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TMI Blog2008 (11) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... manner : DETAILS OF PAY/ALLOWNACES AS CHIEF MINISTER Pay 23,539.85 Allowance 35,209.70 Sumptuary allowance 23,539.85 82,289.40 TDS reimbursed for financial year 1995-96 8,497.00 90,786.40 Less: Incidental expenses Depreciation on car (on opening WDV 64922 at 20%) 12,984.00 Insurance/expenses on car (estimated) 5,000.00 17,984.00 Net income 72,802.40 4. The Assessing Officer gave intimation to the assessee under section 143(1)(a) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). In the adjustment explanatory sheet, the Assessing Officer observed as follows : "1. The Ministers being Government servants are not covered by the Board's circular, therefore returns are to be filed under the head 'Salary' and not 'Income from other sources'. The correction has been made. 2. The only deduction allowable from salary income is standard deduction of Rs. 15,000. This has been allowed despite no claim. 3. Incidental expenses claimed are disallowed as they are not permissible deductions from salary income nor are they incidental to the reimbursement of TDS by the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justment of Rs. 6,000 as made by the Assessing Officer is deleted." 7. The Revenue aggrieved by the order of the Commissioner of Income-tax (Appeals) deleting adding back of the interest on the National Savings Certificate, preferred appeal before the Patna Bench of the Income-tax Tribunal (hereinafter referred to as "the Tribunal"). It was registered as I. T. R. No. 438/PATY/1997. The assessee aggrieved by the change of head, filed cross-objection and that was registered as C. O. No. 92/PAT/1998. The appeal and the cross-objection naturally were heard together and have been disposed of by the Tribunal by the common judgment dated October 31, 2001. The Tribunal allowed the appeal preferred by the Revenue but dismissed the cross-objection filed by the assessee. On the issue of change of head, the Tribunal observed as follows : "The Chief Minister is not a political post. It is a constitutional post. The Assessing Officer had rightly stated that the fact that the assessee enclosed a service certificate to the return wherein Form No. 16 shows his income as pay and allowances from the Government. He could not have classified this as professional income to claim the expenses not relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 438/Pat/97, the filing of which violate the instruction No. 1979, dated March 27, 2000, issued by the Central Board of Direct Taxes ?" 11. Mr. Ajay Rastogi, appearing on behalf of the appellant, submits that the tax effect in the present case being Rs. 4,305, i.e., less than the monetary limit of Rs. 25,000 prescribed by the Central Board of Direct Taxes in its Notification dated October 28, 1992, the Revenue ought not to have preferred the appeal before the Tribunal and the Tribunal instead of deciding the same, ought to have dismissed the same on that ground alone. He points out that such a plea was raised before the Tribunal but has not been answered and without deciding the said issue, the Tribunal had allowed the appeal preferred by the Revenue. 12. Mr. Harshwardhan Prasad, appearing on behalf of the Revenue, does not dispute that the tax effect is only Rs. 4,305 but in view of the nature of issue involved the Revenue had filed the appeal and the Tribunal rightly did not dismiss the appeal on the ground of monetary limits. 13. It is no in dispute that tax effect in the case in hand is Rs. 4,305 The instruction of the Central Board of Direct Taxes relevant at the time w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of regulating filing of appeal or application for reference. Section 268A(5) further provides that order/instruction or direction issued by the Central Board of Direct Taxes fixing monetary limits for filing appeal shall be deemed to have been issued under sub-section (1) of section 268A of the Act. Thus, the instruction fixing monetary limit for filing of appeal before the Tribunal has statutory flavour and in the back-ground thereof, we are of the opinion that the appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals) was wholly unjustified. 15. Accordingly, our answer to the fifth question is in the negative, against the Revenue and in favour of the assessee and it is held that the Tribunal was not justified in entertaining the appeal of the Revenue. The view which we have taken finds support from a Division Bench judgment of this court dated September 15, 2008, passed in Misc. Appeal No. 90 of 2000 (CIT v. Uma Kant Mishra [2009] 316 ITR 229 (Patna) and analogous case). In the said case, it has been observed as follows (pages 231 and 232): "It is worth mentioning that the instruction of the Central Board of Direct Taxes dated October 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitates examination of the scheme of section 14 of the Act. For the purpose of charge of income-tax, the total income has to be classified under various heads which include salaries and income from other sources. Section 14 of the Act, which is relevant for the purpose, reads as follows: "Save as otherwise provided by this Act, all income shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income : A. - Salaries B. - […….] C. - Income from house property. D. - Profits and gains of business or profession. E. - Capital gains. F. - Income from other sources." 23. Section 15 of the Act, inter alia, provides for charging of income under the head "salary" when it is due or paid by him. 24. Section 15 of the Act reads as follows: "The following income shall be chargeable to income-tax under the head 'Salaries'- (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not; (b) any salary paid or allowed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso be disqualified to be appointed as a Minister under clause (1) for duration of the period commencing from the date of his disqualification till the date on which the term of his office as such member would expire or where he contests any election to the Legislative Assembly of a State or either House of the Legislature of a State having Legislative Council, as the case may be, before the expiry of such period, till the date on which he is declared elected, whichever is earlier. (2) The Council of Ministers shall be collectively responsible to the Legislative Assembly of the State. (3) Before a Minister enters upon his office, the Governor shall administer to him the oaths of office and of secrecy according to the forms set out for the purpose in the Third Schedule. (4) A Minister who for any period of six consecutive months is not a member of the Legislature of the State shall at the expiration of that period cease to be a Minister. (5) The salaries and allowances of Ministers shall be such as the Legislature of the State may from time to time by law determine and, until the Legislature of the State so determines, shall be as specified in the Second Schedule." 26. From a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court judges respectively and expressly state that what the judges receive are 'salaries'. It is not possible to hold, therefore, that what judges receive are not salaries or that such salaries are not taxable as income under the head of salary." 29. Article 164(5) of the Constitution expressly provides for payment of salary to the Chief Minister. The discussion aforesaid leads us to conclude that the Assessing Officer did not err in changing the head of income to salary. 30. Accordingly, our answer to the third question is in the affirmative in favour of the Revenue and against the assessee and it is held that the Tribunal was justified in affirming the change of head of income, income from other source declared by the assessee to income from salary by the Assessing Officer in exercise of the power under section 143(1)(a) of the Act. The natural corollary of the answer of the aforesaid question is that the finding of the Tribunal in regard to the change of head of the income is legal and valid. Thus, question No. 4 is also answered in the affirmative, in favour of the Revenue and against the assessee. 31. In the result, Misc. Appeal No. 170 of 2002, is allowed and the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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