TMI Blog2016 (12) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly rejected. In the Delhi High Court judgement in Vijay Gupta's case (2016 (3) TMI 977 - DELHI HIGH COURT ) this plea was specifically raised, but repelled by observing that the use of the expression 'any order' under section 264 would imply that the section does not limit the power to correct the errors committed by the subordinate authorities, but could even be exercised where the errors are committed by assessees. It would even cover the situations where the assessee, because of an error, has not put forth a legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under section 264. The Delhi High Court held that the intimation under Section 143(1) is regarded as an 'order' for the purposes of Section 264 of the Act. 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 Mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter affidavit in rebuttal of the averments made in the the writ petition by the assessee, in spite of several opportunities granted since the year 2003. This is a writ petition filed under Article 226 of the Constitution of India by the petitioner-assessee challenging the order passed by the Commissioner of Income Tax under section 264 of the Income Tax Act 1961 (hereinafter referred as ''Act 1961') rejecting her revision claiming exemption of income in question under section 10(8) of the Act 1961 on the ground that there was no assignment of duties as such in terms of section 10(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 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt as also of different High Courts including this court in support of his submissions as also in rebuttal of the submissions of the learned counsel for the respondents, of which, those relevant, shall be discussed in the later part of this judgement. On the contrary, Sri Manish Mishra learned counsel appearing for the Income Tax Department contented that salary was not exempt under the relevant agreement, therefore, the benefit of section 10(8) was not available to her. He further contented that there was no assignment of duties by the Government of U P in terms of the agreement entered into by the Government 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not deemed to accrue or arise in India, in respect of which such individual is required to pay any income or social security tax to the Government of that foreign State ; On a perusal of the aforesaid provision it is borne out that vide Clause (a) in computing the total income of a previous year of any person, the remuneration received in the case of an individual who is assigned to duties in India in connection with any Cooperative Technical Assistance Programmes and Projects in accordance with an agreement entered into by the Central Government and the Government 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.I.D. funds provided for this Project are additional to the existing level of Expenditure buy the GOUP for Family Welfare and that GOUP expenditures for Family Welfare are maintained at the 1990-91 levels or higher; (b) Appointing GOUP representatives to serve on the Steering Committee; (c) Facilitating be registration, establishment and functioning of the Society; and (d) Establishing the Governing Body of the Society in the manner indicated in paragraph 2.3 In Annexure-2 to the Agreement titled as 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Surgical Contraception, as morefully described in Attachment-2 entitled Program Description and in the proposal of AVSC entitled Proposal for a follow on Cooperative Agreement between the Agency for International Agreement and the Association for Voluntary Surgical Contraception 1993 to 1998 . The cooperative agreement was effective from 24.8.1993 till 23.8.1998, which was subsequently extended to August 2003 as mentioned in the revision petition filed before the Commissioner, a copy of which is annexed 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 ₹ 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 po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough USAID was also covered by Clause (a) of sub-section (8) of Section 10 which refers to remuneration received directly or indirectly from the Government of that foreign State for such duties, as being exempt from taxation. In this view of the matter, considering the material which is on record before this court and was also on the records of the revisional authority under Section 264, a fact which has not been denied by the respondents by filing a counter affidavit nor has 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des services and contractor personnel funded by the Grant or provided by AID/ Washington in support of the project, there can be no manner of doubt that the assessee was exempt from taxation obviously in respect of the remuneration received in connection with the duties assigned to her in India in relation to the aforesaid projects. The contention of the learned counsel for the department that ''remuneration' does not mean salary, has only been made to be rejected. ''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 rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to him in any case was not maintainable, as, there was no order, a revision of which could be sought and also that fresh documents could not be filed before the revisional authority which were not there before the assessing officer. These are not the reasons mentioned in the impugned order passed by the revisional authority. In fact, the revisional authority consciously admitted the revision after condoning the delay and dismissed it on merits. All these pleas 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 inad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he previous applications, on the mere ground that the petitioner had shown the income in his return, is erroneous. The Commissioner was bound to apply his mind to the question whether the petitioner was taxable on that income. The Income-tax Officer is entitled under Section 23(1) to make an assessment on the basis of the return if he is satisfied, without requiring the presence of the assessee or the production of evidence in support of the return, 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1980) 122 ITR 160 (Guj.), held as under: It is clear that under s. 264, the Commissioner is empowered to exercise revisional powers in favour of the assessee. In exercise of this power, the Commissioner may, either of his own motion or on an application by the assessee, call for the record of any proceeding under the Act and pass such order thereon not being an order prejudicial to the assessee, as the thinks fit. Sub-sections (2) and (3) 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 reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct it under s. 264(1). In our opinion, therefore, the Commissioner was wrong in not giving relief to the petitioner in respect of over-assessment as a result of under-totalling of the purchases to the extent of ₹ 20,000. Relying upon the decisions already referred hereinbove the Kerala High Court in the case of Parikh Brothers v. CIT, 150 ITR 105 (Kerala), held that the Commissioner of Income Tax committed an error of law in holding that it is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain being not chargeable to tax under law. What to say of its duty to advice the assessee the revisional authority rejected the contention of the petitioner only on technical grounds. When the substantive law confers a benefit 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. 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-exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Income-tax Act. 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 because of which he was over-assessed after the assessment was completed. Once it is found that there was a mistake in making an assessment, the Commissioner had power to correct it under s. 264(1). When the substantive law confers a benefit 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 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
