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IT 6069 / DEL-2012 ADIT,International Taxation,13A-Subash Road,Dehradun. VS. Transocean Offshore Int. Centure Ltd. as agent of Mr. Robin Torry J, Mr. Neilsen Egon & Mr. Flynn Tony R, Bombay
February, 16th 2013
              IN THE INCOME TAX APPELLATE TRIBUNAL
                   (DELHI BENCH `H' NEW DELHI)

              BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
                                AND
              SHRI T.S. KAPOOR, ACCOUNTANT MEMBER

                I.T.A. No.6068.6069 & 6070/Del/2012
                      Assessment year : 2009-10

     ADIT,                              Transocean Offshore Int.
     International Taxation,            Centure Ltd. as agent of
     13A-Subash Road,                   Mr. Robin Torry J,
     Dehradun.                     V.   Mr. Neilsen Egon &
                                        Mr. Flynn Tony R, Bombay.

          (Appellant)                   (Respondent)

                     /GIR/No.AABCT-
                             AABCT-7361-
                 PAN /GIR/No.AABCT          1672-C
                                   7361-B & 1672-

                 Appellant by : Shri Sameer Sharma, Sr. DR.
                 Respondent by : Shri Amit Arora, C.A.

                                  ORDER

PER BENCH:

  These three appeals are filed by the revenue against three separate
orders of Ld CIT(A) all dated 21.9.2012. The grounds of appeals taken
by the revenue are same in respect of all these three appeals. The
assessee has been assessed as an authorized agents u/s 163 of the
Income Tax Act, 1961 in respect of Mr. Robin Torry J, Mr. Neilsen Egon
& Mr. Flynn Tony R respectively who are foreign nationals employed by
the assessee. The appeals relate to income tax paid by assessee on
behalf of assessee for which assessee had claimed deduction u/s
10(10CC) of the Income Tax Act, 1961 and for which Assessing Officer
did not agree. The grounds of appeal in respect of first person are as
under:-
                                    2     ITA No.6068,6069 & 6070/Del/12







     1. Whether on the facts and in the circumstances of the case, the
       CIT(A) has erred in holding that the tax paid by the employer on
       the salary/remuneration of the employee, although a monetary
       perquisite is covered under section 17(2) of the IT Act since it is
       paid on his account to the Income Tax Department.
     2. Whether on the facts and in the circumstances of the case, the
       CIT(A) has erred in holding that the tax paid by the employer on
       the salary/remuneration of the employee, although a monetary
       perquisite is eligible for exemption u/s 10 (10CC) of the Income
       Tax Act, 1961 even when the section covers perquisite not
       provided for by way of monetary payment only.
     3. The appellant prays for leave to add amend modify or alter any
       grounds of appeal at the time of before hearing of the appeal.


2.     The brief facts of the case are that the assessee filed return of
income of the above persons as an authorized agent u/s 163 reporting
taxable income under the head salary and in the return of income filed
by the applicant exemption u/s 10(10CC) of the Income Tax Act, 1961
was claimed in respect of taxes on perquisite not provided by way of
monetary payment within the meaning of section 17(2) of the Act. As
per section 10(10CC) of the Act the tax paid by an employer is exempt
in the hands of employee if the following conditions were satisfied:-


          a) The tax payment is in respect of an individual;
          b) The individual is an employee of the payer and
          c) The tax is paid in respect of perquisite not provided for by
             way of a monetary payment within the section of 17(2) of
             the Act.
                                     3     ITA No.6068,6069 & 6070/Del/12


3.      During assessment proceedings, the Assessing Officer examined
the provisions of section 10(10CC) along with provisions of section
17(2) of the Act and also examined the case law decided by Special
Bench of Delhi Tribunal in the case of RBF Rigs Corporation LIC v. ACIT,
Dehradun wherein it was held that payment of tax paid on behalf of an
employee at the option of an employer is a non monetary perquisite
fully covered by section 17(2) (iv) of the Act and thus was exempt u/s
10(10CC) of the Act and was not liable to be included in the total
income of an employee. It was further held in this case that taxes paid
by employer can be added only once in the salary of an employee and
therefore the tax on such perquisite cannot be added again.             The
Assessing Officer further held that tax perquisite against which
exemption was claimed was not eligible for exemption under the
provisions of section 10(10CC) of the Act and therefore the value of tax
perquisite was added to the income of assessee.


4.      Aggrieved by the order, the assessee carried the matter to Ld
CIT(A) and Ld CIT(A) after going through the submissions filed by the
assessee allowed the appeals of assessee in view of Special Bench
order in the case of RBF Rigs Corporation LIC reported at 113 TTJ 143
(SB).


5.      Aggrieved the revenue filed appeals before this Tribunal.


6.      At the outset, the Ld DR stated that Govt. will lose about 10% of
taxes collected under the head salaries if the intention of legislature
was to exempt tax on taxes paid by the employer on behalf of
assessee. He further contended that employer would just change
terms of contract in such a way that interest of revenue is hurt without
                                     4     ITA No.6068,6069 & 6070/Del/12


causing any hardship to assessee and employer. Therefore, he argued
that Ld Assessing Officer had rightly made the additions.


7.   The Ld AR, on the other hand, submitted that the appeals are
covered in favour of assessee by the order of Hon'ble High Court of
Uttrakhand and invited our attention to page 5 of High Court order. In
view of the above, he argued that appeals of the revenue be dismissed
as the matters are covered in favour of the assessee.


8.   We have heard the rival submissions of both the parties and
have gone through the material available on record. We find that the
appeals of revenue are covered against it and are in favour of
assessee. In view of the Hon'ble Uttrakhand High Court judgment in a
bunch of cases, the sole question decided by Hon'ble High Court was
as under:-


     "Whether     the       tax   paid   by     the    employer    on      the
     salary/remuneration of the employee would constitute non
     monetary benefit and as such the same would be exempted u/s
     10(10CC of the Income Tax Act, 1961)."


The same has been replied by the Hon'ble High Court in para 10 which
is reproduced as under:-


     "There is no dispute that the employer has entered into
     agreements with the employees and thereby has taken over an
     obligation to pay income tax payable by the employees. If the
     employer was not obliged to pay such income tax, the same
     would have been payable by the employees in question. Such
     payment     as   has     been   provided    in   section   10(10CC)    is
                                      5   ITA No.6068,6069 & 6070/Del/12


        notwithstanding anything contained in section 200 of the
        Companies Act, 1956. Therefore, the payment of tax to the
        Income tax Department on account of salaries/remunerations of
        the employees not by way of monetary payment to the
        employees concerned, but for or on their account to the Income
        Tax Department and the same being one of the perquisites
        included in clause (2) of section 17 of the Act, such payment was
        to be excluded from the income of the employees. The same,
        having been directed to be done by the Tribunal, while we
        answer the question as above in favour of the assessee, refuse
        to interfere with the judgments and orders of the Tribunal
        assailed in these appeals."





9.      In view of the above judicial pronouncement, we find that the
facts and circumstances of the present appeals are same as decided
by the Hon'ble High Court of Uttrakhand and following the above, we
do not see any reason to interfere in the order of Ld CIT(A). Therefore,
the appeals filed by the revenue are dismissed.


10.     Order pronounced in the open court on 15th day of February,
2013.


      Sd/-                                             Sd/-
 (A.D. JAIN)                                    (T.S. KAPOOR)
JUDICIAL MEMBER                             ACCOUNTANT MEMBER

Dt.15.02.2013.
HMS

Copy   forwarded to:-
  1.   The appellant
  2.   The respondent
  3.   The CIT
  4.   The CIT (A)-, New Delhi.
                                 6    ITA No.6068,6069 & 6070/Del/12


   5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
True copy.
                                                   By Order


                                                   (ITAT, New Delhi).


Date of hearing                        6.2.2013

Date of Dictation                      7.2.2013

Date of Typing                         7.2.2013

Date of order signed by                15.2.2013
both the Members &
pronouncement.

Date of order uploaded on net          15.2.2013
& sent to the Bench concerned.
 
 
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