DCIT, Pune V. Shri Uday R. Yadav, Pune

ITA 757/PUN/2010

• Counselvise Citation: 75724514 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 19-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEERA MALHOTRA
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 757/PN/10 (ASSTT. YEAR 2004-05) DY. COMMISSIONER OF INCOME-TAX, CIR. 8, PUNE .. APPELLANT VS. SHRI UDAY R YADAV, .. RESPONDENT C/O EATON INDUSTRIES P. LTD., 145 OFF MUMBAI-PUNE ROAD, PIMPRI, PUNE PAN-AAUPY5988M APPELLANT BY: MRS NEERA MALHOTRA RESPONDENT BY: NONE DATE OF HEARING : 29.09.2011 DATE OF PRONOUNCEMENT : 21.10.2011 ORDER PER G.S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORD ER DATED 04.02.2010 PASSED BY THE COMMISSIONER OF INCOME-TAX (APP EALS)-V, PUNE , WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 30.11.20 06 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX A CT., 1961 (IN SHORT THE ACT), TO THE ASSESSMENT YEAR 2004-05. 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE RESPONDENT- ASSESSEE INSPITE OF VALID SERVICE OF NOTICE. ACCORDINGLY, TH E APPEAL IS BEING DISPOSED OF AFTER HEARING THE APPELLANT-REVENUE ON ME RITS AND EX PARTE QUA THE RESPONDENT-ASSESSEE. 3. THE SOLITARY DISPUTE RAISED BY THE REVENUE IN THIS A PPEAL RELATES TO THE ADDITION OF RS 6,26,280/- DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON ACCOUNT OF GOODS AND SERVICES ALLOWANCE. THE RELEVANT FACTS, IN BRIEF, ARE THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE WAS EMPLOYE D WITH M/S EATON 2 INDUSTRIES (P) LTD. A SUBSIDIARY OF EATON CORPORATION INC., USA AND WAS MANAGING THE AFFAIRS OF THE COMPANY INDIA. THE ASSESSEE FILED A RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS 1,52,19,550/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FILED A REVISED STATEMENT OF INCOME E NHANCING THE TAXABLE INCOME BY AN AMOUNT OF RS 28,28,170/-. ON PE RUSAL OF THE DETAILS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD RECEIVED U S $ 13,600 EQUIVALENT TO RS 6,26,280/- AS GOODS AND SERVICES ALLOWAN CE. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE SAID AMOUNT WAS NOT TAXABLE BECAUSE THE SAME WAS REFUNDED BY THE ASSESSEE TO THE EMPLOYER COM PANY. ACCORDING TO THE DETAILS GIVEN IN PAGE 6 OF ASSESSMENT ORDER, THE ASS ESSEE HAD RECEIVED US $ 13,600 FROM APRIL TO NOVEMBER, 2003 AS GOODS AND SERV ICES ALLOWANCES AND IN THE RETURN OF INCOME ORIGINALLY FILED, ASSESSEE DID NOT OFFER FOR TAXATION THE SAID AMOUNT. AS PER THE ASSESSING OFFICER, THE ABOVE FACT CAME INTO LIGHT ONLY WHEN THE ASSESSEE WAS INSISTED TO SUBMIT COPY OF THE BANK STATEME NT. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED AMOUNT OF RS 6,26,280/- WAS NOT TAXABLE IN THE FINANCIAL YEAR 2003 -04 AS ACCORDING TO HIM, THE SALARY OF THE ASSESSEE WAS CREDITED INCLUDING THE AMOUNT OF RS 6,26,280/- BEING THE GOODS AND SERVICES ALLOWANCES. THE ASSESSING OFFICER ACCOR DINGLY ADDED THE AMOUNT OF RS 6,26,280/- TO THE TOTAL TAXABLE INCO ME OF THE ASSESSEE AS SALARY FOR THE FINANCIAL YEAR 2003-04. 4. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (AP PEALS), THE ASSESSEE ASSAILED THE ORDER OF THE ASSESSING OFFICER BY FILING DETA ILED WRITTEN SUBMISSIONS. THE COMMISSIONER OF INCOME-TAX (APPEALS), AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE IMPUGNED AMOUNT OF RS 6,2 6,280/- WAS NOT TAXABLE IN THE HANDS OF THE ASSESSEE AS HIS SALARY. THE RELEVAN T FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ARE AS FOLLOWS: 9. I HAVE GIVEN CAREFUL CONSIDERATION TO THE WRITT EN AND ORAL SUBMISSIONS ON BOTH FACTUAL AND LEGAL ASPECTS OF THE MATTER, AND HAVE A LSO PERUSED A COPY OF THE CERTIFICATE GIVEN BY THE MANAGER GLOBAL MOBILITY, EATON CORPORA TION, TO THE EFFECT THAT AN AMOUNT OF USD 1700 PER MONTH FROM APRIL TO NOVEMBER 2003 HAD BEEN PAID INCORRECTLY TO MR UDAY YADAV AND THAT THE SAID AMOUNT HAS SINCE BEEN REPAI D BY HIM VIDE A CHEQUE NO 1980 3 DATED 22.3.2004, A COPY OF WHICH HAS ALSO BEEN ENCL OSED TO THE CERTIFICATE. HAVING CAREFULLY CONSIDERED THE FACTS BEFORE ME, I AM IN A GREEMENT WITH THE LD AR OF THE APPELLANT THAT EVERY SUM OF INCOME PAID TO AN EMPLO YEE DURING THE PREVIOUS YEAR DOES NOT AUTOMATICALLY PARTAKE THE CHARACTER OF SALARY. IF THAT WERE THE CASE, EVEN A LOAN TAKEN FROM AN EMPLOYER (INCLUDING THE PRINCIPAL AMOUNT WH ICH IS SUBJECT TO REPAYMENT) WOULD HAVE TO BE TAXED IN THE HANDS OF THE EMPLOYEE AS S ALARY. THE SCOPE OF CHARGEABILITY UNDER THE HEAD SALARY IS SET OUT UNDER SECTION 15 OF THE INCOME-TAX ACT, 1961 WHICH SPECIFIES THAT IN ORDER TO BE CHARGEABLE UNDER THE HEAD, THE NATURE OF THE RECEIPT FIRST HAS TO BE THAT OF INCOME. MERE PAYMENT OF A SUM OF MO NEY BY AN EMPLOYER TO THE EMPLOYEE BY OVERSIGHT, WITHOUT ANY UNDERLYING OBLIGATION ON THE PART OF THE EMPLOYER TO PAY AND RIGHT ON THE PARTY OF THE EMPLOYEE TO RECEIVE THE A MOUNT, CANNOT BE REGARDED AS INCOME AND CONSEQUENTLY CANNOT BE REGARDED AS SALARY. TH E AOS OBSERVATION THAT THE APPELLANT IS FOLLOWING CASH SYSTEM OF ACCOUNTING IS ALSO NOT RELEVANT SINCE THE RELEVANT PART OF SECTION 145(1) APPLIES TO INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAIN OF BUSINESS OR PROFESSION OR INCOME FROM OTHER SOURC ES AND NOT TO THE HEAD SALARIES. 10. CONSIDERING THE TOTALITY OF FACTS, I AM OF THE VIEW THAT THE LD AR OF THE APPELLANT HAS BEEN ABLE TO SUBSTANTIATE HIS CLAIM THAT THE AM OUNT OF RS 6,26,280/- WAS A MERE INADVERTENT OVERPAYMENT WHICH HAS BEEN REPAID TO TH E EMPLOYER WITHIN THE FINANCIAL YEAR AND WAS NOT TAXABLE IN THE HANDS OF THE APPELLANT A S HIS SALARY. AGGRIEVED WITH THE ORDER OF THE COMMISSIONER OF INCOME -TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE , APPEARING FOR THE REVENUE HAS PRIMARILY ASSAILED THE ORDER OF THE COMMISSI ONER OF INCOME-TAX (APPEALS) BY RELYING ON THE ORDER OF THE ASSESSING OFFI CER. ACCORDING TO HER, THE ASSESSING OFFICER WAS QUITE JUSTIFIED IN ASSESSING THE IMPUGNE D AMOUNT, INASMUCH AS THE SAID AMOUNT WAS FOUND TO HAVE BEEN RECEI VED BY THE ASSESSEE FROM HIS EMPLOYER. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS PUT-FORTH BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AS ALSO THE RESPECTIVE ORDE RS OF THE AUTHORITIES BELOW. QUITE CLEARLY, THE AMOUNT IN QUESTION WAS INITI ALLY RECEIVED BY THE ASSESSEE FROM HIS EMPLOYER AS GOODS AND SERVICES ALLOWANCE. SO, HOWEVER, IT IS ALSO EVIDENTLY ESTABLISHED ON THE BASIS OF THE MATERIAL ON RECORD THAT THE SAID AMOUNT WAS ERRONEOUSLY PAID TO THE ASSESSEE AS SALARY AND THAT THE SAME HAS SINCE BEEN REPAID BY THE ASSESSEE TO HIS EMPLOYER. IN THIS REGARD, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS REFERRED TO A CE RTIFICATE ISSUED BY THE EMPLOYER OF THE ASSESSEE CONFIRMING THAT THE SAID AMOUNT HAS INDEED BEEN REPAID BY THE ASSESSEE. THE INCORRECTNESS OF THE PAYMENT HAS BEEN CERTIFIED BY THE EMPLOYER TO WHICH THERE IS NO NEGATION FROM THE SI DE OF THE REVENUE. IN FACT, 4 BEFORE THE ASSESSING OFFICER ALSO IT WAS EXPLAINED THAT O N ACCOUNT OF OUTSOURCING OF PAYROLL FUNCTION BY THE EMPLOYER, THE IMPUGNED E RROR HAD OCCURRED WHEREBY THE ASSESSEE WAS PAID CERTAIN AMOUNTS UNDER GOODS AND SERV ICES ALLOWANCE OVER AND ABOVE HIS AGREED SALARY COMPENSATION. FACTUA LLY SPEAKING, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS CONCLUDED THAT T HE AMOUNT OF RS 6,26,280/- WAS AN INADVERTENT OVER PAYMENT RECEIVED F ROM THE EMPLOYER AND WHICH HAS BEEN REPAID TO THE EMPLOYER WITHIN THE FINA NCIAL YEAR AND WAS THUS NOT TAXABLE IN THE HANDS OF THE ASSESSEE AS HIS SALARY. THESE F ACTUAL ASSERTIONS BY THE COMMISSIONER OF INCOME-TAX (APPEALS), WHICH ARE BASED ON REQUISITE MATERIAL, HAVE NOT BEEN NEGATED OR DISLODGED BEFORE US AND ACCORDINGLY THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS H EREBY AFFIRMED. IN THE RESULT, THE ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS) DELETING THE IMPUGNED SUM IS HEREBY AFFIRMED. 7. IN THE RESULT, THE APPEAL BY THE DEPARTMENT IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2011 SD/- SD/- (I C SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 21 ST OCTOBER, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT(A)-V PUNE 4. THE CIT-V, PUNE 5. THE D.R, B BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE 5