S.S.N.Ravi, CHENNAI V. ACIT, CHENNAI

ITA 933/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9399 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: K G RAGHUNATH
• Keywords: Salary income; Capital receipt
• Section: 143(3); 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , ! ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.933/MDS/2015 ! # $# / ASSESSMENT YEAR : 2008-2009. SHRI. S.S.N. RAVI, C/O. K.G. RAGHUNATH, OLD NO.15, NEW NO.35, ELEVENTH STREET,SAIT COLONY, EGMORE, NEAR DON BOSCO SCHOOL CHENNAI 600 008. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, SALARY CIRCLE III, CHENNAI. [PAN AFDPR 0277C] ( / APPELLANT) ( /RESPONDENT) %& ' ( / APPELLANT BY : SHRI. K. G. RAGHUNATH, ADVOCATE )*%& ' ( /RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. ' + / DATE OF HEARING : 13-04-2016 ,-$ ' + / DATE OF PRONOUNCEMENT : 06-05-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, CHE NNAI IN ITA NO.809/13-14, DT 0310.2014 FOR THE ASSESSMENT YEAR 2008-2009 ITA NO.933/MDS/2015 :- 2 -: PASSED U/S 143(3) R.W.S.147 AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED ONLY ONE SUBSTANTIVE GROUND AS UNDER:- TO DIRECT THE ASSESSING OFFICER TO DELETE THE ADD ITION MADE OF 25,00,000/- IN THE REASSESSMENT, ON REPAYMENT OF SIGN ON BONUS BACK TO M/S. BARCLAYS BANK, AS THI S RECEIPT DOES NOT CONSTITUTE INCOME . 3. THE BRIEF FACTS OF THE CASE THAT ASSESSEE IS AN IN DIVIDUAL AND HAS DISCLOSED INCOME FROM SALARY AND FILED RET URN OF INCOME ON 28.07.2008 WITH TOTAL INCOME OF >43,54,815/- AND AS PER RETURN OF INCOME THE ASSESSEE IS ENTITLED FOR A REFUND OF >7 ,72,266/-. SUBSEQUENTLY THE RETURN OF INCOME WAS PROCESSED U/S .143(1) OF THE ACT AND THE LD. ASSESSING OFFICER BASED ON THE FO RM NO. 16 ISSUED BY THE EMPLOYER FOUND THAT THE ASSESSEES SALARY INCOM E IS >68,54,815/- WERE AS THE ASSESSEE HAS NOT OFFERED SALARY INCOME OF >25,00,000/- IN THE RETURN OF INCOME. FURTHER NOTICE U/S.148 OF TH E ACT WAS ISSUED AND IN COMPLIANCE TO NOTICE, THE LD. AUTHORISED REPRES ENTATIVE OF THE ASSESSEE FILED RETURN OF INCOME ON 19.07.2011 AND A PPEARED IN HEARING PROCEEDINGS FROM TIME TO TIME AND SUBMITTED INFORMA TION FOR VERIFICATION. THE ASSESSEE IS A EMPLOYEE OF BARCLA YS BANK DURING THE FINANCIAL YEAR 2007-08 FROM 01.04.2007 TO 31.10.200 7 AND RECEIVED ITA NO.933/MDS/2015 :- 3 -: SALARY INCOME OF >13,46,943/- AFTER RESIGNATION OF SERVICE JOINED DEUTSCHE BANK AND RECEIVED SALARY OF >56,12,481/- WERE AS THE ASSESSEE HAS DECLARED SALARY INCOME IN THE RETURN OF INCOME >43,54,815/-/ THE LD. AUTHORISED REPRESENTATIVE SU BMITTED THAT THE ASSESSEE HAS JOINED BARCLAYS BANK ON 20.11.2006 AND AS PER THE TERMS AND CONDITIONS WITH EMPLOYER DATED 10.09.2006, THE COMPANY HAS PAID A TAXABLE SIGN-ON-BONUS OF >25,00,000/- WITH CONDIT IONAL RIDER THAT IF THE EMPLOYEE LEAVES THE COMPANY WITHIN A PERIOD OF ONE YEAR FROM THE DATE OF JOINING, HE SHALL REFUND THE SIGN-ON-BONUS. CONSIDERING THE FACTS, THE ASSESSEE HAS LEFT BARCLAYS BANK AND JOIN ED DEUTSCHE BANK AND REFUNDED THE AMOUNT OF >25,00,000/- AS ACKNOWLE DGED BY BARCLAYS BANK ON 06.11.2007. THE ASSESSEE FILED RET URN OF INCOME FOR ASSESSMENT YEAR 2007-08 AND OFFERED SIGN-ON-BONUS F OR TAXATION SINCE THE ASSESSEE HAS REFUNDED AN AMOUNT OF >25,00,000/- ON 06.11.2007 WHICH FALLS IN THE FINANCIAL YEAR 2007-2008 RELEVAN T TO ASSESSMENT YEAR 2008-09 HE HAS REDUCED >25,00,000/- FROM HIS GROSS SALARY AND FILED RETURN OF INCOME. THE LD. ASSESSING OFFICER CONSIDE RED THE FACTS OF THE ASSESSEE ON CHANGE IN EMPLOYMENT AND IS OF OPINION THAT THERE IS NO PROVISION OF THE ACT WERE SUCH REDUCTION OF SALARY INCOME IS PERMISSIBLE. THE LD. ASSESSING OFFICER HAS ADDED > 25,00,000/- TO THE INCOME OF THE CURRENT ASSESSMENT YEAR AND ASSESSE D TOTAL INCOME OF >68,54,820/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ITA NO.933/MDS/2015 :- 4 -: ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INC OME TAX (APPEALS). 4. IN THE HEARING PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE ARGUED ON THE GROUND S AND SUBMITTED PROOFS PERTAINING TO SIGN-ON-BONUS. THE LD. COMMISS IONER OF INCOME TAX (APPEALS) CONSIDERED WRITTEN SUBMISSIONS ON FAC TS AND INTERPRETATION OF LAWS AND CONCURRED WITH FINDINGS OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OBSERVED AT 18 OF THE ORDER AS UNDER:- 18. IN VIEW OF THE ABOVE DISCUSSION, I FIND NO IN FIRMITY IN THE ACTION OF THE ASSESSING OFFICER IN REASSESSI NG THE TOTAL INCOME OF THE ASSESSEE TO BRING TO TAX THE AM OUNT OF SIGN-ON-BONUS OF >25,00,000/- RELATING TO THE ASSESSMENT YEAR 2007-2008 WHICH WAS TAX DEDUCTED THEN AND REDUCED FROM THE ASSESSEES TOTAL INCOME B Y THE ASSESSEE HIMSELF IN THE RETURN OF INCOME FOR TH E SUBSEQUENT ASSESSMENT YEAR 2008-09. SINCE THE SAID AMOUNT WAS FORFEITED BY HIM DUE TO BREACH OF CONTRA CT ON HIS PART, WITH HIS EMPLOYER . AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) ORDER, THE ASSESSEE FILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE VEHEME NTLY ARGUED AND SUBSTANTIATED WITH DOCUMENTARY EVIDENCE. THE ONLY ITA NO.933/MDS/2015 :- 5 -: DISPUTED ISSUE BEING DELETION OF ADDITION OF >25,0 0,000/- BY THE LD. ASSESSING OFFICER, WERE THE SAID AMOUNT WAS REPAID BACK TO BARCLAYS BANK WHICH FALL IN CURRENT FINANCIAL YEAR. THE LD. AUTHORISED REPRESENTATIVE FILED PAPER BOOK, WRITTEN SUBMISSION S EXPLAINING THE CIRCUMSTANCES OF EMPLOYMENT, TAXABILITY OF INCOME A ND HIGHLIGHTENED ON THE FINDINGS OF THE ASSESSING OFFICER AND FURTHE R PRODUCED COPIES OF OFFER OF EMPLOYMENT WITH DEUTSCHE BANK AND SERVICE CERTIFICATE BY BARCLAYS BANK AND SUPPORTED HIS ARGUMENTS WITH THE DECISION OF DELHI HIGH COURT AND PRAYED FOR DELETING THE ADDITION AND ALLOW THE APPEAL. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND INTERPRETATION BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON VARIOUS PROVISIONS OF L AW AND ALSO FILED WRITTEN SUBMISSIONS AND OPPOSED THE GROUNDS OF THE APPEAL. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. AUTHO RISED REPRESENTATIVE ONLY DISPUTED ISSUE BEING SIGN-ON-BONUS SHOULD BE A LLOWED AS DEDUCTION FROM THE GROSS SALARY SINCE IT WAS REPAI D AND OFFERED TO TAX IN ASSESSMENT YEAR 2007-08. THE ISSUE REVOLVED AROU ND WHETHER THE PROVISION OF ACT PERMIT DEDUCTION WERE THE ASSESSEE VOLUNTARILY RESIGNED FROM BARCLAYS BANK AND JOINED DEUTSCHE BAN K VIOLATING THE PRE-CONDITIONS OF EMPLOYMENT TO STAY WITH BARCLAYS BANK FOR A PERIOD ITA NO.933/MDS/2015 :- 6 -: OF ONE YEAR. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED AND EXPLAINED THE ACTION OF THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) ARE AS PER THE PROVISIONS OF L AW. THE CHARACTERISTIC OF SIGN IN BONUS IS REVENUE RECEIPT AND IT CANNOT BE CONSIDERED AS COMPENSATION OF FORFEITED AMOUNT OR A DDITIONAL PREMIUM PRIZE. THE ASSESSEE HAS RECEIVED THE AMOUNT DURING HIS EMPLOYMENT AND THERE EXISTS EMPLOYER AND EMPLOYEE RELATIONSHI P AND SIGN-IN- BONUS CANNOT TREATED AS CAPITAL RECEIPT. WE FOUND ON THE BASIS OF SUBMISSIONS THAT THE ASSESSEE HAS VOLUNTARILY RESI GNED FROM BARCLAYS BANK AND WAS NOT A FORCED TERMINATION OF EMPLOYMEN T. AS PER SERVICE CERTIFICATE OF BANK REFERRED AT PAGE 16 OF PAPER B OOK, THE ASSESSEE HAS LEFT THE BANK ON HIS OWN ACCORD. THE SUBMISSIO NS OF THE REVENUE BEING THE AMOUNT REPAID BY THE ASSESSEE TO THE BARC LAYS BANK WAS REIMBURSED BY NEW EMPLOYER DEUTSCHE BANK. THE ASSES SEE JOINED DEUTSCHE BANK DUE TO ATTRACTIVE PAY PACKAGE AND SEP ARATE AMOUNT WAS PROVIDED FOR REFUND OF SIGN-ON-BONUS. ON THE P ERUSAL OF PROVISIONS OF SEC. 17(1) OF THE ACT, THERE ARE NO E XPLANATION WERE ASSESSEE SHOULD REDUCE REFUND OF SIGN-ON-BONUS. CO NSIDERING THE APPARENT FACTS, TERMS OF EMPLOYMENT, CHARACTERISTIC OF SIGN ON BONUS AND THE SERVICE CERTIFICATE OF BARCLAYS BANK WERE A SSESSEE HAS VOLUNTARILY LEFT THE SERVICE. WE ARE OF THE OPINIO N THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS EXAMINED T HE ISSUE IN ITA NO.933/MDS/2015 :- 7 -: DETAIL BASED ON THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE PROVISIONS OF LAW. THEREFORE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND U PHOLD THE SAME. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED ON FRIDAY, THE 6TH DAY OF MAY, 2 016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI Q / DATED:06.05.2016 VENU R ' )!+ST UT$+ / COPY TO: 1 . %& / APPELLANT 3. V+ () / CIT(A) 5. TYZ )!+! / DR 2. )*%& / RESPONDENT 4. V+ / CIT 6. Z[# \ / GF