIS CONTENTIONS, THE ASSESSEE HAS TAKEN SUPPORT OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF EMIL WEBBER VS. CIT (2 00 ITR 483) AND ALSO THE DECISION DATED 30-01-2008 RENDERED BY THE COCHI N BENCH OF THE TRIBUNAL IN THE CASE OF DY.COMMISSIONER OF INCOME TAX VS. RAJ ENDRA VARMA AND OTHERS IN ITA NO.37/COCH/2007 & OTHERS. THE LEARN ED CIT(A) ALSO, BY FOLLOWING THE DECISION OF COCHIN BENCH OF TRIBUNAL REFERRED (SUPRA), HAS ALLOWED THE CLAIM OF THE ASSESSEE. 8. THE COCHIN BENCH OF TRIBUNAL, IN THE CASE OF RAJENDRA VARMA AND OTHERS REFERRED (SUPRA), HAS CONSIDERED AN IDENTICAL VIEW AND HAS UPHELD THE VIEW OF THE LEARNED CIT(A) THEREIN THAT THE SAID ISSUE WAS COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF EMIL WEBBER, ( SUPRA). ACCORDINGLY THE TRIBUNAL DECIDED THE SAID ISSUE IN FAVOUR OF THE AS SESSEE. IT IS PERTINENT TO NOTE THAT THE REVENUE, IN THE ABOVE CITED CASE, REL IED UPON ANOTHER DECISION OF COCHIN BENCH OF TRIBUNAL DATED 28-04-2006, WHERE IN THE TRIBUNAL HAD TAKEN THE VIEW THAT ONLY THE GROSSED UP FIGURE IS A SSESSABLE. IN THE CASE OF RAJENDRA VARMA, (SUPRA), THE COCHIN BENCH OF THE TR IBUNAL HAS TAKEN NOTE OF THE FACT THAT THE LEARNED CIT(A) THEREIN HAD DISTIN GUISHED THE FACTS PREVAILING IN THAT CASE AND ACCORDINGLY HELD THAT THE DECISION DATED 28-04-2006 RENDERED BY COCHIN BENCH OF THE TRIBUNAL IS NOT APP LICABLE. 9. WE HAVE CAREFULLY CONSIDERED THE DECISION RE NDERED BY HON'BLE SUPREME COURT IN THE CASE OF EMIL WEBBER (SUPRA). WE NOTIC E THAT THE ASSESSMENT YEAR INVOLVED IN THE CASE OF EMIL WEBBER (SUPRA) IS ASSESSMENT YEAR 1974-75 AND 1975-76. THE QUESTION THAT WAS CONSIDERED BY H ON'BLE APEX COURT READS AS UNDER: WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AMOUNT OF TAX PAID BY BALLARPUR ON BEHALF OF THE AS SESSEE IN THE ASSESSMENT YEARS 1974-75 AND 1975-76, IS INCOME TAX ABLE UNDER THE HEADING OTHER SOURCES? THUS, IT CAN BE SEEN THAT THE ISSUE CONSIDERED BY H ON'BLE APEX COURT RELATES TO THE TAXABILITY OF THE INCOME TAX PAID ON BEHALF OF THE ASSESSEE ON THE INCOME, WHICH WAS PAID NET OF TAX. HOWEVER, IN THE INSTANT CASE, THERE IS NO ITA 390/COCH/2009, SRI C.W.P TAYLOR E 5 DISPUTE BETWEEN THE PARTIES ABOUT THE TAXABILITY OF INCOME TAX PAYABLE ON THE SALARY INCOME. THE DISPUTE IS, AS STATED EARLIER, WITH REGARD TO THE QUANTUM OF TAX WHICH IS ASSESSABLE IN THE HANDS OF THE ASSE SSEE. THE CONTENTION OF THE ASSESSEE IS THAT HE IS NOT LIABLE TO BE ASSESSE D ON THE INCOME TAX PAYABLE ON THE TAX PAYABLE ON SALARY INCOME AND IT CAN BE N OTICED THAT THE HON'BLE SUPREME COURT DID NOT CONSIDER THE SAID ISSUE IN TH E CASE OF EMIL WEBBER (SUPRA). THE SAID QUESTION WOULD NOT HAVE ALSO ARI SEN BEFORE THE HON'BLE APEX COURT, SINCE THE GROSSING UP OF INCOME TAX WAS INTRODUCED IN THE ACT BY INSERTION OF SEC. 195A BY FINANCE ACT, 1987 W.E.F. 1.6.1987 ONLY. SINCE THE QUESTION OF TAXABILITY OF TAX PAID ON SALARY INCOME IS NOT CONSIDERED BY HON'BLE SUPREME COURT IN THE CASE OF EMIL WEBBER (S UPRA), IN OUR VIEW, THE SAID DECISION COULD NOT BE TAKEN SUPPORT OF BY THE ASSESSEE ON THE ISSUE UNDER CONSIDERATION. 10. THE YEAR UNDER CONSIDERATION IS THE ASSESSM ENT YEAR 2005-06. HENCE, THERE CAN NOT BE ANY DISPUTE THAT THE PROVISIONS OF SEC. 195A AND SEC.198 ARE APPLICABLE FOR THIS YEAR. WE NOTICE THAT THE LEARN ED CIT(A) DID NOT TAKE INTO ACCOUNT BOTH THE PROVISIONS CITED ABOVE WHILE ADJUD ICATING THE IMPUGNED ISSUE IN FAVOUR OF THE ASSESSEE. IN THE WRITTEN SUB MISSIONS FILED BEFORE US, THE ASSESSEE HAS CONTENDED THAT THE PROVISIONS OF S EC. 195A ARE NOT APPLICABLE TO THE FACTS OF INSTANT CASE. HOWEVER, WE NOTICE THAT THE LEARNED CIT(A) HAS NOT GIVEN HIS OPINION ON THE SAID CLAIM OF THE ASSESSEE. THE SAID CLAIM ALSO DOES NOT APPEAR TO BE AN ISSUE BEFORE TH E ITAT, COCHIN IN THE CASE OF RAJENDRA VARMA, (SUPRA). 11. BEFORE US, THE DECISION OF THE COCHIN TRIBU NAL DATED 28-04-2006 WAS NOT FURNISHED. IN THE CASE OF RAJENDRA VARMA (SUPR A), THE TRIBUNAL HAS CATEGORICALLY OBSERVED THAT THE LEARNED CIT(A) HAS DISTINGUISHED THE FACTS PREVAILING IN THAT CASE VIS--VIS THE CASE CONSIDER ED IN THE DECISION DATED 28- 04-2006. IN THE INSTANT CASE, IT IS NOT KNOWN WHETH ER THE LEARNED CIT(A) DID ANALYSE THE PARITY OF FACTS BETWEEN THE INSTANT CAS E AND THE CASE OF M/S RAJENDRA VARMA, (SUPRA). BEFORE US, THE ASSESSEE H AS FILED AN INCOMPLETE COPY OF THE AGREEMENT ENTERED BETWEEN M/S TECCL AND M/S KWA. IT IS ITA 390/COCH/2009, SRI C.W.P TAYLOR E 6 INCOMPLETE IN THE SENSE THAT IT DOES NOT HAVE PRINT OUTS PERTAINING TO PAGES 2,4,6, ETC. IT CONTAINS PRINT OUTS PERTAINING TO P AGES 1,3,5 ETC. WE ALSO NOTICE THAT THE LEARNED CIT(A) HAS NOT DISCUSSED AB OUT THE PARITY OF FACTS BETWEEN THE INSTANT CASE AND IN THE CASE OF RAJENDR A VARMA, (SUPRA). 12. FROM THE FOREGOING DISCUSSIONS, WE ARE OF TH E VIEW THAT THE LEARNED CIT(A) HAS NOT PROPERLY ADJUDICATED THE ISSUE BY BR INGING ON RECORD ABOUT THE PARITY OF FACTS OF THE INSTANT CASE WITH THE CASES RELIED UPON BY HIM. BESIDES THE ABOVE, THE LEARNED CIT(A) HAS ALSO NOT CONSIDER ED THE PROVISIONS OF THE ACT, REFERRED (SUPRA). WE HAVE ALREADY NOTICED TH AT THE DECISION OF HON'BLE SUPREME COURT IN THE CASE PF EMIL WEBBER IS NOT APP LICABLE TO THE ISSUE UNDER CONSIDERATION. WE HAVE ALSO NOTICED THAT THE ASSESSEE IS ALSO NOT CLEAR ABOUT THE QUANTUM OF INCOME TAX THAT IS TO BE ASSES SED UNDER THE HEAD INCOME FROM OTHER SOURCES. HENCE, IN OUR VIEW, THE IMPUGNED ISSUE NEEDS TO BE RE-EXAMINED BOTH ON FACTUAL AND LEGAL ASPECTS AT THE END OF LEARNED CIT(A). ACCORDINGLY, WE SET ASIDE HIS ORDER ON THI S ISSUE AND RESTORE THE SAME TO HIS FILE WITH A DIRECTION TO EXAMINE THE SA ME AFRESH, AFTER AFFORDING NECESSARY OPPORTUNITY TO THE ASSESSEE. 13. THE NEXT ISSUE PERTAINS TO THE TAXABILITY OF V ALUE OF ACCOMMODATION PROVIDED TO THE ASSESSEE, WHICH IS VALUED AT RS.3,6 0,000/-. WE NOTICE THAT THE LEARNED CIT(A) HAS RELIED UPON THE DECISION OF COCHIN BENCH IN ITA NO.37/COCH/2007 DATED 31.1.2008 AND ITA NO.63/COCH/ 2008 DATED 01.09.2008 TO DECIDE THE SAID ISSUE IN FAVOUR OF TH E ASSESSEE. HOWEVER, ON A CAREFUL PERUSAL OF THE ORDER DATED 31.1.2008 PASSED BY THE COCHIN BENCH OF ITAT IN THE CASE OF RAJENDRA VARMA IN ITA NO.37/COC H/2007, REFERRED (SUPRA), WE NOTICE THAT THE TRIBUNAL DID NOT CONSI DER ANY ISSUE PERTAINING TO THE TAXABILITY OF VALUE OF ACCOMMODATION. THE COPY OF ORDER DATED 01.09.2008 IN ITA NO.63/COCH/2007 WAS NOT PROVIDED TO US AND HENCE WE ARE UNABLE TO APPRECIATE AS TO WHETHER ANY SUCH ISS UE WAS CONSIDERED THEREIN. HENCE, IN OUR VIEW, THIS ISSUE ALSO REQUI RES RECONSIDERATION AT THE END OF LEARNED CIT(A). ACCORDINGLY, WE SET ASIDE H IS ORDER ON THIS ISSUE ALSO ITA 390/COCH/2009, SRI C.W.P TAYLOR E 7 AND RESTORE THE SAME TO HIS FILE WITH A DIRECTION T O EXAMINE THE SAME AFRESH, AFTER AFFORDING NECESSARY OPPORTUNITY TO THE ASSESS EE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ON 20/01/2012 SD/- SD/- (N.R.S.GANESAN) (BR BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN, DATED 20 TH JANUARY, 2012 COPY TO 1 DCIT, CIRCLE-2(1), RANGE-2, TRIVANDRUM. 2 SRI C.W.P.TAYLOR, M/S TOKYO ENGINEERING CONSULTAN TS CO. LTD., CORDIAL CENTRE, TC.6/1220 KANJIRAMPARA, TRIVANDRUM, 3 CIT, TRIVANDRUM 4 THE CIT(A)-1, TRIVANDRUM 5 THE DR, ITAT, COCHIN. 6 GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL COCHIN