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TMI Blog2011 (12) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... ax paid by the employer on the income of the employee assessee is entitled to exemption u/s 10(10CC) of the Income Tax Act, 1961. It may be mentioned that four grounds have been taken in this appeal and the question framed above represents the gist of the grounds. However, for the sake of completeness, the grounds taken in this appeal are reproduced below:- "1. On facts and circumstances of the case, whether in the case of the employee receiving a 'tax free' salary, as per agreement, the taxes paid by the employer constituted a monetary payment that was part and parcel of salary. 2. On facts and circumstances of the case, whether the Ld CIT(A) had erred in allowing exemption u/s 10(10CC), where the facts clearly establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided to the employee. However, the Assessing Officer did not allow the claim of the assessee tax payers by holding that the tax borne by the employer was a monetary perquisite, hence, further tax thereon should also be added to the salary by multiple stage grossing up process. It was the contention of the Assessing Officer that since as per the terms of the employment, tax has to be borne by the employer, all taxes concluded by multiple stage grossing up are to be borne by the employer resulting into further tax perquisite. The Assessing Officer had made reference to the provisions of section 192, 198, 195A to deny the claim of the assessee that no tax was payable on the tax paid by the employer to the Act which was a non monetary perquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department is in appeal before the Hon'ble High Court of Uttrakhand. 9. The learned DR has reiterated the reasons given by the Assessing Officer in including the tax paid by the employer for and on behalf of the employee in the total income after denying the assessee's claim of exemption u/s 10(10CC) of the Act. 10. The learned Counsel for the assessee, on the other hand, submitted that whatever issues has been raised by the Assessing Officer has been considered and dealt with by the Special Bench of the Tribunal in the above referred case, and, as such, the case is fully covered by the aforesaid decision. 11. We have heard the parties and perused the material on record. The issue involved is as to whether the assessee is entitled to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re fully covered by above sub clause (iv). 17. The decision of CIT v. America Counting Corporation 123 ITR 513, noted above also supports the view that taxes paid on behalf of the assessee is a perquisite or a benefit, but not income from business. It could not be taxed except under clause (iv) of section 28 which provided that a benefit or perquisite was liable to be charged to tax. 17.1 It is not money which is paid to the assessee when taxes are paid on his behalf. It is discharge of his obligation. The payment fully fits in the jacket of sub clause (iv) of section 17(2) of the Act. It may be a monetary gain or monetary benefit or a monetary allowance but definitely it is not a monetary payment to the assessee. What is excluded in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance but definitely it is not a monetary payment to the assessee. It has been held by the Special Bench that that the taxes paid by the employer on behalf of the employee is a perquisite within the meaning of section 17(2) of the Act, which is not provided by way of monetary payment and, therefore, there is no reason not to exclude such payment of tax from the total income of the assessee u/s 10(10CC) of the Act. In other words, taxes paid by the employer can be added only once in the salary of the employee, and thereafter, tax on such perquisite is not be added again. 14. Respectfully following the aforesaid decision of Special Bench of the Tribunal which is binding on us as on today, we upheld the order of the Learned CIT(A) in accept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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