Tribunal grants relief under IT Act for perquisites, includes perquisites in 'salary'. Rule 21A, Form 10E apply.

The Tribunal held that relief under section 89 of the IT Act is available for perquisites, interpreting 'salary' to include perquisites. Rule 21A and Form 10E apply to the contribution in question, and internal circulars cannot override statutory provisions. The assessee's claim for relief under section 89 was allowed, reversing the CIT(A)'s decision. The appeal was allowed, directing the grant of relief under section 89 to the assessee.

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Issues Involved:

1. Whether relief under section 89 of the IT Act is available for arrears received as a 'perquisite.'
2. Interpretation of 'salary' and 'perquisite' under section 17 of the IT Act.
3. Applicability of Rule 21A and Form 10E in relation to the contribution in question.
4. Impact of internal circulars versus statutory provisions.

Issue-wise Detailed Analysis:

1. Relief Under Section 89 for Perquisites:

The main issue is whether relief under section 89 of the IT Act is available for arrears received by the assessee as a 'perquisite.' The assessee received arrears of Rs. 23,56,430/- from his employer GAIL (India) Ltd., which he claimed as relief under section 89. The AO disallowed this claim, stating that section 89 applies to arrears of salary and not perquisites. The CIT(A) upheld this view, stating that relief under section 89 is not available for arrears received as a perquisite.

2. Interpretation of 'Salary' and 'Perquisite':

The CIT(A) and AO interpreted 'salary' under section 17 to exclude perquisites for the purpose of section 89 relief. However, the Tribunal found that section 17(1)(iv) includes perquisites within the definition of salary. Therefore, by virtue of section 17(1)(iv), relief under section 89 is available for perquisites.

3. Applicability of Rule 21A and Form 10E:

The CIT(A) held that Rule 21A and Form 10E do not pertain to the contribution in question. However, the Tribunal noted that Rule 21A pertains to salary, which includes perquisites as per section 17(1)(iv). Therefore, Rule 21A and Form 10E are applicable to the contribution in question. The Tribunal also noted that Rule 21A(1)(a) read with Rule 21A(2) applies to cases where salary, including perquisites, is received in arrears.

4. Impact of Internal Circulars Versus Statutory Provisions:

The CIT(A) relied on an internal circular from GAIL, which stated that contributions over the exemption limit are taxable as perquisites. The Tribunal noted that internal circulars cannot override statutory provisions. Section 17(2)(vii) treats such contributions as perquisites, but section 17(1)(iv) includes perquisites within the definition of salary, making them eligible for relief under section 89.

Conclusion:

The Tribunal concluded that relief under section 89 is available for perquisites, Rule 21A and Form 10E apply to the contribution in question, and internal circulars cannot override statutory provisions. Therefore, the assessee's claim for relief under section 89 was allowed, and the order of the CIT(A) was reversed. The appeal was allowed, and the relief under section 89 was directed to be granted to the assessee.

Order Pronounced:

The appeal was allowed, and the order was pronounced in the open court on 16/07/2018.

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