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2016 (12) TMI 1288
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....8) and that under the Agreement between the United States of America and the Indian government there was no specific exemption of salary from tax, therefore, as the prerequisites mentioned in section 10 (8) are not satisfied, the petitioner was held to be disentitled to the claim raised. The facts of the case, in brief, are that the petitioner who was a Member of the U.P. Provincial Medical Services Cadre in the State of U.P. was offered an appointment by the erstwhile "Association for Voluntary Surgical Contraception (AVSC)" in a project in pursuance to a project-grant-agreement (dated 30.9.1992) between the President of India and the United State of America acting through the Agency for International Development (AID) for innovations in Family Planning Services, in pursuance to which she applied for leave-without-pay and was granted the same by her employer, whereupon, she accepted the offer of appointment and worked with the AVSC during the relevant assessment years i.e. 1998-99, 1999-00 and 2000-01 as an Associate Trainee for which she was paid remuneration by the AVSC from the grant received through AID meant for the project which was the subject matter of the aforesaid Coo....
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....ent of United States of America and the Indian government, therefore, for this reason also the provision was not attracted and the Commissioner of Income Tax had rightly declined the claim. In addition to the aforesaid, Shri Manish Mishra, Advocate tried to canvass the point that the petitioner not having raised a claim in her income tax returns filed for the relevant assessment years i.e. 1998-99, 1999-00 and 2000-01 including in the revised income tax return filed for the latter year, it was not open for the petitioner to file fresh evidence before the revisional authority under section 264 in a revision petition which in fact was not maintainable, as, there was no order which could be revised under the said provision. In this regard he relied upon a decision in the case of M.S. Raju vs. DCIT reported in 2008 (298) ITR 373 (A.P.), to contend that though the Commissioner had been bestowed the power to summon the records of any proceedings under section 264, the word 'record' here means 'the record which was available before the assessing officer' and not otherwise, therefore, the contention is that fresh documents filed before the revisional authority could not hav....
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....ent of a foreign State (the terms whereof provide for the exemption given by this clause), directly or indirectly from the Government of that foreign State for such duties, shall not be included in his total income (for the purposes of taxation under the Act 1961). It is not in dispute that the Indian Government (Central Government) and the Government of the United States of America entered into an agreement in connection with a Cooperative Technical Assistance Programme and Project, as is evidenced in Annexure-2 to the writ petition, which is a copy of the said agreement. The said agreement was a Project Agreement. Section 2.1 of the Agreement defines the project as the Project, Innovations in Family Planning Services (IFPS), which is further described in Annexure-1, intended to assist the Government of India (GOI) in re-orienting and finalizing its Family Planning Programmes. It sought to bring about reduction in the level of reproductive fertility in the State of Uttar Pradesh (U.P.) by significantly increasing the use of modern contraception. The focus of the project is thereafter mentioned in detail. This agreement was entered by the Government of the United States acting t....
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.... "Project Grant Standard" referred in Section 8.3 of the Agreement, Section B.4 of the said Annexure reads as under: "Section B.4 Taxation. (a)This agreement and the Grant will be free from any taxation or fees imposed under laws in effect in the territory of the Grantee. (b) To the extent that (1) any contractor, including any consulting firm, any personnel of such contractor financed under the Grant, and any property or transaction relating to such contracts and (2) any commodity procurement transaction financed under the Grant, are not exempt from identifiable taxes, tariffs, duties or other levies imposed under laws in effect in the territory of the Grantee, The Grantee will, as and to the extent provided in and pursuant to Project Implementation Letters, pay or reimburse the same with funds other than those provided under the Grant." Thus, from the aforesaid, it is evident that an agreement was entered into by the Indian Government with the Government of United States acting through its Agency for International Development (USAID) for Cooperative Technical Assistance Programmes and Projects and under the terms of Agreement vide section 8.3 thereof....
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.... as Annexure-6 to the writ petition. Annexure-4 contains a letter dated 10.5.1997 written by the assessee to her original employer, the Government of U.P., seeking extraordinary leave as she had been offered appointment by AVSC, which was granted on 16th July 1997. Annexure-5 to the writ petition is a letter dated 27.8.1997 from AVSC International offering petitioner an appointment as Training Associate effective September 1, 1997 on a salary at the rate of Rs. 8,40,000/- per annum. Job description as also the conditions of employment and employee-information-summary was attached. As per conditions of employment attached thereto, the engagement was a regular full time position, initial assignment was for one year period, renewable on an annual basis etc. The document relating to job description refer to the assessee's responsibilities and read as under: "RESPONSIBILITIES: The Training Associate will work under the direction of the Senior Program Associate to provide technical assistance in specified areas to AVSC International's activities in India in support of the USAID- funded Innovations in Family Planning Services (IFPS) Project in Uttar Pradesh an....
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....as it been objected to, during the course of arguments, the conclusions arrived at by the revisional authority are difficult to sustain. To contend that the assessee was not assigned any duties as is required under section 10(8) is based on a misconception of the provisions of section 10(8) and misreading of the documents referred hereinabove. On a plain and simple reading of Section 10(8) all that is required to be established is that an individual should be assigned to duties in India in connection with the agreement already referred hereinabove and should have received remuneration directly or indirectly from the foreign State for such duties. Once an offer of appointment was made by AVSC for a project of Cooperative Technical Assistance in pursuance to an agreement entered into between the Indian Government and the Government of United states of America through its authorized representative i.e. A.I.D. which was accepted by the assessee and in pursuance thereof, as is evident from the job description to the offer of appointment, she was to perform duties mentioned therein relating to the said project, it is difficult to comprehend as to how it could be said that she was n....
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....ected. ''Remuneration' is a word having wider meaning than ''Salary'. It includes salary and other kinds of wages which may be paid as Quid Pro Quo for the services rendered. This is hardly an issue which requires any detailed elaboration, nevertheless, to set the matter at rest one may refer to the definition of "remuneration" as contained in the Law Lexicon by P. Ramanatha Ayyer, 1987 Edition, which says "remuneration" is wider than "salary". "Remuneration" means "Quid Pro Quo". Whatever consideration a person gets for giving his services is a 'remuneration' for them. As per Chamber's 20th Century Dictionary, 'remunerate' means to recompense, to pay for services rendered. Remuneration; recompense; reward; pay. A reference may also be made to the decision of the Supreme Court in the case of Gestetner Duplicators Pvt. Ltd. vs. C.I.T., (1979) 117 ITR 1 SC, wherein the meaning of the term 'salary' fell for consideration and it was observed as under: "It appears that conceptually "salary" and "wages" connote one and the same thing, namely, remuneration for payment for work done or services rendered but the former expression ....
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....as have been suitably answered by judicial precedents. First and foremost, under Article 265 of the Constitution of India "no tax shall be levied or collected except by the authority of law". Thus, unless and until the income of an assessee is liable to be taxed, it cannot be so taxed under the Act. The Taxing Authority cannot collect or retain tax, that is not authorized. Any retention of tax collected, which is not otherwise payable, would be illegal and unconstitutional. (Vijay Gupta v. Commissioner of Income Tax, Delhi, Writ (C) No. 1572 of 2013, decided on 23.3.2016 by Delhi High Court). The Supreme Court of India in C.I.T. v. Shelly Products and anr., 261 I.T.R. 367, held that if the assessee has by mistake or inadvertence or on account of ignorance included in his income any amount which is exempted from payment of income tax or is not income within the contemplation of law, the assessee may bring the same to the notice of the assessing officer which, if satisfied, may grant the assessee necessary relief and refund the tax paid in excess, if any. The Bombay High Court in Nirmala L Mehta v. A Balasubramaniyam, CIT (2004) 204 ITR 1, held that there cannot be any estoppel again....
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.... that the return is correct and complete. But it may be that the assessee may have committed a mistake in treating a certain receipt as taxable. The mere circumstance that he has shown that receipt as income in his return does not make him liable to tax thereon. An assessee is liable to tax only upon such receipt as can be included in his total income and is assessable under the Income-tax Act. The law empowers the Income-tax Officer to assess the income of an assessee and determine the tax payable thereon. In doing so, he may proceed on the basis that, where an assessee discloses that a certain sum of money has been deceived by him, the fact of that receipt may be accepted without anything more as constituting an admission on the part of the assessee. That would be an admission as to a state of fact. But whether the receipt can be considered as taxable income is quite another matter, and consideration of that question leads into the realm of law. If the Income-tax Officer assesses an assessee upon a receipt which is not taxable in law, it is always open to the assessee to take the case in appeal or in revision thereafter. It is then for the Appellate Assistant Commissioner or the ....
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.... of s. 264 provide for limitation of one year for the exercise of this revisional power, whether suo motu, or at the instance of the assessee. Power is also conferred on the Commissioner to condone delay in case he is satisfied that the assessee was prevented by sufficient cause from making the application within the prescribed period. Sub-section (4) provides that the Commissioner has no power to revise any order under s. 264(1) : (i) while an appeal against the order is pending before the AAC, and (ii) when the order has been subject to an appeal to the Income-tax Appellate Tribunal. Subject to the above limitation, the revisional powers conferred on the Commissioner under s. 264 are very wide. He has the discretion to grant or refuse relief and the power to pass such order in revision as he may think fit. The discretion which the Commissioner has to exercise is undoubtedly to be exercised judicially and not arbitrarily according to his fancy. Therefore, subject to the limitation prescribed in s. 264, the Commissioner in exercise of his revisional power under the said section may pass such order as he thinks fit which is not prejudicial to the assessee. There is nothing in s. 264....
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.... not open to him for the first time to entertain a relief of the kind pleaded by the assessee and in denying jurisdiction. It held that even though a mistake was committed by the assessee and it was detected by him after the order of assessment, and the order of assessment is not erroneous, nonetheless it is open to the assessee to file a revision before the Commissioner under Section 264 of the Act and claim appropriate relief. Thus, the court held that in such cases the Commissioner did have jurisdiction where the assessee having included income for assessment can claim the relief of weighted deduction under Section 35-B of the Act, for the first time, in a petition filed under Section 264 of the Act, however, it held that it was a discretionary jurisdiction. The High Court of Gujrat in Digvijay Cement Co. Ltd. v. CIT, (2010) ITR 797, has held that the power of revision under Section 264 cannot be restricted to such erroneous orders which have become erroneous as a result of some error committed by the Income Tax Officer while passing the orders. Independently of any decision or absence of any decision on the part of the Income Tax Officer, the order of assessment can be chall....
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.... of the Constitution of India and section 114 of the State Constitution imposes an embargo on imposition and collection of tax if the same is without authority of law. Admittedly, on the basis of facts disclosed before the revisional authorities and this Court, the petitioner is not liable to tax on the capital gain. Once it is found that the petitioner has no tax liability, the respondents cannot be permitted to levy the tax and collect the same in contravention to article 265 of the Constitution of India, which provides a constitutional safeguard on levy and collection of tax. It is true that this Court is not to act as Court of Appeal while exercising the writ jurisdiction, but at the same time where the admitted facts disclosed non-exercise of jurisdiction by an adjudicatory authority and a citizen is subjected to tax not payable by him, interference by this Court is warranted. The respondent No. 2 is directed to reassess the taxable income of the petitioner, by taking into consideration the benefit available to her under section 54F of the Income-tax Act and pass appropriate order." The case at hand is quite similar as the case quoted hereinabove, as in the present case als....
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....t on the assessee under a statute, it cannot be taken away by the adjudicatory authority on mere technicalities. It is settled proposition of law that no tax can be levied or recovered without authority of law. Article 265 of the Constitution of India and section 114 of the State Constitution imposes an embargo on imposition and collection of tax if the same is without authority of law." For the reasons aforesaid, all the contentions of Sri Manish Mishra, learned counsel for the Department are hereby rejected. In view of the above, the remuneration paid by the AVSC to the assessee- petitioner was clearly exempt under section 10(8) of the Act 1961 and as the exemption had not been claimed in the income tax return for the assessment year 1998-99, 1999-00 and 2000-01 erroneously and in ignorance of the legal provision, the same is liable to be refunded. The plea raised by Shri Mishra based on Section 297 etc. is nothing but a technicality, which cannot be allowed to come in the way of refund of an amount which otherwise was not taxable under the Act 1961, in view of Article 265 of the Constitution of India, and the reasons mentioned hereinabove as also section 240 of the Act 196....