2017 (4) TMI 965 - AT - Income Tax

Tribunal rules in favor of assessee on notice pay issue but dismisses appeal on EPF interest.

Shri Nandinho Rebello Versus DCIT, Circle-14, Ahmedabad

Shri Nandinho Rebello Versus DCIT, Circle-14, Ahmedabad - TMI Issues:1. Disallowance of amount received as Notice pay under the head 'Salary' u/s. 16 of the IT Act.2. Addition of interest received on Employees Provident Fund.Issue 1: Disallowance of Notice Pay:The case involved the disallowance of &8377; 2,76,744/- received as Notice pay under the head 'Salary' u/s. 16 of the IT Act. The Assessing Officer added the undisclosed salary income received from two previous employers to the total income of the assessee. The CIT(A) upheld the additions made by the Assessing Officer, stating that the deduction of notice pay is not provided in Section 16. The CIT(A) referred to the doctrine of real income and case laws to support the taxability of such income. However, the Tribunal found that the deduction made by the employer for the notice period was essentially a recovery of salary already paid to the assessee. The Tribunal held that the actual salary received by the assessee is taxable, allowing the ground of appeal of the assessee.Issue 2: Addition of Interest on Employees Provident Fund:Regarding the addition of &8377; 23,310/- as interest received on Employees Provident Fund, the assessee had accepted during assessment proceedings that this income was undisclosed in the return of income. The CIT(A) sustained the addition made by the Assessing Officer. The Tribunal noted that the assessee did not provide supporting evidence that this income was exempt from income tax. Therefore, the Tribunal dismissed this ground of appeal of the assessee.In conclusion, the Tribunal partly allowed the appeal of the assessee, ruling in favor of the assessee on the disallowance of Notice pay issue but dismissing the appeal on the addition of interest received on Employees Provident Fund.