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TMI Blog2012 (9) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... ts on record by holding that payment of US taxes and life insurance premium by the employer on behalf of appellant cannot be categorized as a non-monetary payment whereas the ground raised in appeal pertained to whether Indian Tax' paid by the appellant's employer is eligible benefit under Section 10(10CC) of the Act. 2. The learned CIT (Appeals) erred in not considering that the taxes paid by employer behalf of employee is a non-monetary perquisite eligible for exemption u/s 10(1 OCC) *the Act, thereby, ignoring Hon'ble Delhi Special Bench Income-tax Appellate Tribunal decision in M/s RBF Rig Corporation & Ors [2007] 109 ITD 141, holding that: (a) Tax paid by the employer on behalf of the employee is a nonmonetary perquisite and conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employer as non monetary. In his reply, the Ld AR replied vide its reply dated 18.12.2008 as under:- "The *taxes amounting to Rs.3,588,177/- have been computed and paid by GEll ('the employer") on behalf of the assessee under Section 192(lA) of the Act, in "respect of the non-monetary perquisites amounting to Rs.I0, 660,064/- provided during the year. Further, as already submitted vide our submission dated December 10, 2008, the (taxes amounting to Rs. 6,599,820/- deducted by GEII, under Section 192(1) of the Act from the assessee's taxable salary, has been borne by GEII, and accordingly; the same has been included in the taxable nonmonetary perquisites. As the payment of tax of Rs.6,599,820/- is directly made by the employer, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as non-monetary perquisites and the tax paid by the employer on such perquisites need not be grossed-up in terms of section l0 (l0CC) of the Act. " 2.1. The Assessing Officer did not accept the submission filed by Ld AR and recalculated the taxable income of the assessee after taking tax paid by the assessee as monetary perquisite and denied exemption u/s 10(10CC) of the Act after holding the following observations:- "That there is no material difference in so far as payment of tax obligations are concerned whether, the taxes are deducted and paid by the employer from gross salary and only net amount after deduction of tax is received by the employee or whether the employee receives salary net of tax and the taxes on such sala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7(2)(iv) of the Act being an obligation of the employee met by the employer. The said sum hence is taxable in the hands of the employee under the head salary. Reliance was placed on the judgment of Special Bench of ITAT, New Delhi in the case of RBF Rig Corporation LIC v. ACIT 109 ITD 141 wherein the Hon'ble Tribunal in the similar circumstances had held as under:- "We are of the view that from the changes introduced through Finance Act, 2002 w.e.f. 1.4.20-07, the Legislature has reflected its intention in clear terms to exempt in the hands of employee, the tax paid by his employer on the perquisite falling under clause (2) of section 17. The said perquisite itself was tax paid by the employer at his option which the employee was obliged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated on US taxes & life insurance premium instead of taxes borne by employer. 6. The Ld DR, on the other hand, argued that assessee was not covered by the provisions of section 10(10CC) of the Act and further argued that Assessing Officer had distinguished the facts of the present case from the facts of the case relied upon by the Ld AR. Therefore, in view of the fact he argued that both Assessing Officer and Ld CIT(A) had rightly arrived at the conclusion that the case of the assessee was not covered by the provisions of section 10(10CC) of the Act. 7. We have heard the rival submissions of both the parties and have gone through the material available on record and have noted from the order of Ld CIT(A) that he had adjudicated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re obligation which but for such payments would have been payable by the assessee and therefore these taxes squarely fit in the definition of section 17(2)(iv) and therefore are exempt under the provisions of section 10(10CC). The case laws relied upon by the assessee as decided by the Special Bench ITAT in the case of RBF Rig Corporation (supra) also supports the case of the assessee. Respectfully, following the Special Bench judgment of the ITAT Delhi we are of the considered opinion that taxes borne by the employer are eligible for deduction u/s 10(10CC) of the Act. In view of the above, ground Nos. 2 to 4 of assessee's appeal are allowed. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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