Sh. Om Parkash Gupta, Chandigarh V. ITO, Chandigarh

ITA 938/CHANDI/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2326 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.938 /CHD/2011 (ASSESSMENT YEAR : 2007-08) SH.OM PARKASH GUPTA, VS. THE INCOME TAX OFFICER, H.NO. 318, SECTOR 38-A, WARD 4(1), CHANDIGARH. CHANDIGARH. PAN: AAQPG5558H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R.SHARMA RESPONDENT BY : SHRI J.S.NAGAR, D.R. DATE OF HEARING : 17.04.2013 DATE OF PRONOUNCEMENT : 29.04.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS), CHANDIGARH DAT ED 20.07.2011 AGAINST THE ORDER PASSED U/S 143(3) OF INCOME TAX A CT, 1961 (IN SHORT THE ACT). 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) CHANDIGARH IS BAD IN LAW AND IS BEYOND ALL THE CANNONS OF LAW AND JUSTICE. 2. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH DISALLOWING THE CLAIM OF THE APPELLANT AT RS.2,65,914/- U/S 10(10C) OF THE INCOME TAX ACT IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 3. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH DISALLOWING THE CLAIM OF THE APPELLANT AT RS.1,19,227/- ON ACCOUNT OF LTC U/S 10(5) OF THE INCOME TAX ACT IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 3. THE GROUND NO.1 RAISED BY THE ASSESSEE IS GENER AL AND IS DISMISSED. 2 4. THE ISSUE IN GROUND NO.2 RAISED BY THE ASSESSEE IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 10(10C) OF THE ACT . 5. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE UNDER THE VRS SCHEME OF STATE BANK OF INDIA RECEIVE D SUM OF RS.2,65,914/- ON ACCOUNT OF EX-GRATIA PAYMENTS WHIC H WAS CLAIMED AS EXEMPT UNDER SECTION 10(10C) OF THE ACT. THE SA ID CLAIM OF DEDUCTION WAS REJECTED BOTH BY THE ASSESSING OFFICE R AND THE CIT (APPEALS). THE LEARNED A.R. FOR THE ASSESSEE POINT ED OUT THAT THE ISSUE IS COVERED BY THE RATIO LAID DOWN BY THE CHAN DIGARH BENCH OF TRIBUNAL IN SHRI BIKRAM JIT PASSI VS. DCIT IN ITA NO.925/CHD/2011 RELATING TO ASSESSMENT YEAR 2008-09 ORDER DATED 9.11.2011 WHEREIN SIMILAR CLAIM IN THE HANDS OF ANOTHER EX- EMPLOYEE OF STATE BANK OF INDIA WAS ALLOWED. WE FI ND THAT THE SAID ISSUE HAS BEEN ADJUDICATED UPON BY THE TRIBUNA L IN THE CASE OF SHRI BIKRAM JIT PASSI VS. DCIT (SUPRA) AND FOLLOWIN G THE SAME WE DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION UND ER SECTION 10(10C) OF THE ACT AGAINST EX-GRATIA PAYMENT OF RS. 2,65,914/-. THE GROUND NO.2 RAISED BY THE ASSESSEE IS THUS ALLOWED. 6. THE ISSUE IN GROUND NO.3 RAISED BY THE ASSESSEE IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 10(5) OF THE ACT A T RS.1,19,227/-. THE FACTS RELATING TO THE ISSUE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DURING HIS EMPLOYMENT WI TH STATE BANK OF INDIA HAD TAKEN ADVANCE OF RS.1,30,000/- FOR AVA ILING LEAVE TRAVEL CONCESSION DURING THE YEAR UNDER CONSIDERATI ON. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE LEAVE TRAVEL PACKAGE COVERED SINGAPORE AND MALAYSIA ALSO. THE ASSESSING OFFICER HELD THAT THE SAID AMOUNT RECEIVE D BY THE ASSESSEE ON ACCOUNT OF LEAVE TRAVEL CONCESSION IS N OT EXEMPT IN VIEW OF THE PROVISIONS OF SECTION 10(5) OF THE ACT R.W.R. 2B OF THE INCOME TAX RULES AS THE SAID TOUR WAS UNDERTAKEN FO R TRAVEL 3 OVERSEAS. AS PER THE ASSESSEE, FINAL DESTINATION O F THE LTC TOUR WAS IN INDIA AND SO IT WAS EXEMPT. THE ASSESSEE BE FORE THE CIT (APPEALS) FURNISHED WRITTEN SUBMISSIONS WHICH ARE I NCORPORATED UNDER PARA 2.2 AND CLAIMED THAT RULE 2B OF THE RULE S STIPULATES THAT THE AMOUNT OF LTC SHOULD NOT EXCEED THE FAIR CHARGE D BY THE NATIONAL CARRIER IN THE SHORTEST TOUR AND IT IS NOT STIPULATED THAT THE JOURNEY WAS TO BE MADE VIA THE NATIONAL CARRIER. I T WAS FURTHER ARGUED THAT RULE 2B OF THE RULES ONLY STIPULATES TH AT THE FINAL DESTINATION OF THE JOURNEY SHALL BE IN INDIA. THE CIT (APPEALS) REFERRED TO THE PROVISIONS OF SECTION 10(5) OF THE ACT AND HELD AS UNDER: 2.3.1 A PLAIN READING OF CLAUSE (A) OF SECTION 10(5) REVEALS THAT EXEMPTION IS NOT ALLOWABLE, IF I T IS FOR PROCEEDING TO ANY PLACE WHICH IS NOT IN INDIA. 7. IN RESPECT OF THE PROVISION OF RULE 2B(1)(A)(B) IT WAS OBSERVED BY THE CIT (APPEALS) AS UNDER: 2.3.2 PROVISIONS OF RULE 2B(1)(A)(B)HAVE AGAIN ELABORATED UPON SECTION 10(5) AS UNDER: (1) THE AMOUNT EXEMPTED UNDER CLAUSE (5) OF SECTION 10 IN RESPECT OF THE VALUE OF TRAVEL CONCESSION OR ASSISTANCE RECEIVED BY OR DUE TO THE INDIVIDUAL FROM HIS EMPLOYER OR FORMER EMPLOYER FOR HIMSELF AND HIS FAMILY IN CONNECTION WITH HIS PROCEEDING, (A) ON LEAVE TO ANY PLACE IN INDIA; (B) TO ANY PLACE IN INDIA AFTER RETIREMENT FROM SERVICE OR AFTER THE TERMINATION OF HIS SERVICE 2.3.3 PROVISIONS OF SECTION 10(5) READ WITH RULE 2B(1) ENVISAGE THAT AMOUNT RECEIVED BY AN INDIVIDUAL ON ACCOUNT OF VALUE OF TRAVEL CONCESSION IS EXEMPT ONLY IF THE EMPLOYEE IS PROCEEDINGS ON LEAVE TO ANY PLACE IN INDIA. SECTION 10(5) AS WELL AS THE RELEVANT RULE 2B DO NOT STIPULATE THAT JOURNEY TO ANY PLACE IN INDIA WOULD BE MADE VIA A PLACE OUTSIDE INDIA THE INTENTION OF THE LEGISLATUR E WAS CERTAINLY NOR TO GRANT: EXEMPTION FOR REIMBURSEMENT OF THE VALUE OF LTC IN A CASE WHERE W AS PERFORMED VIA A FOREIGN COUNTRY. IN FACT, THE NATIO NAL CARRIER I.E. AIR INDIA/INDIAN AIRLINES HAD ALSO BEE N OFFERING LTC PACKAGES TO VARIOUS DESTINATIONS IN IN DIA AND ALLOWING PASSENGERS TO VISIT THE FOREIGN COUNTR IES 4 AT THE FULL FARE CHARGEABLE TO THE FILIAL DESTINATI ON IN INDIA AND IT WAS CLEARLY MENTIONED ON THE WEBSITE ( OF AIR INDIA/INDIAN AIRLINES)THAT THE VALUE OF LTC WAS CHARGEABLE TO INCOME TAX. 2.3.4 THE CONTENTION OF THE APPELLANT THAT THE ASSESSING OFFICER HAD OVERLOOKED THE FACT THAT RULE 2B OF INCOME TAX ACT, 1962 ONLY STIPULATED THAT THE AMOUNT OF LTC SHALL NOT EXCEED THE FARE CHARGED BY THE NATIONAL CARRIER FOR THE SHORTEST ROUTE IS NOT RELEVANT IN THE PRESENT CASE. SIMILARLY, THE CONTENTION OF THE APPELLANT THAT THE RULES OF THE B ANK PERMIT THE APPELLANT TO TAKE CIRCUITOUS ROUTE E VEN INVOLVING FOREIGN JOURNEY IS ALSO IRRELEVANT. TH E ASSESSING OFFICER HAD ONLY HELD THAT AMOUNT IS NOT EXEMPT U/S 10(5) OF INCOME TAX ACT , 1961. 8. THE CIT (APPEALS) THUS HELD AS UNDER: 2.3.5 IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT THE VALUE OF LTC RECEIVED BY THE APPELLANT IS NOT EXEMPT U/S 10(5} OF THE INCOME TAX ACT, 1961. HOWEVER, AS THE APPELLANT HAD RECEIVED ONLY RS.I,19,227/- (REST OF THE AMOUNT WAS REFUNDED), TH E AMOUNT TO BE TAXED IS TO BE RESTRICTED TO RS.1,19,2 27/-. GROUND OF APPEAL NO. L(A) IS PARTLY ALLOWED. 9. THE LEARNED A.R. FOR THE ASSESSEE DREW OUR ATTEN TION TO THE CERTIFICATE ISSUED BY THE STATE BANK OF INDIA PLACE D AT PAGE 15 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE ASSESSEE HAD VISITED ONE OF THE PLACES IN INDIA BESIDES VISITING FOREIGN COUNTR Y. IT WAS THE PLEA OF THE LEARNED A.R. FOR THE ASSESSEE THAT THE LTC WAS AVAILED ONLY IN RESPECT OF PART OF THE JOURNEY PERFORMED WITHIN IND IA. 10. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANC E ON THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SECTION 10(5) OF THE ACT POSTULATES EXEMPTION IN RE SPECT OF JOURNEY CONCESSION RECEIVED BY AN INDIVIDUAL FROM HIS EMPLO YER AND PROVIDES AS UNDER: 10(5) IN THE CASE OF AN INDIVIDUAL, THE VALUE OF ANY TRAVEL CONCESSION OR ASSISTANCE RECEIVED BY, OR DUE TO, HIM, (A) FROM HIS EMPLOYER FOR HIMSELF AND HIS FAMILY, IN CONNECTION WITH HIS PROCEEDING ON LEAVE TO ANY PLACE IN INDIA ; 5 (B) FROM HIS EMPLOYER OR FORMER EMPLOYER FOR HIMSE LF AND HIS FAMILY, IN CONNECTION WITH HIS PROCEEDING TO ANY PLACE IN INDI A AFTER RETIREMENT FROM SERVICE OR AFTER THE TERMINATION OF HIS SERVICE, SUBJECT TO SUCH CONDITIONS AS MAY BE PRESCRIBED ( INCLUDING CONDITIONS AS TO NUMBER OF JOURNEYS AND THE AMOUNT WHICH SHALL BE EX EMPT PER HEAD) HAVING REGARD TO THE TRAVEL CONCESSION OR ASSISTANCE GRANT ED TO THE EMPLOYEES OF THE CENTRAL GOVERNMENT : PROVIDED THAT THE AMOUNT EXEMPT UNDER THIS CLAUSE SHALL IN NO CASE EXCEED THE AMOUNT OF EXPENSES ACTUALLY INCURRED FOR THE PURPOS E OF SUCH TRAVEL. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, FA MILY, IN RELATION TO AN INDIVIDUAL, MEANS (I) THE SPOUSE AND CHILDREN OF THE INDIVIDUAL ; AN D (II) THE PARENTS, BROTHERS AND SISTERS OF THE INDI VIDUAL OR ANY OF THEM, WHOLLY OR MAINLY DEPENDENT ON THE INDIVIDUAL; ] 12. THE SAID SUB-SECTION PROVIDES THAT WHERE AN IND IVIDUAL HAD RECEIVED TRAVEL CONCESSION OR ASSISTANCE FROM HIS E MPLOYER FOR PROCEEDING ON LEAVE TO ANY PLACE IN INDIA, BOTH FOR HIMSELF AND HIS FAMILY, THEN SUCH CONCESSION RECEIVED BY THE EMPLOY EE IS NOT TAXABLE IN THE HANDS OF THE EMPLOYEE. SIMILAR EXEMPTION IS AL LOWED TO AN EMPLOYEE PROCEEDING TO ANY PLACE IN INDIA AFTER RETIREMENT O F SERVICE OR AFTER THE TERMINATION OF HIS SERVICE. THE PROVISIONS OF THE ACT ARE IN RELATION TO THE TRAVEL CONCESSION/ASSISTANCE GIVEN FOR PROCEEDI NG ON LEAVE TO ANY PLACE IN INDIA AND THE SAID CONCESSION IS THUS EXEM PT ONLY WHERE THE EMPLOYEE HAS UTILIZED THE TRAVEL CONCESSION FOR TRA VEL WITHIN INDIA. FURTHER UNDER RULE 2B OF THE INCOME TAX RULES THE C ONDITION FOR ALLOWING EXEMPTION UNDER SECTION 10(5) OF THE ACT A RE LAID DOWN. THE CONDITIONS ARE IN RESPECT OF VARIOUS MODES OF TRANS PORT. HOWEVER, THE BASIC CONDITION IS THAT THE EMPLOYEE IS TO UTILIZE THE TRAVEL CONCESSION IN CONNECTION WITH HIS PROCEEDING TO LEAVE TO ANY PLAC E WITHIN INDIA, EITHER DURING THE COURSE OF EMPLOYMENT OR EVEN AFTER RETIR EMENT OF SERVICE OR AFTER TERMINATION OF SERVICE. READING OF SECTION 1 0(5) OF THE ACT AND RULE 2B OF THE RULES IN CONJUNCTION LAYS DOWN THE G UIDELINES FOR CLAIMING EXEMPTION IN RELATIONS TO THE TRAVEL CONCE SSION RECEIVED BY AN EMPLOYEE FROM HIS EMPLOYER OR FORMER EMPLOYER, FOR PROCEEDING ON LEAVE TO ANY PLACE IN INDIA. THE PERSON IS TO UNDERTAKE THE JOURNEY TO ANY PLACE IN INDIA AND THEREAFTER RETURN TO THE PLACE O F EMPLOYMENT AND IS 6 ENTITLED TO REIMBURSEMENT OF EXPENDITURE ON SUCH TR AVEL BETWEEN THE PLACE OF EMPLOYMENT AND DESTINATION IN INDIA. RULE 2B OF THE RULES FURTHER LAYS DOWN THE CONDITIONS THAT THE AMOUNT TO BE ALLOWED AS CONCESSION IS NOT TO EXCEED THE AIR ECONOMY FAIR OF THE NATIONAL CARRIER BY THE SHORTEST ROUTE TO THE DESTINATION IN INDIA. THE SAID CONDITION IN NO WAY PROVIDES THAT THE ASSESSEE IS AT LIBERTY TO CLAIM EXEMPTION OUT OF HIS TOTAL TICKET PACKAGE SPENT ON HIS OVERSEAS TRAV EL AND PART OF THE JOURNEY BEING WITHIN INDIA. WE FIND NO MERIT IN TH E CLAIM OF THE ASSESSEE IN THE PRESENT CASE AND WE ARE IN CONFORMI TY WITH THE OBSERVATION OF THE CIT (APPEALS) IN THIS REGARD, WH ICH HAS BEEN REPRODUCED BY US IN THE PARAS HEREINABOVE. IN VIEW THEREOF, WE REJECT THE CLAIM OF THE ASSESSEE OF EXEMPTION UNDER SECTIO N 10(5) OF THE ACT. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS THUS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF APRIL, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 29 TH APRIL, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7