DR. CHITANG JANAK JOSHI, MUMBAI V. CIT NATIONAL FACELESS APPEAL CENTRE, DELHI

ITA 748/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6905 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 09-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS; Set aside
• Section: 10; 143(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri Shamim Yahya (AM) I.T.A. No. 748/Mum/2021 (A.Y. 2017-18) Dr.Chitang Janak Joshi 786A, Eastern Heights 4 th Road, TPS III, Santacruz East, Mumbai-400 055. PAN : AGOPJ0499E Vs. CIT(A) National Faceless Appeal Centre Mumbai. (Appellant) (Respondent) Assessee by None Department by Shri T. Sankar Date of Hearing 03.01.2022 Date of Pronouncement 15.03.2022 O R D E R This appeal by the Revenue is directed against the order learned CIT(A) dated 15.3.2021 for assessment year 2017-18. 2. The grounds of appeal read as under : 1. The Commissioner of Income Tax (Appeal) erred in confirming addition of Rs.3,72,845/- by assessing officer as income which is exempt income under section 10 of the Income Tax Act, 1961. 2. The appellant appeals your lordship to delete the addition of Rs 3,72,845/- made to taxable income. 3. Without prejudice to what is mentioned above, the appellant had negative cash flow as the appellant paid education fees and other fees like term fees, examination fees, etc and received stipend money as per Government order to aid education expenses incurred by students of medicines. 3. Brief facts of the case are that in this case assessment order was processed by CPC Bangalore under section 143(1) of the IT Act. In the computation of income CPC substituted Rs. 3,72,845/- instead of Rs. 5,00,000/- against salary. Dr.Chitang Janak Joshi 2 4. Against this order, assessee appealed before learned CIT(A). Learned CIT(A) noted the following submission of the assessee : "I gratefully acknowledge your having permitted me to make written submissions which I do as follows. 7.7 The captioned appeal is against the addition of Rs. 3,72,845/-made by the Income-tax officer ("the ITO") in his Order of assessment u/s 143(1) of Income-tax Act, 1961 ("the Act"). The Order was made on. 1.2 The Appellant was a student during the year under review. The appellant was doing three (3) years Post Graduation degree course in Surgery. He received stipend of Rs.3,72,845/- per annum and was paying TUITION fees of Rs.5,00,000/- per annum for pursuing his studies. In addition to his annual fees of Rs.5.00,000/-. The Appellant had also paid examination fees, college development fees, stay expenses as he was required to stay near hospital, etc. 1.3 The Appellant was not an employee as he was not authorized to work as an employee nor he was allowed to work outside as he was not authorized to work independently nor as an under authorized person. Without paying fees of Rs.5,00,000/- to the Hospital towards his Post Graduation studies, he would be ineligible to get this stipend from the hospital, where he was enrolled for his Post Graduation Studies. 1.4 There was no employer- employee relationship/contract between the appellant and payer of stipend. He was not eligible to claim any benefits as per law or customs. The net receipts of the appellant was negative during the year under review. 1.5 The APPELLANT had to appear & PASS examinations at the end of the tenure of three years of his studies (course), to get the degree certificate of M.S. (Gen. Surgery) & exit the course. No Employer-employee relationship would require any employee to appear & pass the examinations. This shows that he was a student and not an employee. 1.6 Here, the sole intention & motive of the Appellant (Student) is not to earn stipend but to complete his studies and EARN the P.G. degree. 1.7 Without prejudice to the above, the earning in the name of stipend should be treated other than salary qualifying for deduction of expenses like tuition fees, examination fees, other expenses, etc. to earn the so called taxable income. 1.8 As per the Income Tax Act, stipend is a scholarship given to meet the education expenses. Thus, it is exempted from income tax under Section 10 (16). The Income Tax Act has further laid down that 'scholarship granted to meet the cost of education' is exempt from Income Tax under the section 10(16). Now the question arises should we consider Stipend as 'Salary' or as 'Scholarship'. Dr.Chitang Janak Joshi 3 For this we must review the terms under which such Stipend is paid-when Stipend is paid to further a person's education, we need to test whether it qualifies as a Scholarship. The person may exhaust this money fully or may end up saving some of it - as long as this has been paid purely in pursuit of a person's education and is in the nature of a scholarship it shall be exempt. This will have no relation to the position of the person. Usually, Articles pursuing CA may earn Stipend, or a professor may receive stipend for carrying on research work. The purpose of such payment is of importance here - and not the value or the way this has been spent Research fellowships, grants received from universities may all be exempt when their nature is to support further education. In Junior Doctors' Association Vs. Chief Commissioner of Income Tax the Madhya Pradesh High Court ordered not to deduct TDS, as stipend to Doctors is not taxable. 1.9 The captioned appeal is against the addition of Rs 3,72,845 made by the Income-tax officer ("the ITO") in his Order of assessment u/s 143(1) of Income-tax Act, 1961 ("the Act"). 1.10 A review of the grounds of appeal before your Honour shows that relief is pleaded in appeal in respect of the following issues. (i) In the preliminary ground, it has been pleaded that the addition made in the assessment proceedings including the impugned Order be deleted.” 5. Learned CIT(A) held as under :- I have perused the facts of the case, the intimation under section 143(1) and the submissions of the appellant. In this case, the Assessing Officer (CPC) made addition of Rs. 3,72,845/- under the head "Salary". The Authorized Representative argued that amount of Rs. 3,72,845/- is stipend which was received by the appellant as appellant is student of post graduation in surgery and he is not authorized to work as employee nor work done by him. Hence, the stipend received by appellant may be exempt under section 10(16) of the I.T. Act, 1961. 2.2.1 On perusal of overall facts, I find that before me, till passing the appellate order, the appellant did not file any supporting documents I which prove that the amount of Rs. 3,72,845/- is stipend and not salary. Therefore, the addition made by the Assessing Officer (CPC) is justified and upheld. These grounds of appeal are dismissed. 6. Against this order assessee is in appeal before ITAT. 7. I have heard Leonard DR and perused the records. From the facts narrated above it is evident that learned CIT(A) has accepted that if the amount has been received as a stipend the same shall not be taxed as salary. However learned CIT has held that till the passing of his appellate order Dr.Chitang Janak Joshi 4 assessee has not submitted any evidence that the amount received is stipend. There is no mention as to whether any such query was made by the learned CIT appeals. The assessee all along has submitted that it is stipend. The amount of salary was inserted by CPC Bangalore. Hence the reason for such an insertion has to be available before the Department. Hence putting the onus on the assessee is totally unjustified. Moreover it is not very difficult matter to comprehend that amount paid during the post graduation course in the medical field is termed as a stipend. In this view of the matter in my considered opinion the order passed by the learned CIT appeals is liable to be set aside. Accordingly, I set aside the orders of authorities below and decide the issue in favour of assessee. 8. In the result, appeal by the assessee is allowed. Order pronounced in the open court on 15.3.2022. Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Mumbai; Dated : 15/03/2022 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai