Bhaskar Eknath avhad, Pune V. DCIT, Cent. Cir.-1(1), Pune

ITA 62/PUN/2009

• Counselvise Citation: 6224514 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 15-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: V JAYARAMAN
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NOS 62, 63 & 65/PN/09 (ASSTT. YEAR: 2000-01, 2001-02 & 2003-04) BHASKAR EKNATH AVHAD, .. APPELLANT DNYANDEEP, 19/1-B/1, KOTHRUD, PUNDE 411 0289 PAN AAZPA 3419N VS. DY. COMMISSIONER OF INCOME-TAX, .. RESPO NDENT CEN. CIR. I (1) PUNE APPELLANT BY: SHRI V JAYARAMAN RESPONDENT BY: SHRI HARESHWAR SHARMA DATE OF HEARING : 08.09.2011 DATE OF PRONOUNCEMENT : 24.10.201 1 ORDER PER G.S. PANNU, AM THE CAPTIONED APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST SEPARATE BUT SIMILAR ORDERS OF THE COMMISSIONER OF INCOME-TAX-I, PUNE , WHICH IN TURN, HAVE ARISEN FROM THE ORDERS PASSED BY THE ASSESSING OFFICER UNDE R SECTION 143(3) R.W.S 153A(B) OF THE INCOME-TAX ACT, 1961 (IN SHORT TH E ACT), PERTAINING TO THE ASSESSMENT YEARS 2000-01, 2001-02 & 2003-04. 2. INITIALLY, THE THREE APPEALS WERE HEARD AND DISPO SED OF BY THE TRIBUNAL VIDE ITS ORDER DATED 31.8.2010. SUBSEQUENTLY, ON AN APPLICA TION PREFERRED BY THE 2 ASSESSEE, THE TRIBUNAL VIDE ITS ORDER DATED 27.4.2011 IN M.A NO 159/PN/10 INVOKED THE PROVISIONS OF SECTION 254(2) OF THE ACT AND R ECALLED PARA 7 OF THE ORDER DATED 31.8.2010 RELATING TO THE ADDITION MADE ON ACCOUNT OF PROFIT IN LIEU OF SALARY IN RESPECT OF COLLEGE FEE CONCESSION GRANTED TO THE DAUGHTER OF THE ASSESSEE. ACCORDINGLY, THE AFORESAID APPEALS WERE POSTED FOR HEARING FOR THE LIMITED PURPOSE OF ADJUDICATING THE ISSUE OF ADDITION O N ACCOUNT OF PROFIT IN LIEU OF SALARY IN RESPECT OF COLLEGE FEE CONCESSION GRANTED TO THE DAUGHTER OF THE ASSESSEE. 3. IN THIS REGARD, THE BRIEF FACTS AS EMERGING FROM T HE ORDERS OF THE AUTHORITIES BELOW CAN BE SUMMARIZED AS FOLLOWS. THE APPELLANT IS A T RUSTEE AND HONORARY PRESIDENT OF THE MAHARASHTRA ACADEMY OF ENGINEERING AND EDUCATIONAL RESEARCH, PUNE (IN SHORT MAEER). THE ASSESSING OFFICER FOUND THAT ONE OF THE ASSESSEES DAUGHTER GOT ADMISSION TO MBBS IN AN INSTITUTION RUN BY MAHARASHTRA EDUCATIONAL SOCIETY, PUNE AND THE OTHER DAUGHTER GOT ADMISSION TO A B.E COURSE IN MIT, WHICH WAS AGAIN BEING RUN BY MAEER. THE ASSESSIN G OFFICER NOTICED THAT THE DAUGHTERS GOT FEE CONCESSION WHICH, ACCORDING TO T HE ASSESSING OFFICER, WAS POSSIBLE BECAUSE OF THE POSITION OF THE ASSESSEE IN MAEE R. THE ASSESSING OFFICER NOTICED THAT THOUGH THE ASSESSEE WAS NOT GETTIN G ANY SALARY FOR THE SERVICES BEING RENDERED TO THE MAEER, BUT THE FEE CONCESSI ON AVAILABLE TO THE DAUGHTER WAS PURELY ON ACCOUNT OF HIS POSITION OF A TRUST EE. ACCORDINGLY, IN THE ASSESSMENT YEAR 2000-01, THE ASSESSING OFFICER MADE AN ADDI TION OF RS 74,030/-, AND THE SAME WAS TAXED AS PROFITS IN LIEU O F SALARY. SIMILARLY, IN THE ASSESSMENT YEAR 2001-02 AN ADDITION OF RS 1,25,885/- WAS MADE AS PROFIT IN LIEU OF SALARY ON ACCOUNT OF THE FEE CONCESSION. IN THE ASSESSMEN T YEAR 2003-04, SIMILAR ADDITION WAS MADE TO THE EXTENT OF RS 2,95,940 /-. THE COMMISSIONER OF INCOME-TAX (APPEALS) ALLOWED PARTIAL RELIEF, INASMUCH A S IT WAS FOUND THAT THE DAUGHTER OF THE APPELLANT WHO WAS STUDYING THE MBBS C OURSE FINISHED THE SAID COURSE IN NOVEMBER, 1999 AND THEREFORE, THERE WAS NO J USTIFICATION FOR SUCH ADDITION SUBSEQUENT TO THE SAID PERIOD. ACCORDINGLY, I N RELATION TO THE ADDITION ON 3 ACCOUNT OF FEE CONCESSION TO ONE OF THE DAUGHTERS CARRY ING ON MBBS COURSE, RELIEF WAS ALLOWED AND ADDITION HAS BEEN SUSTAINED IN THE BALANCE AMOUNT OF RS 49,353/-, 48,000/- AND RS 48,000/- IN THE ASSESSMENT YEA RS 2000-01, 2001-02 AND 2002-03 RESPECTIVELY. 4. AGAINST THE AFORESAID PART SUSTENANCE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE SO-CALLED FEE CONCE SSION TO CHILDREN OF THE ASSESSEE CANNOT BE BROUGHT TO TAX AS PROFITS IN LIEU OF SALARY, SINCE THE ASSESSEE COULD NOT BE CONSTRUED AS AN EMPLOYEE OF THE EDUCAT IONAL INSTITUTION. IT WAS POINTED OUT THAT THE ASSESSEE IS THE TRUSTEE OF THE M AEER, AND ITS POSITION COULD NOT BE EQUATED TO THAT OF AN EMPLOYEE. IN SUPPO RT, RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS: (I) CIT V. INFOSYS TECHNOLOGIES LTD. 297 ITR 167 (SC), (II) CIT V SHIVALIK DRUG (FAMILY TRUST) 300 ITR 339 ( ALL) APART THEREFROM, IT WAS ALSO POINTED OUT THAT THE CONC ESSION, IN QUESTION, WAS NOT GRANTED ARBITRARILY TO THE ASSESSEE, INASMUCH AS THE MA EER HAS BEEN FUNCTIONING FOR 25 YEARS AND RIGHT FROM INCEPTION THE RE IS A POLICY OF PROVIDING CONCESSIONAL EDUCATION TO THE CHILDREN OF TRUSTEES AND PER SONS CONCERNED WITH THE MANAGEMENT. IT WAS, THEREFORE, POINTED OUT THAT THE IMPUGNED AMOUNTS WERE NOT TAXABLE AT ALL AS PROFIT IN LIEU OF SALARY AND T HEREFORE, EVEN PART SUSTENANCE BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS DEVOID OF ME RIT. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS CONTESTED THE STAND OF THE ASSESSEE BY POINTING OUT THAT FEE CONCESSION HAS BEEN AVAILED BY THE ASSESSEE ONLY ON ACCOUNT OF HIS POSITION AS TRUSTEE OF MAEER AND, THEREFORE, THE ASSESSING OFFICER WA S JUSTIFIED IN ASSESSING THE SAME AS PROFIT IN LIEU OF SALARY EVEN THOUGH THE ASSESSEE WAS NOT DRAWING ANY SALARY FROM THE SAID INSTITUTION. 4 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE FACTS RELATING TO THE CAPTIONED DISPUTE LIE IN A NARROW COMPASS. THE ASSESSEE IS A TRUSTEE OF AN INSTITUTION, NAMELY, MAEER. THE SAID TRUST ALLOWED CERT AIN FEE CONCESSION TO THE CHILDREN OF THE ASSESSEE, WHO WERE STUDYING IN THE EDUCA TIONAL INSTITUTIONS RUN BY THE SAID TRUST. THE SAID AMOUNT OF FEE CONCESSION HAS BE EN ASSESSED TO TAX AS PROFITS IN LIEU OF SALARY. FOR THE PURPOSES OF SECTION 1 5 AND 16 OF THE ACT WHICH DEAL WITH TAXATION OF SALARIES, SECTION 17 PROVIDES THE DEFINITION OF EXPRESSION SALARY WHICH, INTER ALIA, INCLUDES PROFITS IN LIEU OF SALARY. THE CLAIM SET-UP BY THE REVENUE IS THAT THE FEE CONCESSION IN QUESTION IS TAXABL E AS PROFITS IN LIEU OF SALARY. SO, HOWEVER, AN AMOUNT IS CHARGEABLE TO TAX U NDER THE HEAD SALARIES ONLY IF IT IS RECEIVED FROM AN EMPLOYER. IN OTHER WOR DS, THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP IS A PRE-REQUISITE SO AS TO TAX AN AMOUNT UNDER THE HEAD SALARIES. THE MOOT QUESTION IS AS TO WHETHER THE RECIPIENT OF THE BENEFIT BY WAY OF FEE CONCESSION IN THIS CASE I.E. THE ASSESSEE INDIVI DUAL WHO IS A TRUSTEE CAN BE CONSIDERED TO BE AN EMPLOYEE OF MAEER. FACTUALL Y SPEAKING, THERE IS NO MATERIAL EMERGING FROM THE ORDER OF THE ASSESSING OFFI CER WHICH WOULD SHOW THAT ANY EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN THE ASSESSEE AND THE MAEER. IN OUR CONSIDERED OPINION, THE ASSESSEE WHO IS ON LY A TRUSTEE OF THE TRUST CANNOT BE CONSTRUED AS ITS EMPLOYEE QUA THE IMPUGN ED AMOUNT UNLESS THE FACTS PROVE AN EMPLOYER-EMPLOYEE RELATIONSHIP. PER SE, A TRUSTEE CANNOT BE CONSIDERED TO BE AN EMPLOYEE AS HELD BY THE HONBLE AL LAHABAD HIGH COURT IN THE CASE OF SHIVALIK DRUG (FAMILY TRUST) (SUPRA). UNDER THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, IT CANNOT BE SAID THAT THE ASSESSE E WAS AN EMPLOYEE OR AKIN TO AN EMPLOYEE OF MAEER AND, THEREFORE, THE IM PUGNED AMOUNTS COULD NOT BE ASSESSED TO TAX BY THE ASSESSING OFFICER AS PROFITS IN LI EU OF SALARY WITHIN THE MEANING OF SECTION 15 READ WITH SECTION 17 OF THE ACT. W E, THEREFORE, SET ASIDE THE ORDER OF THE COMMISSIONER OF THE INCOME-TAX (APPEA LS) ON THIS ASPECT AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON ACCOUNT OF PROFIT IN 5 LIEU OF SALARY IN RESPECT OF COLLEGE FEE CONCESSION GRANT ED TO THE DAUGHTERS OF THE ASSESSEE FOR ALL THE YEARS UNDER CONSIDERATION. IN THE RESULT, THE ASSESSEE SUCCEEDS IN THE CAPTIONED P ROCEEDINGS. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF OCTOBER, 2011. SD/- SD/- (S HAILENDRA KUMAR YADAV) (G.S. PAN NU) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE, DATED: 24 TH OCTOBER, 2011 B COPY TO:- 1) APPELLANT 2) RESPONDENT 3) THE CIT(A)-I PUNE 4) THE CIT (CEN) PUNE 5) DR, A BENCH, ITAT, PUNE. 6) GUARD FILE BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE