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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI A.T.VARKEY, JM & DR. A.L.SAINI, AM
O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the assessee pertaining to the Assessment Year 2010-11, is directed against the order passed by ld. CIT(A)-19, Kolkata in Appeal No.73/CIT(A)-19/Kol/2014-15, dated 15.02.2016, which in turn arises out of an order passed by the Assessing Officer (AO) Under Section 143(3) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 01.03.2013.
Brief facts of the case qua the assessee are that the assessee filed its return of income on 01.02.2011 declaring total income of Rs.10,88,600/- and the same was processed u/s.143(1) of the Act on 07.05.2011. Later on assessee’s case was selected for scrutiny u/s.143(3) of the Act and the AO has completed the assessment by making the disallowance of Rs.7,27,865/- on account of advance salary received. before the ld. CIT(A), who has confirmed the order passed by the AO observing the followings :-
I have considered the facts of the case. The assessing officer had added the sum of Rs. 7,27,865/- under section 17(1)(v) of the I.T. Act, 1961 as salary advance to the income of the assessee. The assessee had claimed it to be advance/loan taken from the company where he worked but the same was not accepted by the assessing officer as the said amount was not reflected as a loan in the auditable balance sheet of the company. I find that the amount that the amount claimed to have been returned by the assessee to the company does not tally with the amount that was added as the salary advance and no working/reconciliation is produced in this regard. Further, the assessing officer's finding that the amount is not reflected in the audited accounts of the company has not been rebutted by the appellant in any way. Under the circumstances, I am unable to allow the appellant the relief prayed for. The addition of Rs. 7,27,865/- is confirmed. 5. Not being satisfied with the order of ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal :-
1. That under the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) erred in confirming the addition made by learned Assessing Officer of Rs.7,27,865/- being refundable advance received from the employer which was also repaid.
Ld. AR for the assessee has submitted before us that Assessee has received perquisite from the company which is exempted under section 17 (2) (iii) (a), that is benefit and amenity granted or provided free of cost, therefore it is not taxable at all in the hands of the assessee. The ld AR further drew our attention towards the provisions of section 17 (2) (iii) (a) which reads as under:
“SECTION 17: “Salary”, “perquisite” and “profits in lieu of salary” defined. For the purposes of section s 15 and 16 and of this section,— (2) “perquisite” includes—……………………………..
(iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases— 3 Sundeep Sethia (a) by a company to an employee who is a director thereof;” The Ld AR for the assessee also drew our attention towards Rule 3 (7) (i) of the Income Tax Rules, 1962 which reads as under: RULE 3 : Valuation of perquisites (7) In terms of provisions contained in sub-clause (viii) of clause (2) of section 17, the following other benefits or amenities and value thereof shall be determined in the manner provided hereunder : (i) The value of the benefit to the assessee resulting from the provision of interest-free or concessional loan for any purpose made available to the employee or any member of his household during the relevant previous year by the employer or any person on his behalf shall be determined as the sum equal to the interest computed at the rate charged per annum by the State Bank of India, constituted under the State Bank of India Act, 1955 (23 of 1955), as on the 1st day of the relevant previous year in respect of loans for the same purpose advanced by it on the maximum outstanding monthly balance as reduced by the interest, if any, actually paid by him or any such member of his household”. Therefore, Ld AR submitted that considering the provisions of section 17(2) (iii) (a) and Rule 3(7) (i) of the I.T. Rules, cited above, it is a benefit and amenity granted to the assessee by his employer company and hence not taxable in the hands of the assessee.
On the other hand, Ld. DR for the Revenue has primarily relied on the findings of the AO which we have already noted in our earlier para and is not being repeated for the sake of brevity.
Having heard the rival submissions, perused the material on record, we are of the view that there is merit in the submissions of the assessee, as the proposition canvassed by ld. AR for the assessee are supported by the facts narrated by him above. As Ld. AR for the assessee has pointed out that payment received by the assessee is a benefit and amenity provided to him by his employer company therefore it is not taxable in the hands of the assessee. Payment received by the assessee is fully covered by the provisions of section 17 2 (iii) (a) of the I.T. Act and Rule 3 (7) (i) of the I.T. Rules, which is benefit or amenity provided to the assessee at free cost, by his employer company. Considering the factual