AMAY PANDEY, Jaipur V. DCIT, Sawai Madhopur

ITA 505/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5342 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Keywords: Salary income
• Section: 148; 37; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 505 & 506/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2007-08 & 2008-09 AMAY PANDEY, RE/IV/7A, A RAILWAY COLONY, KOTA JUNCTION, KOTA. CUKE VS. DY.CIT, CIRCLE-SAWAI MADHOPUR, KOTA (RAJ.) LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AOIPP 6158 A VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/03/2016 MN~?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 22/04/2016 VKNS'K @ ORDER PER: T.R. MEENA, A.M. BOTH THE APPEALS FILED BY THE ASSESSEE ARISE AGAIN ST THE ORDER DATED 22/03/2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AJMER FOR A.Y. 2007-08 AND 2008-09. THE EFFECTIVE GROUND OF APPEAL FOR A.Y.2007-08 IS AS UNDER:- 1. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE CLAIM OF EXPENSES OF RS. 7,94,673/- INCURRED BY THE ASSESSEE ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 2 AGAINST THE PROFESSIONAL RECEIPTS RECEIVED FROM RESONANCE INSTITUTE, KOTA. HE HAS FURTHER ERRED I N CONFIRMING THE SAID DISALLOWANCE HOLDING THAT NO EVIDENCE IN SUPPORT OF CLAIM OF EXPENSES WAS FILED IGNORING THAT NO ADEQUATE OPPORTUNITY WAS PROVIDED TO FILE THE EVIDENCE IN SUPPORT OF CLAIM OF EXPENSES. SIMILAR GROUND HAS BEEN MADE BY THE ASSESSEE IN THE APPEAL FOR A.Y. 2008-09. 2. THE ASSESSEE FILED HIS RETURN IN INDIVIDUAL CAPAC ITY ON 10/7/2008 AT RS.5,01,534/- FOR A.Y. 2007-08 AND ON 03/12/2008 AT RS. 9,72,480/- FOR A.Y. 2008-09. THE CASE FOR A.Y. 2007-08 WAS SCR UTINIZED U/S 144 READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND FOR A.Y. 2008-09, THE CASE WAS SCRUTINIZED U/S 1 43(3) OF THE ACT. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEARS U NDER CONSIDERATION, THE ASSESSEE HAD BEEN WORKING AS A LECTURER WITH RES ONANCE, AND COACHING INSTITUTE SITUATED IN KOTA.. HE HAD RECEIV ED SALARY AT RS. 90,000/- AND FEE OF RS. 12,06,000/- IN A.Y. 2007-08 AND REMUNERATION OF RS. 17,80,000/- IN A.Y. 2008-09 IN FORM NO. 16A. HOWEVER, IN COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAD SHOWN INCOME FROM BUSINESS OR PROFESSION AT RS. 5,01,327/- FOR A.Y. 2 007-08 AFTER CLAIMING VARIOUS EXPENSES LIKE SALARY AT RS. 2,70,000/-, BON US AT RS. 22,500/-, WORKMAN/STAFF WELFARE EXPENSES AT RS. 18,203/-, TRAVE LLING AT RS. ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 3 12,485/-, TELEPHONE EXPENSES AT RS. 19,107/- ETC. A ND ALSO DECLARED INCOME FROM OTHER SOURCES AT RS. 90,000/-. SIMILARL Y IN A.Y. 2008-09 HE HAD SHOWN THIS INCOME FROM BUSINESS AND PROFESSION A T RS. 9,68,316/- AFTER CLAIMING VARIOUS EXPENSES LIKE SALARY AT RS. 3,30,000/-, BONUS AT RS. 22,500/-, WORKMAN/STAFF WELFARE EXPENSES AT RS. 2 1,717/-, TRAVELLING AT RS. 24,134/-, TELEPHONE EXPENSES AT R S. 16,520/-, RENT RS. 75,600/- AND OTHER EXPENSES AT RS. 1,46,023/-. THE L D ASSESSING OFFICER FOUND THAT THE EXPENSES CLAIMED IN BOTH THE YEARS A RE NOT ALLOWABLE IN CASE OF SALARY OF PERSON. THEREFORE, HE RESORTED A C OLOURFUL DEVICE TO TREAT THE SALARY INCOME AS PROFESSIONAL INCOME WHICH CANNOT BE ALLOWED TO BE A PART OF TAX PLANNING. HE HAS GIVEN COMPARAB LE CASE OF OTHER PROFESSIONAL IN THE LIGHT OF PROFESSION OF ALLEN CA REER INSTITUTE WHERE THIS INCOME HAS BEEN SHOWN UNDER THE HEAD SALARY ON WHICH SUBSTANTIAL TAX HAS BEEN DEDUCTED AND PAID BY THEM. AFTER COMPARING THE SIMILAR NATURE OF PAYMENT WITH OTHER PERSONS OF OTHER INSTIT UTIONS, HE CAME TO CONCLUSION THAT IT IS COLOURABLE DEVICE, FOR WHICH H E RELIED ON THE HON'BLE SUPREME COURT DECISION IN THE CASE OF MC. D OWELL & CO. 154 ITR 148. HE FURTHER OBSERVED THAT TEACHERS LIKE THE ASSESSEE ACTUALLY WORKED AS FULL TIME SALARIED EMPLOYEES WITH A COACHIN G INSTITUTION BUT, JUST FOR THE PURPOSE OF REMUNERATION, DECLARED THEM SELVES PROFESSIONAL ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 4 IN ORDER TO GET THEIR TDS DEDUCTION AT MUCH LOWER RAT E AND ALSO TO CLAIM UNDUE EXPENSES TO REDUCE THE TAX LIABILITY FURTHER. THE WORK ASSIGNED TO THE ASSESSEE BY HIS INSTITUTE WAS THE MAIN DUTY OF A TEACHER NOT A PROFESSIONAL, I.E. TECHNICAL WORK, TEST PAPER SETTIN G, SOLUTIONS, DAILY PRACTICE PROBLEM, DEVELOPMENT OF LITERATURE AND COP IES CHECKING. THE NATURE OF SERVICE AND SERVICE CONDITION IN THIS CAS E CLEARLY SUGGESTED THAT MASTER SERVANT RELATIONSHIP EXISTS BETWEEN EMPL OYER AND EMPLOYEE. HE FURTHER ANALYSED THE CONTRACT OF SERVI CE AND CONTRACT FOR SERVICE AND HELD THAT THE ASSESSEE CLAIM OF EXPENSE S IS NOT ALLOWABLE. ACCORDINGLY, HE ASSESSED THE ASSESSEES INCOME AS I NCOME FROM SALARY IN BOTH THE YEARS. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD ALLOWED THE ASSESSEES APPEALS PARTLY ALLOWED. FOR A.Y. 2007-08, THE FINDING OF THE LD CIT(A) IS AS UNDER:- 5.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APPEL LANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT ASSESSEE H AS SHOWN THE PROFESSIONAL RECEIPTS OF RS. 12,06,000 AN D SALARY INCOME OF RS. 90,000 WHICH HAS BEEN TREATED A S OTHER INCOME BY THE ASSESSEE. ACCORDINGLY, ASSESS EE CLAIMED THAT EXPENSES OF RS.7,94,673 SHOULD BE ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 5 ALLOWED AGAINST ABOVE INCOME. THE AO HAS REJECTED THE ABOVE CLAIM OF THE ASSESSEE AND HAS DISALLOWED THE CLAIM OF EXPENSES HOLDING THAT ASSESSEE IS DERI VING SALARY INCOME FROM RESONANCE, A COACHING INSTITUT E AT KOTA. IT IS SEEN THAT AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON TWO ACCOUNTS. I. THE AO HAS TREATED ABOVE RECEIPTS AS INCOME FROM SALARY' AND NOT PROFESSIONAL RECEIPTS. II. THE EXPENSES CLAIMED HAVE BEEN DISALLOWED FOR THE WANT OF EVIDENCE, EXPLANATION AND CLARIFICATIONS OF THE ASSESSEE. VIEWED IN ABOVE CONTEXT, THE CONSULTANCY AGREEMENT OF THE APPELLANT WITH THE RESONANCE HAS BEEN EXAMINED. IT IS SEEN THAT THE ABOVE AGREEMENT IS BETWEEN THE INSTITUTE AND SHRI AMAY PANDEY HAS BEEN STATED TO BE CONSULTANT. THE ASSESSEE IS INVOLVED IN CARRYING OUT VARIOUS DUTIES AS PER CLAUSE 2.3 REGAR DING ADVISING THE INSTITUTE IN DESIGNING THE COURSE STRU CTURE OF THE CHEMISTRY' FOR IIT- JEE ASPIRANTS AND POLICY FORMULATION WITH REGARD TO STUDENT IN TAKE, CLASS SI ZE ETC. ALONG WITH OTHER ACTIVITIES INCLUDING TEACHING AS MENTIONED IN THE CLAUSE 2.3 OF THE AGREEMENT. FURTHER, AS PER CLAUSE 7.3, IT HAS ALSO BEEN NOTED THAT ASSESSEE HAVE THE OWN COPY RIGHT ON ACADEMIC AND STUDY MATERIAL PREPARED BY THE ASSESSEE WITHOUT USIN G THE RESOURCES OF INSTITUTE AND THIS CONTRACT IS ONL Y FOR ONE YEAR AS PER THE SAID AGREEMENT. FURTHER, THE ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 6 ASSESSEE HAS TO PERFORM THE WORK AS PER HIS OWN DISCRETION AS PER THE CLAUSE 2.1 OF THE AGREEMENT WITHOUT THE INSTITUTE INTERFERING IN ANY MANNER EXCE PT OVERALL COORDINATION. THE SAID CLAUSE 2.1 IS AS UNDE R: THE AGREEMENT AS TO DUTIES AND FUNCTIONS OF THE CONSULTANT DETAILED BELOW ARE ON MAXIMUM SINCERITY AND BEST EFFORTS BASIS IN PRACTICAL SENSE AND NOT IN LE GALLY TECHNICAL SENSE AND DO NOT AFFECT THE CONSULTANTS FREEDOM OF METHODOLOGY AS ALSO SCHEDULING, STRUCTURING AND DELIVERY OF THEIR FUNCTIONS, SO LONG AS THEY ARE BROADLY IN CONFORMITY WITH INSTITUTE'S METHODOLOGY, SCHEDULES AND SEQUENCE. IT MAY BE MENTIONED THAT ASSESSEE HAS ALSO EXPLAIN ED THAT THE WORD USED IN THE CONTRACT IS CONSULTANCY AGREEMENT BETWEEN THE INSTITUTE AND THE CONSULTANT. THE REMUNERATIONS HAVE BEEN STATED AS ANNUAL CONSULTANCY FEES OF RS. 12,06,000 AND NOT THE MONTH LY SALARY PAYMENTS. IT HAS BEEN EXPLAINED THAT THERE I S NO FIXED TIMING AND ATTENDANCE RECORD AND NO CONDITIONS FOR TRANSFER OR SUPERANNUATION BENEFITS IN THE SAID AGREEMENT. IT IS NOTED THAT SIMILAR ISSUE HAS BEEN CONSIDERED AND DECIDED IN FAVOUR OF THE ASSESSEE BY HONBLE IT AT JAIPUR IN THE CASE OF ACIT VS KAMLESH SONI 107 TTJ JP 836 WHERE THE SIMILAR RECEIPTS HAVE BEEN HELD TO BE PROFESSIONAL RECEIPTS. IN VIEW OF ABOVE DISCUSSION AND SUBMISSIONS OF THE APPELLANT, THE ABOVE RECEIPTS OF RS. 12,06,000 ARE ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 7 TREATED AS PROFESSIONAL RECEIPTS WHILE THE BALANCE RECEIPTS OF RS. 90,000 ARE TREATED AS SALARY RECEIP TS AS AO HAS MENTIONED THAT FORM NO. 16 HAD BEEN ISSUED TO THE ASSESSEE FOR THE ABOVE PAYMENT WHILE THE ASSESSEE HAS NOT FILED ANY SUBMISSION OR EVIDENCE T O SHOW THAT THEY ARE NOT THE SALARY RECEIPTS. II. AS REGARDING THE CLAIM OF THE EXPENSES OF RS. 7,94,673, IT HAS BEEN POINTED OUT BY THE ASSESSEE T HAT IN SPITE OF THE REPEATED OPPORTUNITIES GIVEN TO THE ASSESSEE, ASSESSEE HAS NOT GIVEN ANY EVIDENCE, EXPLANATION OR CLARIFICATION DURING THE ASSESSMENT PROCEEDINGS. EVEN DURING THE APPEAL, MY EVIDENCES I N SUPPORT OF CLAIM OF, THE EXPENSES HAVE BEEN FILED. THE ONUS LIES ON THE ASSESSEE TO SUPPORT THE CLAIM OF T HE EXPENSES CLAIMED BY HIM. AS THE SAID ONUS HAS NOT BEEN DISCHARGED AT ANY STAGE, THE CLAIM OF ABOVE EXPENSES IS REJECTED. THIS GROUND OF APPEAL IS PARTL Y ALLOWED. FOR THE APPEAL OF A.Y. 2008-09, THE FINDING OF THE LD CIT(A) IS AS UNDER:- 7.1 THE SECOND GROUND OF APPEAL IS SIMILAR AS IN A. Y. 2007-08 AND ASSESSEE HAS CLAIMED THE REMUNERATION OF ?17,80,000 FROM RESONANCE, A COACHING INSTITUT E AT KOTA AS PROFESSIONAL RECEIPTS AND HAS CLAIMED DEDUCTION OF EXPENSES OF RS. 9,68,316 AGAINST THE ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 8 SAME. THE AO HAS DISALLOWED THE CLAIM OF EXPENSES ON THE SIMILAR REASONING AS IN A.Y. 2007-08. IN VIEW OF ABOVE, THE FINDINGS OF THE A.Y. 2007-08 ARE EQUALLY APPLICABLE IN THE CASE OF THE ASSESSEE IN RESPECT O F ABOVE REMUNERATIONS AND EXPENSES CLAIMED. FOLLOWING THE SAME, THE ABOVE REMUNERATIONS ARE HELD TO BE PROFESSIONAL RECEIPTS. HOWEVER, THE CLAIM OF THE EXPENSES IS REJECTED AS DISCUSSED AS PER PARA 4.3(I I) OF THIS ORDER. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 4. NOW THE ASSESSEE IS IN APPEALS BEFORE US. THE LD A R OF THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE T HE LD CIT(A) AND FURTHER SUBMITTED THAT ALL THESE EXPENSES CLAIMED BY THE ASSESSEE ARE CLAIMED AS PER LAW U/S 37 OF THE ACT AS INCURRED WHOL LY AND EXCLUSIVELY FOR BUSINESS PURPOSES, WHICH IS ALLOWABLE. 5. AT THE OUTSET, THE DR HAS VEHEMENTLY SUPPORTED T HE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HAS NOT PRODUCED ANY EVIDENCE EITHER BEFORE THE ASSESSING O FFICER OR CIT(A) AND ALSO NOT BEFORE US. THEREFORE, WE SET ASIDE THIS ISSUE TO THE ASSESSING OFFICER TO VERIFY THE EXPENSES AS CLAIMED BY THE ASSESSEE. ITA 505 & 506/JP/2013_ AMAY PANDEY VS. DCIT 9 THE ASSESSEE IS ALSO DIRECTED TO PRODUCE ALL THE EVI DENCES BEFORE THE ASSESSING OFFICER TO COMPLETE THE SET ASIDE PROCEED INGS. ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE FOR BOTH THE ASSES SMENT YEARS ARE SET ASIDE TO THE ASSESSING OFFICER FOR DE NOVO. 7. IN THE RESULT, THE BOTH THE APPEALS OF THE ASSES SEE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 22/04/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 22 ND APRIL, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI AMAY PANDEY, KOTA 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE-SAWAI MADHOPUR, KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 505 & 506/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR