TMI Blog2015 (9) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... ss salaries received in earlier years, the periodic payments made to her remained the same as normally due. The effect, however, remains the same. The salary due to the assessee this year was only ₹ 2,43,689. However, since she had refunded ₹ 2,13,132 by cheque immediately upon coming to know about excess salary payments to her, she was paid the amount of ₹ 4,56,821/- which would have been due to her but for this recovery. Whether she refunds the excess salary received in earlier years and gets full salary for this year, or whether she gets net of recovery salary this year, the amount due to her from employer, which can only be net of recoveries held permissible by Hon’ble Supreme Court, remains the same. Viewed thus, the impugned addition is not sustainable in law. We, therefore, direct the Assessing Officer to delete the impugned addition - ITA No. 1512/Ahd/2014 - - - Dated:- 15-9-2015 - Pramod Kumar AM and S.S. Godara JM , JJ. For the Appellant : Tushar Hemani For the Respondent : James Kurian ORDER Per Pramod Kumar AM: 1. The short issue that we are required to adjudicate, in this appeal, is whether or not, on the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyer never reduced her right or reconsidered worth of her services for FY 2007-08 after deciding her pay of ₹ 4,56,821/- for FY 2007- 08. Thus, she held the right to receive the salary of ₹ 4,56,821/- for FY 2007-08 and she was paid accordingly. Further, the assessee followed mercantile system while computing her income which is evident from the fact in para 3 above that she offered interest on NSC on accrual basis. The case laws referred to are also not applicable in case of the instant assessee. In view of the above discussions, it is evident that the assessee had the right to receive the salary of ₹ 4,56,821/- and also received the same in consideration to her services during the FY 2007-08. She has wrongly reduced recovery of earlier period pay from the pay of FY 2007-08 as the same does not pertain to the period related to the FY 2007-08. Therefore, the amount of ₹ 2,13,132/- is added back to the total income of the assessee for the AY 2008-09. 4. Aggrieved, assessee carried the matter in appeal before the ld. CIT(A) but without any success. While rejecting the grievances of the assessee, learned CIT(A) observed as follows :- 5.3 I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him; (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year. Explanation 1 : For the removal of doubts, it is hereby declared that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due. Explanation 2 : Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as salary for the purposes of this section. (Emphasis, by underlining, is supplied by us now) 8. It is thus clear that what can be taxed under section 15 is salary due , whether received or not, as also salary paid or allowed to the assessee whether due or not. Of course, in certain situations, arrears of salary are also taxable under this section, but that aspect of the matter, for the time being, is not relevant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant for our present discussions. 11. The question that really arises is whether the amount becoming due to the assessee in the present year was ₹ 4,56,821, as computed by the Assessing Officer, or it was only ₹ 2,43,689 (i.e. net of excess salary adjustment of ₹ 2,13,132/- for earlier years) as claimed by the assessee. In other words, could the assessee be legitimately demanded, as a matter of right, that she should be paid ₹ 4,56,821 whether or not the excess payments made in earlier years are adjusted by the employer or refunded by the assessee. 12. Hon ble Supreme Court, in the case of Chandi Prasad Uniyal Ors. vs. State of Uttarakhand [(2012) 8 SC 417], reproduced at www.indiankanoon.org/doc/8446951, has, dealing with excess salary payments on account of wrong fixation of salary- as in the present case, observed inter alia as follows :- 16. We are concerned with the excess payment of public money which is often described as tax payers money which belongs neither to the officers who have effected over-payment nor that of the recipients. We fail to see why the concept of fraud or misrepresentation is being brought in such situations. Ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived due to wrong pay fixation, was a gracious gesture, which is hallmark of academic fraternity anyway, on her part. Nothing, however, really turned on that. Whether she was to return the money or not, what was due to her as salary was salary accrued that year as reduced by the recoveries sanctioned by the law laid down by Hon ble Supreme Court. Since she was gracious enough to refund the excess salaries received in earlier years, the periodic payments made to her remained the same as normally due. The effect, however, remains the same. The salary due to the assessee this year was only ₹ 2,43,689. However, since she had refunded ₹ 2,13,132 by cheque immediately upon coming to know about excess salary payments to her, she was paid the amount of ₹ 4,56,821/- which would have been due to her but for this recovery. Whether she refunds the excess salary received in earlier years and gets full salary for this year, or whether she gets net of recovery salary this year, the amount due to her from employer, which can only be net of recoveries held permissible by Hon ble Supreme Court, remains the same. Viewed thus, the impugned addition of ₹ 2,13,132 is not sustaina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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