Shri Paramjit Singh, Chandigarh V. Dy. Director of Income Tax, Chandigarh

ITA 914/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9214 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 13-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Residential status
• Section: 80C

Judgement Text

PAGE 1 OF 3 SHRI PARAMJIT SINGH V DDIT A Y 2010 - 11 ITA NO 915/CHD/2015 INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 914 /CHD/20 15 ASSESSMENT YEAR: 2010 - 11 SHRI PARAMJIT SINGH, H. NO. 1236, SECTOR 8 - C, CHANDIGARH - 160009 PAN:AAPPS0233G VS. DEPUTY DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, NWR, AAYKAR BHAWAN, SECTOR - 17, CHANDIGARH (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. MR SHARMA, ADV REVENUE BY: SH. MANJIT SINGH, DR DATE OF HEARING 01 /0 8 /2016 DATE OF PRONOUNCEMENT 0 5 /0 8 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT ( A) - 43, NEW DELHI DATED 10.09.2015 FOR THE ASSESSMENT YEAR 2010 - 11. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW ADDITION IS BEYOND ALL THE CANNONS OF LAW AND JUSTICE. 2. THAT THE ORDER OF THE AO AS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) DISALLOWING RS. 70,000/ - U/S 80C OF THE INCOME TAX ACT BEING THE AMOUNT DEPOSITED BY THE APPELLANT IN HIS PPF ACCOUNT IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 3. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD BY THE COMMISSIONE R OF INCOME TAX (APPEALS) DISALLOWING RS. 128510/ - CLAIMED AS EXEMPTION U/S 10(11) OF THE INCOME TAX ACT BEING THE AMOUNT OF INTEREST CREDITED ON PUBLIC PROVIDENT FUND (PPF) ACCOUNT IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 3 . HOWEVER, THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THAT THE ASSESSEE HAS BEEN DENIED DEDUCTION U/S 80C OF THE INCOME TAX ACT BEING THE AMOUNT DEPOSITED BY THE APPELLANT IN HIS PPF ACCOUNT ASSESSEE IS A NON RESIDENT. SIMILARLY, INTEREST EARNED BY THE ASSESS EE ON THAT PPF ACCOUNT OF RS. 128510/ - WAS ALSO NOT FOUND ELIGIBLE FOR EXEMPTION U/S 10(11) OF THE ACT. 4 . THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A NON RESIDENT , FILED HIS RETURN OF INCOME DECLARING INCOME OF RS. 1474640/ - . DURING THE YEAR THE A SSESSEE HAS CLAIMED DEDUCTION UNDER CHAPTER VI ( A) OF THE ACT OF RS. 1 LAKH AND ONE OF THE ITEM OF SUCH CLAIM WAS DEPOSIT OF RS. 70,000/ - IN THE PPF ACCOUNT OF THE A SSESSEE. TH E LD AO DENIED THE DEDUCTION AS ACCORDING TO THE CIRCULARS ISSUED UNDER THE PPF RULES, NON - RESIDENT ARE NOT PAGE 2 OF 3 SHRI PARAMJIT SINGH V DDIT A Y 2010 - 11 ITA NO 915/CHD/2015 ALLOWED TO INVEST IN SMALL SAVINGS INCLUDING PPF. SIMILARLY, THE AMOUNT OF INTEREST EARNED BY THE A SSESSEE WAS ALSO NOT GRANTED EXEMPTION. AGGRIEV ED BY THE ORDER OF THE LD AO THE A SSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT ( A) WHO IN TURN CONFIRM ED THE FINDING OF THE LD AO RELYING ON THE LETTER OF THE MINISTRY OF FINANCE DATED 16.07.2012 WHEREIN, IT HAS BEEN CLARIFIED THAT THE NON RESIDENT INDIAN S ARE NOT ELIGIBLE TO EXTEND AND CONTINUE PPF ACCOUNT UP TO MATURITY. THE A SSESSEE BEING AGGRIEVED BY THE ORDER OF THE LD CIT ( A) HAS PREFERRED THIS APPEAL BEFORE US. 5 . THE GROUND NO. 1 OF THE APPEAL IS GENERAL IN NATURE THEREFORE THE SAME IS DISMISSED. 6 . GR OUND NO. 2 OF THE APPEAL IS AGAINST THE NON ALLOWING DEDUCTION U/S 80C IN PPF A/C AS STATED ABOVE AND GROUND NO 3 IS REGARDING THE EXEMPTION OF INTEREST EARNED THEREON. 7 . THE LD AR SUBMITTED THAT ACCORDING TO THE PROVISIONS OF INCOME TAX ACT THE DEDUCTION IS ALLOWABLE U/S 80C TO AN INDI VIDUAL AND HUF WITHOUT ANY RESTRICTION REGARDING THEIR RESIDENTIAL STATUS. HE FURTHER ARGUED THAT AMENDMENT IN THE PPF RULES ARE WITH RESPECT TO THE DEFINITION OF NONRESIDENT UNDER FEMA. HE THEREFORE ARGUED THAT THE A SSESSEE SHOULD BE ALLOWED THE DEDUCTION. 8 . THE LD DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT ASSESSEE IS NOT ALLOWED TO INVEST IN PPF AS PER THE CIRCULAR AND THEREFORE THE CLAIM OF DEDUCTION AS WELL AS EXEMPTION WITH RESPECT TO DEPOSIT AND INTEREST IS NOT ALLOWABLE. . 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE PROVIS IONS OF SECTION 80C OF THE ACT WHICH IS AS UNDER : - 6 [ DEDUCTION IN RESPECT OF LIFE INSURANCE PREMIA, DEFERRED ANNUITY, CONTRIBUTIONS TO PROVIDENT FUND, SUBSCRIPTION TO CERTAIN EQUITY SHARES OR DEBENTURE S, ETC. 7 80C. 8 9 (1) IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY , THERE SHALL BE DEDUCTED, IN ACCORDANC E WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE WHOLE OF THE AMOUNT PAID OR DEPOSITED IN THE PREVIOUS YEAR, BEING THE AGGREGATE OF THE SUMS REFERRED TO IN SUB - SECTION (2), AS DOES NOT EXCEED 10 [ONE HUNDRED AND FI FTY THOUSAND RUPEES]. [EXTRACTED FROM TAXMANN.COM AND UNDERLINED BY US] 10 . ACCORDING TO ABOVE PROVISIONS INDIVIDUAL AND HUF ARE ELIGIBLE FOR DEDUCTION OF CONTRIBUTION TO PPF ACCOUNT U /S 80C(2)(V) OF THE ACT AND THESE PERSONS CAN DEPOSIT IN THE NAME OF THE PERSON SPECIFIED UNDER SUB - SEC TION (4) OF (A) OF THE INCOME TAX ACT . LD. DR COULD NOT SHOW US ANY PROVISION WHICH DIFFERENTIATES DEDUCTION UNDER SECTION 80 C OF THE ACT BASED ON RESIDENTIAL STATUS OF THE ASSESSEE. T HERE IS NO RESTRICTION WITH RESPECT TO THE RESIDENTIAL STATUS OF THE A SSESSEE SO FAR AS THE ELIGIBILITY OF DEDUCTION U/S 80 C IS CONCERNED. THE LETTER ISSUED BY THE MINISTRY OF FINANCE DATED 16/07/2012 WAS WITH RESPECT TO FOREIGN DIRECT INVESTMENT POLICY AND W ITH RESPECT TO INVESTMENT OF NONRESIDENT IN PPF ACCOUNT. IT WAS FOR EXTENSION OR CONTINU ATION OF PPF ACCOUNT AFTER MATURITY OF THOSE PERSONS. THAT RESTRICTION DID NOT APPLY WITH RESPECT TO MAINTENANCE OF EXISTING ACCOUNT OPENED WHEN THE A SSESSEE IS A RESIDENT. THAT MEANS THE NON RESIDENCE CANNOT EXTEND BEYOND 15 YEARS THE ACCOUNT OPENED BY THEM OR CONTINUE TO OPERATE ACCOUNT BEYOND MATURITY AND CONTRIBUTION THERETO SHOULD BE CONSIDERED AS IRREGULAR AND NOT PAGE 3 OF 3 SHRI PARAMJIT SINGH V DDIT A Y 2010 - 11 ITA NO 915/CHD/2015 ENTITLED FOR INTEREST. IT IS ALS O UNDISPUTED FACT THAT THE A SSESSEE HAS DEPOSITED THE AMOUNT IN PPF ACCOUNT WHICH HAS BEEN ACCEPTED BY THE RESP ECTIVE AUTHORITY WITHOUT ANY OBJECTION AND FURTHER THE A SSESSEE HAS BEEN GRANTED INTEREST ON THE DEPOSIT OF THE SAID AMOUNT. R EVENUE ALSO COULD NOT BROUGHT ANY MATERIAL ON RECORD WHICH SHOWS THAT DEPOSIT MADE BY THE ASSESSEE IS IRREGULAR OR THE ASSESSEE IS NOT ELIGIBLE FOR INTEREST. P ROVISION OF SECTION 80C OF THE ACT ALSO DOES NOT DEBAR ELIGIB ILITY FOR DEDUCTION BASED ON TH E RESIDENTIAL STATUS OF AN A SSESSEE. I N OUR OPINION AS I NCOME TAX A CT DOES NOT PROHIBIT ANY PERSON WHO IS A NON RESIDENT FROM CLAIMING DEDUCTION IF HIS PPF DEPOSIT IS ACCEPTED BY THE PPF AUTHORITIES AND DUE INTEREST THEREON IS GRANTED , THEREFORE WE REVERS E THE FINDING OF THE LD CIT ( A) IN NOT GRANTING THE A SSESSEE DEDUCTION ON ACCOUNT OF DEPOSIT OF RS. 70,000/ - IN THE PUBLIC PROVIDENT FUND U/S 80C OF THE ACT. IN THE RESULT GROUND NO. 2 OF THE APPEAL IS ALLOWED. 11 . GROUND NO. 3 IS WITH RESPECT TO NOT GRANTING EXEMPTION TO THE A SSESSEE ON ACCOUNT OF INTEREST EARNED U/S 10(11) OF THE ACT. FOR THE REASONS GIVEN BY US IN DISPOSING THE GROUND NO. 2 OF THE APPEAL OF THE A SSESSEE , WE ALSO HOLD THAT THE A SSESSEE IS ALSO ELIGIBLE FOR EXEMPTION U /S 10(11) OF THE ACT BEING THE AMOUNT OF INTEREST CREDITED IN PPF ACCOUNT S SAME HAS BEEN GRANTED BY THE RESPECTIVE AUTHORITY AND IN ABSENCE OF ANY NEGATIVE PROVISION UNDER THE INCOME TAX ACT. IN THE RESULT GROUND NO. 3 OF THE APPEAL IS ALLOWED. 12 . IN THE RESULT APPEAL OF THE A SSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 5 / 08 /2016 . - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 5 / 08 / 2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, CHANDIGARH