2013 (5) TMI 745 - AT - Income Tax

Addition on account of low household expenses on protective basis - CIT(A) deleted the addition - Held that - the Commissioner (Appeals), in the block assessment, has deleted the addition purely on merits. Even though this may be a subject matter of appeal before the Tribunal by the Department in the block assessment proceedings but that issue would be decided there only and not in the regular assessment proceedings wherein only protective addition has been made. Thus, the protective addition made by the Assessing Officer in the regular assessment order dated 30th March 2001, in our opinion, has no legs to stand. Consequently, the findings given by the Commissioner (Appeals) in this appeal are upheld. The grounds raised by the Revenue is treated as dismissed. Against revenue. Income from hiring of tankers as undisclosed income - computation under the normal provision of the Act or the special provision of Sec. 44AE - Held that - it is noted that the assessee was having eleven tankers which is not in dispute. Provisions of section 44AE, will only apply to the assessee who owns not more than ten goods carriages. Thus, in case of the assessee who is in possession of more than ten goods carriages, then by virtue of the provisions of sub-section (1) of section 44AE the deeming provision of section 44AE will not apply to the facts of the present case. Moreover, it has also not been disputed that the assessee has been maintaining regular books of account for the business of hire of eleven tankers which are also subjected to audit under section 44AB. On this ground also, the provisions of section 44AE will not apply in view of sub-section (7) of section 44AE. Against revenue. Exemption u/s 10(15) - whether CIT(A) erred in holding that in A.Y. 1999-2000 the assessee s status was that of R & NOR and allowed exemption u/s 10(15) - Held that - As decided in assessee s own case assessee was out of India for more than 182 days in both the A. Ys. so he was not resident of India for that period. As far as employment is concerned, it is found that he had gone to Dubai as a Manager of a Dubai firm. The assessee had filed copies of the visa, passport, appointment letter of Dubai concern to the A.O. The said documents are at page nos. 13 to 18 of the paper book filed by the assessee. The A.0. has not mentioned anything contradiction the said factual position. Considering the fact of the case provisions of section 6(1)(c) are held not to be applicable in assessee s case. In light of the above discussion,assessee was non-resident for the A.Y.1999-2000 following the predessor & as he was Non-Resident for the said period and resident but Not Ordinarily Resident for succeeding eight years remittance sent by him from Dubai are held to be exempt from tax. Against revenue.

Summary

Issues Involved:
1. Deletion of addition on account of low household expenses on a protective basis for the assessment year 1998-99.
2. Applicability of section 44AE for computing income for the assessment year 1999-2000.
3. Determination of residential status and eligibility for exemption under section 10(15) for the assessment year 1999-2000.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Low Household Expenses on a Protective Basis for the Assessment Year 1998-99:
The Revenue challenged the deletion of an addition of Rs. 3.60 lakhs made by the Assessing Officer (AO) on account of low household expenses on a protective basis. The AO had initially made this addition during block assessment proceedings under section 158BC, which was later deleted by the Commissioner (Appeals) on merits. The AO reiterated this addition on a protective basis during regular assessment proceedings for the same amount. The Commissioner (Appeals) held that once the substantive addition was deleted on merits, the protective addition could not be sustained. The Tribunal upheld this view, noting that the addition was already deleted in the block assessment order and thus had no basis to stand in the regular assessment proceedings.

2. Applicability of Section 44AE for Computing Income for the Assessment Year 1999-2000:
The Revenue contested the Commissioner (Appeals)'s decision that the income of Rs. 25,699 should be computed under the normal provisions of the Act rather than under section 44AE. The AO had invoked section 44AE, adding Rs. 1,54,197 as undisclosed income from the hiring of tankers, and apportioned part of this for the regular assessment period. The Commissioner (Appeals) found that section 44AE was inapplicable as the assessee owned more than ten vehicles and maintained regular audited books of account. The Tribunal upheld this decision, confirming that section 44AE applies only to those owning not more than ten goods carriages and that the assessee's maintenance of regular books of account further exempted them from this provision.

3. Determination of Residential Status and Eligibility for Exemption under Section 10(15) for the Assessment Year 1999-2000:
The AO had added Rs. 11,22,781 as interest income, arguing that the assessee's claim of being a Non-Ordinarily Resident (NOR) was incorrect. The Commissioner (Appeals) deleted this addition, referencing the Tribunal's earlier decision in the assessee's case for the assessment year 2002-03, which confirmed the assessee's NOR status and eligibility for exemption under section 10(15). The Tribunal agreed, noting that the assessee was a Resident but Not Ordinarily Resident (R & NOR) and thus eligible for the exemption. The Tribunal upheld the Commissioner (Appeals)'s decision, dismissing the Revenue's appeal on this ground.

Conclusion:
The Tribunal dismissed the Revenue's appeals for both assessment years 1998-99 and 1999-2000, upholding the Commissioner (Appeals)'s decisions on all contested issues. The protective addition for low household expenses was deemed unsustainable, section 44AE was found inapplicable due to the number of vehicles and maintenance of regular books, and the assessee's NOR status and corresponding exemption under section 10(15) were confirmed.