ADIT, Dehradun V. M/s. Atwood Oceanic Pacific Ltd., Dehradun

ITA 4443/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53249 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `A : NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.4443/DEL./2011 (ASSESSMENT YEAR : 2008-09) ADIT, INTERNATIONAL TAXATION, VS. M/S ATWOOD OCEANI C PACIFIC LTD., DEHRADUN. AS AGENT OF MR. NIGEL RICHARDSON, C/O NANGIA & CO., 75/7, RAJPUR ROAD, DEHRADUN. (PAN/GIR NO.AACCA7578C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT ARORA, CA REVENUE BY : SHRI N.K. CHAND, SR.DR ORDER PER R.P. TOLANI: JM THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 20 08-09. THE FOLLOWING GROUNDS ARE RAISED: 1. ON FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER IN THE CASE OF EMPLOYEE RECEIVING A TAX-FREE SALARY, AS PER AGREEMENT, THE TAXES PAID BY EMPLOYER CONSTITUTED A MONETARY CONSTITUTED A MONETARY PAYME NT THAT WAS PART AND PARCEL OF SALARY. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE CIT(A) HAD ERRED IN ALLOWING EXEMPTION U/S 10(10CC), WHERE THE FACTS CL EARLY ESTABLISH THAT THE TAX PAID BY THE COMPANY M/S TRANSOCEAN OFFSHORE DEE PWATER DRILLING INC. FOR ASSESSMENT YEAR 2008-09 WAS PART AND PARCEL SALARY OF MR. PISANO PASQUATE, AGENT AND THEREFORE, THIS PAYMENT ON BEHALF OF THE ASSESSEE CONSTITUTED A MONETARY PAYMENT FALLING OUTSIDE THE PURVIEW OF SEC TION 10(10CC) OF THE I.T. ACT. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE CIT(A) HAS ERRED IN FOLLOWING THE DECISION OF SPECIAL BENCH OF ITAT, WH ICH IS PERVERSE AND DISREGARDED THE CLEAR CUT PROVISIONS OF SECTION 117 (2) READ WITH SECTION 10(10CC) AND CORROBORATED BY SECTION 195A R.W.S. 19 8 OF THE I.T. ACT, AND AGAINST WHICH DEPARTMENT IS IN APPEAL BEFORE THE HO NBLE HIGH COURT OF UTTRANKHAND. I.T.A. NO.4443/DEL./2011 (A.Y. : 2008-09) 2 2 2. LD.DR RELIED ON THE ORDER OF ASSESSING OFFICER A ND CONTENDS THAT THE CIT(A) HAS ERRED IN FOLLOWING THE DECISION OF THE SPECIAL BENC H (DELHI) OF THE ITAT AGAINST WHICH DEPARTMENT IS IN APPEAL BEFORE THE HONBLE HIGH COU RT OF UTTRAKHAND. 3. LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND C ONTENDS THAT THE CIT(A) RELYING ON THE DECISION OF THE SPECIAL BENCH (DELHI) OF ITA T HAS ALLOWED THE ASSESSEES APPEAL BY FOLLOWING THE OBSERVATIONS MADE AS UNDER: IT IS NOT MONEY, WHICH IS PAID TO THE ASSESSEE WHE N TAXES ARE PAID ON HIS BEHALF, IT IS DISCHARGED OF HIS OBLIGATION. THE PAYMENT FU LLY FITS IN THE JACKET OF SUB- CLAUSE (IV) OF SECTION 17(2) OF THE ACT, IT MAY BE A MONETARY GAIN OR MONETARY BEHALF OR A MONETARY ALLOWANCE BUT DEFINITELY IT IS NOT A MONETARY PAYMENT TO THE ASSESSEE. WHAT IS EXCLUDED IN THE CLAUSE IS THE PE RQUISITE IS IN SHAPE OF A MONETARY PAYMENT TO THE ASSESSEE. IT IT IS A PAYME NT TO A THIRD PERSON LIKE PAYMENT OF TAXES TO THE GOVERNMENT, THEN SUCH PAYME NT OF TAXES CAN NOT BE EXCLUDED UNDER CLAUSE 10(10CC). THE CIRCULAR OF TH E BOARD AND PROVISION OF SUB- SECTION (1A) OF SECTION 192, SECTION 40(A)(V), 195A FULLY SUPPORT THE CLAIM OF THE ASSESSEE. WE, THEREFORE, HOLD THAT THE TAXES PAID BY THE EMPLOYER ON BEHALF OF THE EMPLOYEE IS A PERQUISITE WITHIN THE MEANING OF SECT ION 19(2) OF THE I.T. ACT, 1961, WHICH IS NOT PROVIDED BY WAY OF MONETARY PAYMENT. THEREFORE, THERE IS NO REASON NOT TO EXCLUDE SUCH PAYMENT OF TAXES FROM THE TOTAL INCOME OF THE ASSESSEE. IN OTHER WORDS, TAXES PAID BY THE EMPLOYER CAN BE ADDE D ONLY ONCE IN THE SALARY OF THE EMPLOYEE. THEREAFTER, TAX ON SUCH PERQUISITE I S NOT TO BE ADDED AGAIN. WE, THEREFORE, FIND SUBSTANCE IN THE CONTENTION ADVANCE D ON BEHALF OF LEARNED COUNSEL FOR THE ASSESSEE AND THE INTERVENERS. THE QUESTION REFERRED TO US IS ANSWERED IN FAVOUR OF THE ASSESSEE. THE APPEALS OF THE ASSESSE ES AND INTERVENERS ARE ALLOWED ON THIS ISSUE. THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE A SSESSEE. THEREFORE, THE REVENUES APPEAL MAY BE DISMISSED. 4 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW, THE ISSUE IN QUESTION IS SQ UARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE SPECIAL BENCH IN THE CASE O F RBF RIG CORPN. (SUPRA), HOLDING THAT THE TAXES PAID BY THE EMPLOYER ON BEHALF OF THE EMP LOYEE IS A PERQUISITE WITHIN THE MEANING OF SECTION 17(2) OF THE I.T. ACT, 1961, WHI CH IS NOT PROVIDED BY WAY OF MONETARY PAYMENT. RESPECTFULLY FOLLOWING THE DECISION OF SP ECIAL BENCH IN THE CASE OF RBF CORPN. (SUPRA), WE DISMISS THE REVENUES APPEAL. I.T.A. NO.4443/DEL./2011 (A.Y. : 2008-09) 3 3 5. WE MAY MENTION THE CONCERN ABOUT THE WAY DEPARTM ENT HAS TAKEN GROUND NO.3, WHICH COULD HAVE BEEN HAPPILY WORDED WHILE FRAMING THE GROUNDS OF APPEAL. IN FUTURE LITIGANT SHALL NOT USE AN OFFENSIVE WORD BEFORE THE SAME FORUM. 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 07.12.2011. SD/- SD/- (SHAMIM YAHYA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, DEC. 07, 2011. SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-II, DEHRADUN. 5.CIT(ITAT), NEW DELHI. AR/ITAT