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2016 (10) TMI 167 - HC - Income TaxReopening of assessment - Charge of fringe benefit tax - double taxation - employer ONGC had reimbursed Conveyance Maintenance and Repair Expenditure ( CMRE ) and uniform allowance to the petitioner which was not reflected in the salary certificate issued by the employer nor ONGC had deducted tax at source on such amounts - Held that - Once a certain benefit is held to be a fringe benefit and the employer is taxed accordingly under chapter XIIH of the Act the same benefit cannot be included in the income of the employee treating it as a perquisite. Revenue has accepted the ONGC s treatment to this payment as fringe benefit and accepted tax from the employer on such basis in terms of chapterXIIH of the Act Revenue now cannot change its stand and seek to tax the same amount in the hands of the employees which would be a clear case of double taxation. The last of the contentions of Shri Parikh that the petitioner having agreed before the Assessing Officer to a certain disallowance cannot challenge the order by way of revision and is therefore must be turned down. Thus impugned order passed by the Commissioner is set aside. The disallowance of 20% of the CMRE benefit and 100% of the uniform allowance made in case of the petitioner by the Assessing Officer is reversed. The Assessing Officer shall pass a consequential order giving effect to this judgment. The petition is disposed of.
Issues Involved:
1. Legality of the tax levied on Conveyance Maintenance and Repair Expenditure (CMRE) and uniform allowance. 2. Double taxation issue concerning Fringe Benefit Tax (FBT). 3. The applicability of Section 264 of the Income Tax Act, 1961 for revising the assessment. Detailed Analysis: 1. Legality of the tax levied on CMRE and uniform allowance: The petitioner, employed as a General Manager by ONGC, filed a return of income declaring ?9,03,346/- for the assessment year 2007-08. The Assessing Officer issued a notice under section 148 of the Income Tax Act, 1961, and subsequently passed an order levying tax on 20% of CMRE and 100% on uniform reimbursement. The petitioner argued that ONGC had paid fringe benefit tax (FBT) on these amounts, and therefore, these should not be taxed again as part of his salary. The Commissioner rejected the revision petition, stating that similar disallowances were confirmed in other cases. 2. Double taxation issue concerning Fringe Benefit Tax (FBT): The petitioner contended that the employer ONGC had treated the benefits as fringe benefits and paid tax accordingly, which should preclude further taxation in the hands of the employee. The court noted that ONGC had paid FBT on the amounts in question under section 115WA of the Act. The statutory provisions under section 17(2) of the Act excluded fringe benefits chargeable to tax under chapter XIIH from being treated as perquisites. The court emphasized that the statutory framework was designed to avoid double taxation, where the same benefit would not be taxed both as a fringe benefit for the employer and as a perquisite for the employee. The CBDT Circular No. 9 of 2007 also clarified that fringe benefits taxed under chapter XIIH could not be taxed as perquisites under section 17. 3. The applicability of Section 264 of the Income Tax Act, 1961 for revising the assessment: The petitioner relied on the decision in S. R. Koshti v. Commissioner of Income Tax, where it was held that the Commissioner has the power to correct an overassessment under section 264, even if the overassessment resulted from the assessee's own mistake. The court reaffirmed this principle, stating that the Commissioner is duty-bound to provide relief where due, in accordance with the provisions of the Act. Conclusion: The court set aside the impugned order dated 22.09.2011 passed by the Commissioner, reversing the disallowance of 20% of the CMRE benefit and 100% of the uniform allowance made by the Assessing Officer. The court directed the Assessing Officer to pass a consequential order giving effect to this judgment, thereby resolving the issue in favor of the petitioner. The petition was disposed of accordingly.
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