P. P. BARMAN, MUMBAI V. ITO 26(1)(3), MUMBAI

ITA 5049/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7791 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Salary income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH J,MUM BAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5049/MUM/2016 (ASSESSMENT YEAR- 2011-12) SHRI P. P. BARMAN B/3/101, PAWAN HANS JUHU HOUSING COMPLEX, DAULAT NAGAR, SANTACRUZ (WEST), MUMBAI-400054 PAN: AAEPB3686M VS. ITO -26(1)(3) MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAMOD KUMAR PARIDA WITH SANJUKTA CHOWDHURY (ARS) REVENUE BY : MS. BEENA SANTOSH (DR) DATE OF HEARING : 23.02.2017 DATE OF PRONOUNCEMENT : 17.03.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS) [FOR SHORT THE CIT(A)] 46, MUMBAI DATED 08.06.2016 FOR ASSES SMENT YEAR (AY) 2011-12. THE ASSESSEE HAS RAISED THE GROUNDS OF APPEAL IN TH E FOLLOWING MANNER: 1. DENIAL OF EXEMPTED PERQUISITE: (A) THE LD. CIT(A) ERRED IN DENYING THE EXEMPTED PE RQUISITE TO THE APPELLANT BY NOT APPRECIATING TO THE PROVISIONS AND RULES OF TAX LAWS; THEREFORE, THE ORDER IMPUGNED DESERVES TO BE QUASHED AND THE BENEF IT OF EXEMPTION BE ACCORDED TO THE APPELLANT. (B) WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) FAILED TO IGNORE THE GOVERNMENT CIRCULAR IN THE OF THE GOVERNMENT EMPLOY EE, BEING THE APPELLANT, WHICH ARE CLEAR ON ITS INTENT AND IMPLICATION, THER EFORE, DENIAL OF EXEMPTED PERQUISITE IS CONTRARY TO THE LAW AND THE BENEFIT B E DEMANDED TO THE APPELLANT. ITA NO. 5049/MUM/2016 SHRI P. P. BARMAN 2 (C) WITHOUT PREJUDICE TO ABOVE, THE CASE LAWS RELIE D UPON BY THE CIT(A) IS NOT APPLICABLE TO THE FACTS OF THE APPLICANT. 2. LEVY OF PENAL INTEREST APPELLANT, ON MERITS, DENIES HIS LIABILITY TO PENAL INTEREST. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN IND IVIDUAL AND DRAWING HIS INCOME FROM SALARY, FILED HIS RETURN OF INCOME FOR RELEVAN T AY ON 18.03.2012 SHOWING TAXABLE INCOME OF RS. 7,29,530/-. THE ASSESSMENT WA S COMPLETED ON 07.03.2014 U/S 143(3) OF THE ACT. THE ASSESSING OFFICER (AO) W HILE PASSING ASSESSMENT ORDER, DISALLOWED THE CLAIM OF EXEMPTION OF PERQUIS ITE FOR RESIDENTIAL ACCOMMODATION UNDER RULE 3(1) OF THE INCOME-TAX RUL ES, 1962 OF RS. 1,23,666/- . ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE WAS SUSTAINED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARG UED THAT ASSESSEE IS EMPLOYEE OF M/S PAWAN HANS HELICOPTER LTD., A GOVERNMENT OWN ED COMPANY. THE EMPLOYER OF THE ASSESSEE PROVIDED ACCOMMODATION TO THE ASSESSEE. THE ASSESSEE FILED RETURN OF INCOME AND CLAIMED THE EXEMPTION OF PERQUISITE FOR HOUSING ACCOMMODATION AS PER CENTRAL GOVERNMENT EMPLOYEE. T HE AO WHILE FRAMING ASSESSMENT NOT ALLOWED THE DEDUCTION OF PERQUISITE AND AS PER RULE 3(1) ADDED THE PERQUISITE IN THE INCOME OF ASSESSEE. THE LD. CIT(A ) CONFIRMED THE ACTION OF AO WITHOUT APPRECIATING THE FACT THAT ASSESSEE IS AN E MPLOYEE OF CENTRAL GOVERNMENT. THE REVENUE HAS DISALLOWED THE PERQUISITE FOR THE F IRST TIME THOUGH THE ASSESSEE WAS CLAIMING THE SAME CONSISTENTLY. THE LD AR FOR T HE ASSESSEE ARGUED THAT THE EMPLOYER OF THE ASSESSEE RECOVERED THE LICENSE LIKE CENTRAL GOVERNMENT EMPLOYEE. ON THE OTHER HAND THE LD DR FOR THE REVE NUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD DR FURTHER WOULD SUBMIT T HAT THE IN THIS CASE THE IS MADE FOR THE FIRST TIME THE ASSESSMENT ORDER IS PASSED U NDER SECTION 143(3). THE ASSESSEE ITA NO. 5049/MUM/2016 SHRI P. P. BARMAN 3 HAS NOT FILED ANY SUCH EVIDENCE THAT THE RETURN OF INCOME WAS PROCESSED ON EARLIER OCCASIONS (FOR EARLIER AYS) ASSESSMENT UNDER SECTI ON 143(3). EVEN NO ASSESSMENT ORDER FOR ANY EARLIER YEAR IS PLACED ON RECORD. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. THOUGH THE ASSESSEE HAS RAISE D AS MANY AS THREE GROUND OF APPEAL HOWEVER, AS PER OUR CONSIDERED OPINION THE O NLY SUBSTANTIAL GROUND OF APPEAL IS IF THE ASSESSEE IS ENTITLED TO SEEK THE DEDUCTION OF PERQUISITE UNDER CHAPTER VI-A. THE AO WHILE FRAMING THE ASSESSMENT, NOTICED THAT THE ASSESSEE HAS RETURN SALARY INCOME OF RS. 8,56399/- AGAINST S ALARY INCOME OF RS.8,79,780/- (PER FORM NO.16). THE ASSESSEE CLAIMED DEDUCTION U NDER CHAPTER VI-A OF RS. 1,26,870/- AND OFFERED TAXABLE INCOME AT RS. 7,29, 530/-. THE TOTAL SALARY INCOME AS PER FORM NO.16 INCLUDED PERQUISITE OF RS. 1,23,6 66/- RECEIVED ON ACCOUNT OF ACCOMMODATION AS PER FORM 12BA. HOWEVER, THE ASSESS EE WHILE COMPUTING SALARY INCOME TREATED ONLY RS. 37,606/- TO GROSS SA LARY INCOME OF RS. 8,47,881/-. THE AO POINTED OUT THE DEFICIENCY. THE ASSESSEE VID E HIS LETTER DATED 01.04.2014 CONTENDED THAT PERQUISITE ARE IN RESPECT OF RESIDE NTIAL ACCOMMODATION AS PER RULE 3(1) OF INCOME-TAX RULES, 1962, AND THE ASSESSEE IS CENTRAL GOVERNMENT EMPLOYEE AND ENTITLED FOR DEDUCTION. THE EMPLOYER H AS ALREADY DEDUCTED RS.3516/- ON ACCOUNT OF LICENSE FEE AND HENCE RS.1, 23,666/- WAS CLAIMED AS EXEMPTED. THE CONTENTION OF THE ASSESSEE WAS NOT A CCEPTED BY AO AND CLAIM OF THE DEDUCTION UNDER CHAPTER VI-A WAS REJECTED. THE AO WHILE REJECTING THE CLAIM OF DEDUCTION HELD THAT THE EMPLOYER OF THE ASSESSEE HAS ADDED THE PERQUISITE AS TAXABLE WHICH IS ACCEPTABLE. THE LD. CIT(A) WHILE CONSIDERING THE CONTENTION OF THE ASSESSEE EXAMINED RULE 3 OF INCOME TAX RULES ( IN PARA7.4). THE LD CIT(A) FURTHER OBSERVED THAT THE EMPLOYER OF ASSESSEE HAS ADOPTED SECOND CATEGORY OF CLASSIFICATION PRESCRIBED IN THE TABLE THEREIN AND VIRTUALLY NOT ACCEPTED THE ASSESSEE AS CENTRAL GOVERNMENT EMPLOYEE WHICH ARE PLACED IN FIRST CATEGORY. THE LD CIT (A) CONCLUDED THAT THE EMPLOYER HAS SET OFF THE LIC ENSE FEE (REDUCED LICENSE FEE RECOVERED) AND TREATED THE BALANCE AS PERQUISITE. T HE ORDER OF LD CIT(A) IS REASONABLE PROVIDED THE PUBLIC SECTOR EMPLOYEE LIKE THE PRESENT ASSESSEE, WHO IS ITA NO. 5049/MUM/2016 SHRI P. P. BARMAN 4 EMPLOYEE OF PAWAN HANS DOES NOT CONSTITUTE CENTRA L GOVERNMENT EMPLOYEE. WE ARE AWARE THAT THE HONBLE APEX COURT IN ARUN KU MAR VS UOI (286 ITR 86) UPHELD THE DISTINCTION PROVIDED IN RULE 3 BETWEEN THE CENTRAL/ STATE GOVERNMENT EMPLOYEE AND THE EMPLOYEE OF STATUTORY CORPORATION, COMPANIES AND UNDERTAKINGS. THE LD CIT (A) HAS NOT GIVEN THE REAS ONING AS TO HOW THE CENTRAL GOVERNMENT PUBLIC SECTOR EMPLOYEE DOES NOT COVERED BY THE CLASS OF PERSON QUALIFIED IN FIRST CATEGORY OF RULE 3 OF IT RULE 19 62. FROM, THIS POINT OF VIEW THE CONCLUSION DRAWN BY LD CIT (A) IN OUR VIEW IS PREMA TURE. THEREFORE, WE DIRECT THE LD CIT(A) TO GIVE A REASONING AS TO HOW THE EMP LOYEE OF PUBLIC SECTOR OF CENTRAL GOVERNMENT LIKE PAWAN HANS IS NOT QUALIFI ED FOR FIRST CATEGORY OF EMPLOYEE AS PRESCRIBED IN RULE 3 OF IT RULE. HENCE , FOR LIMITED PURPOSE THE APPEAL IS RESTORED TO THE FILE OF LD CIT(A). THE AS SESSEE IS ALSO DIRECTED TO ASSIST THE LD CIT(A) AND PROVIDE NECESSARY EVIDENCES AND INFORMATION TO ARRIVE ON A FAIR CONCLUSION. NEEDLESS TO SAY THAT BEFORE PASSING THE ORDER THE LD CIT(A)SHALL PROVIDE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 7 TH MARCH, 2017. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 17/03/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/