1992 (12) TMI 75 - AT - Income Tax

Summary

Issues:
1. Reopening of assessment under s. 147(b)
2. Tax liability borne by the employer as perquisite
3. Exemption under s. 10(6)(viia)

Reopening of assessment under s. 147(b):
The appeal was against the order passed by the Dy. CIT(A) for the assessment year 1985-86. The Assessing Officer issued a notice under s. 148 r/w s. 147(b) as tax amounting to Rs. 10,838 borne by the employer was considered a perquisite. The assessee contended that the reassessment was based on a change of opinion and challenged the initiation of proceedings. The CIT(A) upheld the initiation of proceedings under s. 147(b), stating it was in accordance with the law. However, the Tribunal found that the reassessment was not based on any new information post the original assessment, and thus, held the reopening of assessment under s. 147(b) as bad in law, leading to the allowance of the appeal.

Tax liability borne by the employer as perquisite:
The Assessing Officer added the tax liability borne by the employer to the assessee's income, as the employer paid Rs. 10,838 as tax on behalf of the assessee. The assessee relied on s. 10(6)(viia) for exemption, but the Assessing Officer deemed the provision inapplicable due to a long gap between income accrual and assessment period. The CIT(A) upheld the addition of Rs. 10,838 as arrears of salary under s. 15(c). However, the Tribunal disagreed, stating that the tax paid by the employer on behalf of the assessee fell within the exemption under s. 10(6)(viia), as the remuneration due to the assessee within 24 months of arrival in India was exempt from computation of total income. Therefore, the Tribunal allowed the appeal on this issue.

Exemption under s. 10(6)(viia):
The provision of s. 10(6)(viia) was crucial in determining the tax liability borne by the employer as a perquisite. The Tribunal held that the assessee was entitled to exemption under cl. (A) of s. 10(6)(viia) for the tax paid by the employer, as the remuneration due to the assessee within 24 months of arrival in India was exempt from income computation. Despite a delay in remittance, the assessee could claim the exemption under the provision. Consequently, the appeal was allowed based on this ground, affirming the assessee's right to exemption under s. 10(6)(viia).

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