2023 (2) TMI 411 - AT - Income Tax

Income from salaries - Perquisite - Superannuation fund in excess - Adjustment on account of employer s contribution towards approved superannuation fund - as submitted that such employer contribution towards approved superannuation fund could not be treated as perquisites so as to tax it under the head income from salaries - HELD THAT - CPC while processing the return of assessee made adjustment (disallowance) of Rs. 85, 318/-, out of employer contribution for superannuation fund, which was in excess of Rs. 1.50 Lakhs. CIT(A) upheld the adjustment by taking view that a total sum of Rs. 2,35,318/-was an aggregate contribution to the assessees account for FY 2016-17 for contribution to approved superannuation fund. As per section 17(2)(vii) the amount of any contribution to an approved superannuation fund by the employer in respect of the employee, to the extent it exceeds Rs. 1,50,000/-, shall be treated perquisite to be chargeable under head salaries . Before us assessee vehemently submitted that the amount contributed by the employer to the superannuation fund is not vested in the hand of employee till the event his superannuation or becoming incapable of services and unless right of the employee is vested in the said amount, it cannot be treated amount of perquisite. The submissions of assessee, though seems to be convincing but against the statutory provisions of section 17(2)(vii). None of the case laws relied by the ld AR for the assessee has considered the provisions of section 17(2)(vii). Therefore, no reason to interfere with the finding of the ld. CIT(A). Addition on account of conveyance maintenance reimbursement expenses (CMRE) - assessee submits that the assessee disallowed (offered) 20% of CMRE to tax and remaining amount was offered to tax - assessee restricted his claim to the extent of 80%, only which is spent and remaining was disallowed by assessee voluntarily - CPC while processing return disallowed the same - HELD THAT - As assessee vehemently submitted that the assessee restricted the claim to the extent of actually spent and the XCPC taxed the entire claim without seeking any details, we find merit in the submissions of assessee that the disallowance was made without giving opportunity of explanation or seeking details of the actual expenditure. On considering the facts and the wage structure of assessee, we are convinced that the assessee has reasonably disallowed 20% of CMRE payment while filing return of income. Therefore, direct the assessing officer to delete the addition/ disallowance of CMRE.

Summary

Issues Involved:
1. Violation of principles of natural justice by the CIT(A).
2. Adjustment of Rs. 85,318/- as perquisite chargeable under the head salaries.
3. Adjustment of Rs. 65,642/- on account of conveyance maintenance reimbursement expenses (CMRE).
4. Applicability of the Rule of Consistency.
5. Over-assessment and entitlement to refund.

Detailed Analysis:

1. Violation of Principles of Natural Justice by the CIT(A):
The appellant claimed that the CIT(A) violated the principles of natural justice. However, this ground was treated as not pressed and dismissed as the appellant's representative did not make any specific submissions regarding this issue.

2. Adjustment of Rs. 85,318/- as Perquisite Chargeable Under the Head Salaries:
The appellant contended that the employer's contribution to the approved superannuation fund should not be treated as a perquisite. The CIT(A) referred to Section 17(2)(vii) of the Income Tax Act, which states that any contribution exceeding Rs. 1,50,000/- is to be treated as a perquisite. The appellant relied on the decision in CIT Vs L.W. Russel, but the CIT(A) held that this case law was not applicable as it pertained to the old Act. The Tribunal upheld the CIT(A)'s decision, stating that the statutory provisions of Section 17(2)(vii) were clear and unambiguous. Thus, the adjustment of Rs. 85,318/- was justified.

3. Adjustment of Rs. 65,642/- on Account of Conveyance Maintenance Reimbursement Expenses (CMRE):
The appellant argued that the CMRE was exempt under Section 10(14)(i) and relied on the decision in CIT Vs ONGC. The CIT(A) noted that the exemption claimed was not based on actual expenditure, which is a requirement under Section 10(14)(i). The Tribunal found merit in the appellant's submission that the disallowance was made without giving an opportunity for explanation or seeking details of actual expenditure. Therefore, the Tribunal directed the assessing officer to delete the disallowance of CMRE.

4. Applicability of the Rule of Consistency:
The appellant claimed that the CIT(A) erred in not applying the Rule of Consistency. However, this issue was not specifically addressed in the Tribunal's judgment.

5. Over-assessment and Entitlement to Refund:
The appellant argued that by dismissing the appeal and confirming the adjustments made by the assessing officer, they were over-assessed and entitled to a refund. The Tribunal's decision to delete the disallowance of CMRE effectively addressed this issue, resulting in a favorable outcome for the appellant.

Conclusion:
The appeal was partially allowed. The Tribunal upheld the adjustment of Rs. 85,318/- as a perquisite but directed the deletion of the disallowance of Rs. 65,642/- on account of CMRE. The ground of violation of natural justice was dismissed, and the issue of over-assessment was resolved in favor of the appellant.