TaxTMI 
TaxTMI 
2016 (12) TMI 1288
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....nited 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 Cooperative Technical Agreement between the two Go....
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....nt, 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 have been filed and could not have been taken into conside....
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.... 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 through the Agency for International Development (AID) with the President of India (Grantee). Thus, the United States of America was acting through AID ....
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.... 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 the term 'grant' included all goods, services, training and contractor personnel provided by AID/ Washington in support of the project. For example all goods, services, training and contractor personnel financed by the Grant or provided by AID/Washington we....
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....ure-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 and other AVSC activities that may be developed. The Program Officer (Training) will also participate in country workplan and project development, project monitoring, reporting and routine coordination with implementing agencies, donors and sister agencies. Specific Duties include: 1. ....
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.... 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 not assigned to duties in India in connection therewith. The provision nowhere says that the Government of U.P., the original employer, should have assigned such duties to the assessee. It is not open either to add words to the provisions which are not there nor to extract something which exists in the provision. The provision has to be read as it i....
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....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 is generally used in connection with services of a higher or non-manual type while the latter is used in connection with the manual services. In Gordon Vs. Jennings [1882] 51 LJ QB 417; 9 QBD 45 (QB), Grove. J. observed as follows: "Though this word (wages) might be said to include payment for any services, yet, in general, the word ''salary' is....
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..... 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 against the statute, specially in view of Article 265 of the Constitution of India. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. Reference may also be made to a circular No. 14 (EXCEL 35) of 1955, dated 11.4.1955 issued by the Central Board of Direct Taxes wherein it has been stated ....
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....w 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 Commissioner of Income-tax, as the case may be, to examine the matter and determine whether, although the money has been received by the assessee, it is taxable in law. The assessee is then within his rights in requiring the appellate or the revisional authority to examine the validity of the assessment to tax of a receipt which, though admitted by him, is not taxable in law." Reference may also be m....
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....4(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 which places any restriction on the Commissioner's revisional power to give relief to the assessee in a case where the assessee detracts mistakes on account of which he was over-assessed after the assessment was completed. We do not read any such embargo in the Commissioner's power as read by the Commissioner in the present case. It is open to the Commissioner to entertain even a new ground not urged before the lower....
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..... 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 challenged as erroneous. If, for example, some provision was overlooked not only by the assessee, but also by the Income Tax Officer. In Smt. Snehlata Jain v. CIT, 192 CTR (JNK) 50, the High Court of Jammu & Kashmir was faced with a situation where the assessee filed a return of income without claiming exemption under Section 54(f) of the Act, the return was processed under Section 143(1) of the Act, subsequently the mistake came to ....
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....e 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 also the return was processed under section 143(1) of the Act 1961, thereafter the assessee was advised that the income which had been taxed was in fact exempt under Section 10(8) of the Act, therefore, she filed a revision petition under Section 264 which has been dismissed, although for different reasons, but now before the writ court the same argument is being raised on behalf of the Department, as had been raised before the Jammu & Kashmir High C....
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....earned 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 1961. In this context it is also relevant to mention that the revisional authority has not dismissed the revision petition on the ground that it is not maintainable, therefore, the objections raised in this regard by Sri Mishra are not tenable for this reason also. In fact the revisional authority has consciously condoned the delay in filing the revision and has decided the same on merits, al beit, on a misreading and misconstruction of the provisions of law as als....