DCIT, Circle - 5, Kolkata, Kolkata V. Shri Rajendra Kumar Somani, Kolkata

ITA 47/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48271 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2011
• Appeal Filed By: Department
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 11-01-2011
• Court: TRIBUNAL
• Department Lawyers: R K SAHA
• Assessee Lawyers: P K SANGHAI
• Keywords: Salary income
• Section: 142(1)

Judgement Text

, C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C , CALCUTTA () BEFORE , SHRI MAHAVIR SINGH,, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , , , , '# , ,, , SHRI C.D. RAO, ACCOUNTANT MEMBER. $ $ $ $ / ITA NO. 47/ KOL/2011 %& '(/ ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-5,KOLKATA SRI RAJENDRA KUMAR SOMANI PAN: AIYPS 6274J (*+ / APPELLANT ) - % - - VERSUS -. (-.*+/ RESPONDENT ) *+ / 0 '/ FOR THE APPELLANT: / SHRI R.K.SAHA, DR -.*+ / 0 '/ FOR THE RESPONDENT: / SHRI P.K.SANGHAI, AR '1 / ORDER . .. . ! ! ! !. .. . , , , , '# , ,, , SHRI C.D.RAO, ACCOUNTANT MEMBER.: REVENUE HAS FILED THIS APPEAL AGAINST ORDER DATED 27-10-2010 OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FOR THE ASSES SMENT YEAR 2004-05. 2. THE APPEAL FILED BY THE REVENUE IS TIME BARRED B Y 2 DAYS. FOR WHICH A CONDONATION PETITION HAS BEEN FILED. AFTER PERUSING THE SAME AN D HEARING BOTH THE PARTIES THE DELAY IN FILING THE APPEAL IS CONDONED AND THE APPEAL IS ADMITTED. 3. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING EFFECTIVE GROUNDS OF APPEAL:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD .CIT(A), KOLKATA HAS ERRED IN LAW IN DELETING THE ADDITION ON ACCOUN T OF COMMISSION WITHOUT GOING INTO THE DETAILS OF WORKING OF COMMIS SION BASED ON PERCENTAGE OF COMMISSION ON PROFIT. ITA NO.47/KOL/2011-C-CDR 2 4. BRIEF FACTS OF THE ISSUE INVOLVED IS THAT WHILE DOING THE SCRUTINY ASSESSMENT THE ASSESSING OFFICER HAS TAKEN THE SALARY INCOME OF TH E ASSESSEE OF RS.1,08 CRORES BY OBSERVING AS UNDER:- 4. NOTICE U/S.143(2) AND 142(1) WERE ISSUED ON 10. 11.2008. THE A.R OF THE ASSESSEE SRI AJAY DOKANIA APPEARED AND THE C ASE WAS DISCUSSED WITH HIM. HE ALSO SUBMITTED A WRITTEN REPLY STATING - THIS IS TO INFORM YOU THAT THE ASSESSEE HAS RECEIV ED DIRECTORS REMUNERATION & COMMISSION FROM HSIL LIMITED EVERY Y EAR AS A CAPACITY OF CHAIRMAN & MANAGING DIRECTOR. DETAILS OF DIRECTORS REMUNERATION & COMMISSION RECE IVED IN THE FINANCIAL YEAR 2003-04 & 2004-05 RELATING TO THE AS SESSMENT YEAR 2004- 05 & 2005-06 RESPECTIVELY MENTIONED AS UNDER:- ASST. YEAR 2004-05 ASST. YEAR 2005-06 DIRECTORS REMUNERATION 27,10,452/- 32,52,542/- DIRECTORS COMMISSION 7,45,091/- 75,82,091/- 34,55,543/- 1,08,34,633/- COPY OF I.T ACKNOWLEDGEMENT AND COMPUTATION ALONG W ITH FORM 16 ISSUED BY THE COMPANY IS ENCLOSED FOR YOUR READY REFERENCE & RECORD. THERE IS NO ANOMALY IN THE REMUNERATION RECEIVED AN D ITS TAXATION IN THE HANDS OF THE ASSESSEE. THE ASSESSEE BEING A CHAIRMAN & MANAGING DIRECTOR OF HSIL LIMITED IS GETTING COMMISSION ON P ROFIT OF THE COMPANY ONLY AFTER ITS APPROVAL BY THE BOARD OF DIRECTORS A ND AT ITS ANNUAL GENERAL MEETING. ON SUCH DECLARATION ONLY THE REMUN ERATION BY WAY OF COMMISSION BECOME DUE. NOW IN THE FINANCIAL YEAR 2004-05 ONLY AT ITS ANNUA L GENERAL MEETING FOR THE YEAR ENDING 31.03.2004 ON 24.07.20 04 THE REMUNERATION BY WAY OF COMMISSION WAS APPROVED AND THE ASSESSE E HAS RECEIVED IT IN FINANCIAL YEAR 2004-05 RELEVANT TO THE ASSESSMENT Y EAR 2005-06. THERE IS NO CONTROVERSY AS IT HAS BEEN RIGHTLY TAKEN EVERY YEAR AND YEAR AFTER YEAR. 5. HOWEVER, ON APPEAL, LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS) HAS DELETED THE SAME BY OBSERVING THAT:- IT MAY BE PERTINENT TO MENTION HERE THAT SIMILAR IS SUE HAS BEEN RECENTLY DECIDED BY HONBLE CALCUTTA HIGH COURT I N THE CASE OF SANJIB KUMAR AGARWAL VS. CIT(2009) 310 ITR 295(CAL). IN TH IS CASE ALSO THE ASSESSEE WAS A FULL TIME DIRECTOR OF A COMPANY. AS PER THE CONDITIONS OF ITA NO.47/KOL/2011-C-CDR 3 SERVICE, THE ASSESSEE WAS TO RECEIVE COMMISSION AT THE RATE OF ONE PERCENT ON THE NET PROFITS OF THE COMPANY APART F ROM THE MONTHLY SALARY AND CERTAIN PERQUISITES WHICH WERE ALLOWED TO HIM . THE ASSESSING OFFICER HELD THAT A SUM OF RS.1,02,464/- RELATING T O THE PERIOD JULY 1, 1998 TO MARCH 31, 1989, ACCRUED AS INCOME TO THE A SSESSEE AND WAS LIABLE TO BE TAXED FOR THE ASSESSMENT YEAR 1989-90 . HONBLE HIGH COURT HELD THAT THE COMMISSION WAS TAXABLE IN THE YEAR IN WHICH THE PROFITS OF THE COMPANY WERE FINALIZED AND NOT IN THE YEAR TO WHICH THE PROFITS OF THE COMPANY BELONGED. THE FACTS OF THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS OF THIS CASE. THEREFORE, THE COMMISSI ON OF RS.75,82,091/- SHALL BE TAXABLE IN A.Y 2005-06 AND NOT IN A.Y 2004 -05. 6. AGGRIEVED BY THIS, NOW THE REVENUE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING BEFORE US THOUGH THE LEAR NED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE ASSESSING OFFICER. 8. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE APPEARING ON BEHALF OF THE ASSESSEE REFERRING TO THE SALARY CERTIFICATE-FROM N O.16, BANK STATEMENT AND COPY OF COMPUTATION CONTENDED THAT SINCE THE ASSESSEE HAS REGULARLY BEEN SHOWING THE COMMISSION INCOME ON RECEIPT BASIS ONLY AND THE REVENUE HAS AL SO ACCEPTED THE SAME IN THE PRECEDING ASSESSMENT YEARS, THEREFORE, HE REQUESTED TO CONFI RM THE IMPUGNED ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS). 9. AFTER HEARING THE RIVAL SUBMISSIONS, ON CAREFUL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF THE FACT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALLOWED THE APPEAL OF THE ASSESSEE RESPECTFULLY FOLLOWING THE JURISDICTIONAL DECISION OF THE HONBLE HIGH COURT IN THE CASE OF SANJIB KUMAR AGAR WAL VS. CIT (2009) 310 ITR 295(CAL). WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CO MMISSIONER OF INCOME-TAX (APPEALS). THEREFORE, WE CONFIRM THE SAME. GROUND RAISED BY TH E REVENUE IS DISMISSED. ITA NO.47/KOL/2011-C-CDR 4 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. '1 #2' 3 2% 4 5 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT.12- 07-2011 SD/- SD/- ( , ) (SHRI MAHAVIR SINGH), JUDICIAL MEMBER) ( . .. . ! ! ! !. .. . ) '# '# '# '# ) (C.D. RAO), ACCOUNTANT MEMBER ) ( (( (!# !# !# !#) )) ) DATE: 12-07-2011 '1 / -6 7'6'8 / COPY OF THE ORDER FORWARDED TO: 1. . *+ / THE APPELLANT : DCIT,CIR-5 P-7 CHOWRINGHEE SQ, K OL- 69. 2 -.*+ / THE RESPONDENT- SRI RAJENDRA KUMAR SOMANI 2 RE D CROSS PLACE, KOL-1. 3. 1% / THE CIT, 4. 1% ( )/ THE CIT(A), 5 . 94 -% / DR, KOLKATA BENCH 6 . GUARD FILE . .6 -/ TRUE COPY, '1%2/ BY ORDER, : /ASSTT REGISTRAR . *PRADIP* ;< %=: >