2013 (6) TMI 156 - AT - Income Tax

Reopening of assessment - assessment ex parte u/s 144 - additions on account of hypothetical tax liability that is chargeable in US with reference to the services rendered in India. CIT(A) following the decision of the Tribunal in CIT vs. Mr. Jaidev H. Raja 2012 (11) TMI 343 - BOMBAY HIGH COURT and the decision in Nicco Corporation vs. CIT 2001 (5) TMI 42 - CALCUTTA High Court directed the A.O. to consider the perquisite only to the extent of tax paid by Amex India on behalf of the assessee for additional Indian income tax liability paid for equalization of income earned which comes to Rs. 16,84,498- and accordingly deleted the addition of Rs. 39,03,900/- made by the A.O. Revenue appeal. Held that - In the absence of any distinguishing feature brought on record by the Revenue, and following the decision of the Hon ble jurisdictional High Court in CIT vs. Mr. Jaidev H. Raja 2012 (11) TMI 343 - BOMBAY HIGH COURT , there is no need to interfere with the order passed by the ld. CIT(A) on this account and accordingly the Revenue appeal is rejected.

Summary

Issues:
- Assessment year 1996-97: Tax equalization perquisite computation and assessment.

Analysis:
The appeal pertains to the assessment year 1996-97, where the assessee, an employee of American Express Bank Ltd., received salary from India and abroad. The assessment was reopened under section 147(a) of the Income Tax Act, 1961, and completed ex parte by the Assessing Officer (A.O.) under section 144 of the Act. The A.O. observed the tax equalization claim of Rs. 16,84,498 by the assessee, based on Indian and US tax liabilities. The A.O. added a perquisite amount of Rs. 39,03,900 to the income. However, the ld. CIT(A) directed to consider the perquisite only to the extent of tax paid by Amex India, deleting the additional amount added by the A.O.

The Revenue appealed against the CIT(A)'s order, arguing that the A.O. erred in adopting the higher perquisite value. The Departmental Representative (D.R.) supported the A.O.'s order, while the assessee's counsel cited precedents to uphold the CIT(A)'s decision. The Tribunal examined the computation of the tax equalization amount and noted that the assessee had correctly added Rs. 16,84,498 as per the annexure. The A.O. had added a higher perquisite amount, which was subsequently deleted by the CIT(A) based on legal precedents.

Referring to the decision in Jaidev H. Raja, the Tribunal highlighted the principle that the tax reimbursed by the employer should not be added to the assessee's income. Without any distinguishing features presented by the Revenue, the Tribunal upheld the CIT(A)'s order, rejecting the Revenue's grounds. Consequently, the Revenue's appeal was dismissed, affirming the deletion of the additional perquisite amount added by the A.O.