K.Padmanabhan, CHENNAI V. ITO, CHENNAI

ITA 425/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9395 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: MEENAKSHISUNDRARM ITP
• Keywords: Salary income
• Section: 10(14); 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO.425/MDS/2016 ! / ASSESSMENT YEAR : 2009-2010 SHRI. K. PADMANABHAN, JAINS KENSEAS TETREAT, NO.15, REDDY STREET, VIRUGAMBAKKAM, CHENNAI 600 092. VS. THE INCOME TAX OFFICER, SALARY WARD V(3) CHENNAI. [PAN ADPPP 0522L] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SHRI. MEENAKSHISUNDRARM, ITP. &''# $ % /RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT ( $ )* /DATE OF HEARING : 28-04-2016 +! $ )* /DATE OF PRONOUNCEMENT : 06-05-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-5, CHENNAI IN ITA NO.364/CIT(A)-5/13-14, DT 23.12.2015 FOR THE ASSESS MENT YEAR 2009-2010 ITA NO.425/MDS/2016 :- 2 -: PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED SIX GROUNDS PERTAINING TO CLAIM OF ALLOWANCES PAID BY THE EMPLOYER AND CLAIMED EXEMPTI ON U/SEC. 10(14) OF THE ACT AND THE LD. COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN UPHOLDING THE ORDER OF ASSESSING OFFICER CONFIRMING THE ADDITION OF ALLOWANCE PAID BY THE EMPLOYER. 3. THE BRIEF FACTS OF THE CASE THE ASSESSEE IS A SALAR IED EMPLOYEE AND 3 RD ENGINEER IN M/S. INTERNATIONAL SEAPORT DREDGING LT D AND FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-2010 ON 23.03.2009 ADMITTING TOTAL INCOME OF =3,20,791/- AND THE RETUR N WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED. IN CO MPLIANCE TO NOTICE, LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED INFORMATION FOR VERIFICATION. THE LD. ASSE SSING OFFICER ON PERUSAL OF INFORMATION FOUND THAT ASSESSEE HAS ADMITTED NET INCOME FROM SALARY =5,70,791/- AND CLAIMED EXEMPTION OF ALLOWANCE OF = 6,32,476/-. ON PERUSAL OF FORM NO.16 FROM M/S. INTERNATIONAL SEAP ORT DREDGING LTD THE GROSS SALARY IS =12,03,267/- AND THE EXEMPTION U/S .10 OF THE ACT LIMITED TO =15,000/- AND THERE WAS WIDE DIFFERENCE OF NET SALARY OFFERED BY THE ASSESSEE AND FORM NO.16 ISSUED BY THE EMPLOYER. TH E LD. AUTHORISED ITA NO.425/MDS/2016 :- 3 -: REPRESENTATIVE FILED LETTER DATED 06.8.2011 AND EXP LAINED WORKING STRATEGY OF ASSESSEE ON SHIP AND WAS PAID THE FOLLOWING ALL OWANCES AS PER PAGE 2 OF THE ASSESSMENT ORDER AS UNDER:- 1.REGARDING VICTULAAING ALLOWANCE HE HAS STATED A S FOOD EXPENSES INCURRED IN SHIP 2. REGARDING HOLIDAY TRAVEL ALLOWANCE, HE HAD STAT ED THAT HOLIDAY TRAVEL ALLOWANCE IS NOTHING BUT THE ALLOWAN CE PAID FOR EXPENSES INCURRED TO JOIN AND LEAVE SHIP TO MEET TH E ORDINARY DAILY CHARGES INCURRED BY AN EMPLOYEE ON ACCOUNT OF ABSENCE FROM THE NORMAL PLACE OF DUTY. 3. REGARDING ACADEMIC ALLOWANCE HE HAD STATED THAT IT IS THE ALLOWANCE SEND TO UPGRADE TECHNICAL SKILL WHILE DISCHARGING THE DUTY ON SHIP. 4. REGARDING SPECIAL ALLOWANCE HE HAD STATED THAT I T IS ALLOWANCE GRANTED TO AN EMPLOYEE WHO IS WORKING IN UNCONGENIA L, UNNATURAL CLIMATE AND THE ALLOWANCE ARE GRANTED TO EMPLOYEE W HO IS WORKING IN TRANSPORT SYSTEM (SHIP) TO MEET HIS PERS ONAL EXPENDITURES DURING HIS DUTY PERFORMED IN THE COURS E OF RUNNING OF SUCH TRANSPORT FROM ONE PLACE TO ANOTHER PLACE. 5. REGARDING UNIFORM ALLOWANCE, HE HAD STATED THAT THE ALLOWANCE IS GRANTED TO PURCHASE AND MAINTENANCE OF UNIFORM FOR WEAR DURING PERFORMANCE OF THE DUTIES. 6. REGARDING MEDICAL ALLOWANCE, HE HAD STATED THAT IT WAS MEDICAL EXPENSE REIMBURSED BY THE EMPLOYER WHILE ON DUTY. THE LD. ASSESSING OFFICER FOUND THAT ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE OF INCURRING SUCH EXPENDITURE OR SPENT FOR SPECIFIC PURPOSE. THE CONTENTION OF THE ASSESSEE THAT EXPENDITURE WAS INC URRED AND COULD NOT OBTAIN BILLS AND VOUCHERS DUE TO WORK PLACE AT DIF FERENT LOCATIONS. THE LD. ASSESSING OFFICER ALLEGED EXTENSIVELY THAT THE ASSESSEE HAS CLAIMED ITA NO.425/MDS/2016 :- 4 -: EXEMPTION OF ALLOWANCES BUT FAIL TO PROVE WITH BILL S AND VOUCHERS OF THIRD PARTIES AND DISALLOWED =.6,07,876/- FOR WANT OF EV IDENCE ON INCURRING OF EXPENDITURE AND PASSED ORDER U/S.143(3) DATED 29.1 2.2011. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE C OMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED RE PRESENTATIVE OF ASSESSEE ARGUED GROUNDS ON THE DISALLOWANCES AND SUBSTANTIATED WITH WRITTEN SUBMISSIONS. THE ASSESSEE IS AN EMPLOYEE A ND SUCH ALLOWANCE ARE PROVIDED AS PER TERMS AND CONDITIONS ENTERED DUE TO NATURE OF WORKING CONDITIONS AND THERE IS A LAPSE ON THE PART OF THE ASSESSEE IS NOT COLLECTING THE BILLS AND PRODUCE IN ASSESSMENT PROC EEDINGS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE SUBMISSIONS AND THE FINDINGS OF THE ASSESSING OFFICER AND FURTHER O BSERVED IN DETAIL THE PROVISIONS OF SEC. 10(14) OF THE ACT AND RELIED ON THE FINDINGS OF THE JUDICIAL HIGH COURT AND TRIBUNAL AND CONCLUDED THAT ASSESSEE HAS FAILED TO ESTABLISH THAT THE AMOUNT WAS INCURRED WHOLLY, EXC LUSIVELY AND NECESSARILY FOR THE PURPOSE OF PERFORMING OF HIS DUTIES AND CON CURRED WITH FINDINGS OF THE ASSESSING OFFICER AND UPHELD THE SAME. AGGRIEV ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE ASS ESSEE ASSAILED AN APPEAL BEFORE TRIBUNAL. ITA NO.425/MDS/2016 :- 5 -: 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF ASS ESSEE REITERATED THE SUBMISSIONS AND ARGUMENTS MADE IN TH E ASSESSMENT AND APPELLATE PROCEEDINGS AND WRITTEN SUBMISSIONS FILED BEFORE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AUTHORISED REPRES ENTATIVE SUBSTANTIATED THE ARGUMENTS THAT THE ASSESSEE IS A MARINE ENGINEE R AND AS PER THE SERVICE AGREEMENT RECEIVES CERTAIN ALLOWANCES OTHE R THAN SALARY AND SAME ARE EXEMPTED U/S.10(14) OF THE ACT. THE ALLO WANCES ARE PROVIDED CONSIDERING THE CONDITIONS, IN THE PRESENT CASE ASS ESSEE IS A MARINE ENGINEER ON SHIP AND AWAY FROM THE LAND FOR DAYS AN D THESE ALLOWANCES ARE EXCLUSIVELY TO MAKE GOOD THE WORKING CONDITIONS OF EMPLOYEE WHO IS AWAY FROM HIS FAMILY AND LAND AND THE ASSESSEE MAND ATORLY INCURRED EXPENDITURE TO UPGRADE AND MAINTAIN HIMSELF AND FAI LED TO OBTAIN BILLS FOR EXPENDITURE AND BECAUSE OF NON-AVAILABILITY OF EVID ENCE THE EXPENDITURE SHOULD NOT BE IGNORED AND DISALLOWED. THE EXPENSES INCURRED ARE PAID BY WAY OF CASH OR DEBIT OR CREDIT CARDS AND OBTAININ G VALID VOUCHERS FROM RECEIPTANTS IS OF LEAST IMPORTANCE AND PRAYS FOR DE LETING THE ADDITION AND ALLOW THE APPEAL. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND OPPOSED THE GRO UNDS OF THE ASSESSEE. ITA NO.425/MDS/2016 :- 6 -: 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD, JUDICIAL DECISIONS AND WRITTEN SUBMISSIONS . IN THE CASE OF EMPLOYEES THERE IS A CONTRACTUAL AGREEMENT WITH EMP LOYER AND REIMBURSEMENT OF EXPENSES ARE FIXED BASED ON TERMS AND CONDITIONS OF THE EMPLOYMENT. THE ASSESSEE IS A MARINE ENGINEER IN M/S. INTERNATIONAL SEAPORT DREDGING LTD AND PROVIDED ALLOWANCES IN A DDITION TO THE BASIC SALARY SUCH ALLOWANCES ARE MANDATORLY FOR UPBRINGIN G EMPLOYEES TO BE PHYSICALLY AND MENTALLY TO BE FIT TO CONDUCT THE DU TY WITH GREAT RESPONSIBILITY. THE LD. ASSESSING OFFICER HAS ACCEP TED AND REFERRED TO THE DIFFERENT TYPE OF ALLOWANCES IN HIS ASSESSMENT ORDE R INCURRED BY ASSESSEE AND DUE TO NONSATISFACTION OF CLAIM FOR EXPENDITURE WITHOUT ANY EVIDENCE THE DISALLOWANCE ARE CONSIDERED IN THE ASSESSMENT. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RELIED ON THE FINDINGS OF T HE ASSESSING OFFICER AND JUDICIAL DECISIONS AND PROVISIONS OF SEC. 10(14 ) OF THE ACT AND OF THE OPINION THAT ALLOWANCES ARE TO BE UTILIZED WHOLLY A ND EXCLUSIVELY BY THE EMPLOYEE IN CONDUCTING HIS DUTY AND SHOULD BE ACTUA LLY INCURRED FOR THE PURPOSE AS PER THE PROVISIONS OF SEC.10(14) AS UND ER:- (1) ANY SUCH SPECIAL ALLOWANCE OR BENEFIT, NOT BEING IN THE NATURE OF A PERQUISITE WITHIN THE MEANING OF CL AUSE (2) OF SECTION 17, SPECIFICALLY GRANTED TO MEET EXPENSES W HOLLY, NECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORM ANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMENT OF PROFIT [AS MAY BE PRESCRIBED] TO THE EXTENT TO WHICH SUCH EXPENSES AR E ACTUALLY INCURRED FOR THAT PURPOSE. (2) ANY SUCH ALLOWANCE GRANTED TO THE ASSESSEE EITHER TO MEET HIS PERSONAL EXPENSES AT THE PLACE WHERE TH E DUTIES ITA NO.425/MDS/2016 :- 7 -: OF HIS OFFICE OR EMPLOYMENT OF PROFIT ARE ORDINARIL Y PERFORMED BY HIM OR AT THE PLACE WHERE HE ORDINARILY RESIDES OR TO COMPENSATE HIM FOR THE INCREASED COST OF LIVING [ A S MAY BE PRESCRIBED AND TO THE EXTENT AS MAY BE PRESCRIBED] [PROVIDED THAT NOTHING IN SUB-CLAUSE (II) SHALL APP LY TO ANY ALLOWANCE IN THE NATURE OF PERSONAL ALLOWANCE GRANT ED TO THE ASSESSEE TO REMUNERATE OR COMPENSATE HIM FOR PERFOR MING DUTIES OF A SPECIAL NATURE RELATING TO HIS OFFICE O R EMPLOYMENT UNLESS SUCH ALLOWANCE IS RELATED TO THE PLACE OF HI S POSTING OR RESIDENCE] THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RELIE D ON THE JUDICIAL DECISIONS AND CONCURRED WITH THE FINDINGS OF ASSESS ING OFFICER AND FOUND AS PER PROVISIONS OF SEC. 10(14) IT IS THE DUTY CAS T ON THE ASSESSEE THAT THE EXPENSES ARE ACTUALLY INCURRED AND TO PRODUCE THE S UPPORTING EVIDENCE OF BILLS AND VOUCHERS. THE LD. ASSESSING OFFICER HAS NOT DISPUTED ON THE NATURE OF ALLOWANCE OR ANY ADVERSE CLAIM OF EXPEND ITURE BUT NON AVAILABILITY OF SUPPORTING VOUCHERS OR BILLS. CONS IDERING THE APPARENT FACTS, PROVISIONS OF LAW AND THE CONDUCT OF THE ASSESSEE I N PERFORMANCE OF DUTY, THERE IS A PRESUMPTION THAT ASSESSEE HAS INCURRED T HE EXPENDITURE IN DISCHARGING THE DUTIES BUT THE ASSESSEE COULD NOT S UPPORT WITH ANY VALID EXPLANATIONS FOR NOT FILING THE BILLS AND VOUCHERS. AS PER THE PROVISIONS OF SECTION 10(14) OF THE ACT EXPENSES ARE ACTUALLY INC URRED FOR THE PURPOSE OF EMPLOYMENT AND ACTUAL SPENT FOR THE PERFORMANCE OF DUTY. THERE IS A LAPSE ON THE PART OF THE ASSESSEE FOR NOT OBTAINING VALID BILLS/VOUCHERS FOR EXPENSES WHICH ARE TO BE SUBMITTED TO EMPLOYER OR B EFORE ASSESSING OFFICER IN ASSESSMENT. WE APPLY THE BENEFIT OF DOUB T ON THE CLAIM OF ITA NO.425/MDS/2016 :- 8 -: EXPENDITURE IN FAVOUR OF THE ASSESSEE BY RESTRICTIN G THE DISALLOWANCE BY 50% OF TOTAL ALLOWANCE RECEIVED BY THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 50% OF =6,0 7,876/- AND PASS THE ORDER AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.425/MDS/2016 IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 6TH DAY OF MAY, 2 016 AT CHENNAI. SD/- SD/- ( . ! ' ) (A. MOHAN ALANKAMONY) $ % / ACCOUNTANT MEMBER ( & . ' ( ) (G. PAVAN KUMAR) ) % / JUDICIAL MEMBER ,( / CHENNAI - / DATED:6TH MAY, 2016. KV . $ &)0 1 21!) / COPY TO: 1 . '# / APPELLANT 2. &''# / RESPONDENT 3. 3) ( ) / CIT(A) 4. 3) / CIT 5. 167 &)8 / DR 6. 79 :( / GF