Ravi Kiran Sinha, Dhanbad v. ACIT(IT), Circle-1(2), Kolkata, Kolkata

ITA 1308/KOL/2019 | 2014-2015
Pronouncement Date: 15-11-2019 | Result: Allowed

Appeal Details

RSA Number 130823514 RSA 2019
Assessee PAN AHLPC7400N
Bench Kolkata
Appeal Number ITA 1308/KOL/2019
Duration Of Justice 5 month(s) 18 day(s)
Appellant Ravi Kiran Sinha, Dhanbad
Respondent ACIT(IT), Circle-1(2), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 15-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 15-11-2019
Assessment Year 2014-2015
Appeal Filed On 28-05-2019
Judgment Text
1 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . . ' # $% % '( ) [BEFORE SHRI A. T. VARKEY JM & DR. A. L. SAINI A M] S.A. NO.103/KOL/2019 IN I.T.A. NO. 1314/KOL/2019 ASSESSMENT YEAR: 2014-15 & ITA NO.1314/KOL/2019 ASSESSMENT YEAR: 2014-15 BODHISATTVA CHATTOPADHYAY PLOT NO. X 1-7 BLOCK EP/G SECTOR-V BCS BUILDING SALT LAKE KOLKATA-700 091. (PAN: AHLPC7400N) VS. COMMISSIONER OF INCOME-TAX (IT & TP) KOLKATA APPELLANT RESPONDENT & S.A. NO.99/KOL/2019 IN I.T.A. NO. 1304/KOL/2019 ASSESSMENT YEAR: 2014-15 & ITA NO.1304/KOL/2019 ASSESSMENT YEAR: 2014-15 HIMADRI MALLICK 114/3 RAJANI MUKHERJEE LANE KOLKATA-700 038. (PAN: ASMPM1867B) VS. COMMISSIONER OF INCOME-TAX (IT & TP) KOLKATA APPELLANT RESPONDENT & S.A. NO.100/KOL/2019 IN I.T.A. NO. 1306/KOL/2019 ASSESSMENT YEAR: 2014-15 & ITA NO.1306/KOL/2019 ASSESSMENT YEAR: 2014-15 NAYAN MUKHERJEE CF 04 IC UTSA NEW TOWN KOLKATA- 700 156. (PAN: AQCPM0647B) VS. COMMISSIONER OF INCOME-TAX (IT & TP) KOLKATA APPELLANT RESPONDENT 2 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 & S.A. NO.101/KOL/2019 IN I.T.A. NO. 1308/KOL/2019 ASSESSMENT YEAR: 2014-15 & ITA NO.1308/KOL/2019 ASSESSMENT YEAR: 2014-15 RAVI KIRAN SINHA AT BANKALI ROAD PO-GOBINDPUR DHANBAD JHARKHAND-828109. (PAN: CAUPS5234E) VS. COMMISSIONER OF INCOME-TAX (IT & TP) KOLKATA APPELLANT RESPONDENT & S.A. NO.102/KOL/2019 IN I.T.A. NO. 1311/KOL/2019 ASSESSMENT YEAR: 2014-15 & ITA NO.1311/KOL/2019 ASSESSMENT YEAR: 2014-15 MALAY GHOSH C/O MR. KANAI LAL GHOSH VILLAGE-DAL DALI MIDNAPORE WEST BENGAL-721127 (PAN: AIDPG0136A) VS. COMMISSIONER OF INCOME-TAX (IT & TP) KOLKATA APPELLANT RESPONDENT & S.A. NO.104/KOL/2019 IN I.T.A. NO. 1315/KOL/2019 ASSESSMENT YEAR: 2014-15 & ITA NO.1315/KOL/2019 ASSESSMENT YEAR: 2014-15 DEBANJAN DASGUPTA 12 D/4 NAKTALA LANE DPP ROAD NAKTALA KOLKATA-700 047. (PAN: ATKPD5968J) VS. COMMISSIONER OF INCOME-TAX (IT & TP) KOLKATA APPELLANT RESPONDENT DATE OF HEARING 27.09.2019 DATE OF PRONOUNCEMENT .11.2019 FOR THE APPELLANT MS. SHERRY GOYAL ADVOCATE FOR THE RESPONDENT SHRI JAYANTA KHANNA JCIT 3 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 ORDER PER SHRI A.T.VARKEY JM ALL THESE APPEALS AND STAY APPLICATIONS PREFERRED B Y THE DIFFERENT ASSESSEES ARE AGAINST ORDERS OF THE LD. CIT(IT & TP) KOLKATA P ASSED U/S. 263 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) ALL DAT ED 29.03.2019FOR AY 2014-15. 2. AT THE OUTSET ITSELF IT WAS BROUGHT TO OUR NOTI CE THAT THE ISSUE INVOLVED IS NO LONGER RES INTEGRA AND THEREFORE AFTER HEARING BOTH THE PARTIES WE ARE INCLINED TO DISMISS ALL THE STAY APPLICATIONS FILED BY THE ASSESSEE AND DISPOSE OF ALL THE APPEALS IN ITA NOS. 1304 1306 1308. 1311 1314 & 1315/KOL/2019.THE COMMON F ACTS PERMEATING IN ALL THE APPEALS ARE THAT ALL THE ASSESSEES ARE THE EMPLOYEES OF IB M INDIA PVT. LTD. (HEREINAFTER REFERRED TO AS IBM) WHO HAVE BEEN SENT TO SWITZERLAND ON COMP ANYS FOREIGN ASSIGNMENT. THE UNDISPUTED FACTS ARE THAT THE RESIDENTIAL STATUS OF ALL THE ASSESSEES FOR THE RELEVANT YEAR IS NON-RESIDENT IN TERMS OF SECTION 6 OF THE ACT AND THAT THEY ACTUALLY RENDERED SERVICES OUTSIDE INDIA DURING THE PERIOD UNDER CONSIDERATION . THE EMPLOYER VIZ. IBM DEDUCTED TAX AT SOURCE U/S 192 ON THE ENTIRE GROSS SALARY EARNED BY THE ASSESSEES. THE ASSESSEES HOWEVER CLAIMED IN THEIR RESPECTIVE RETURNS OF INCOME THAT THE FOREIGN ASSIGNMENT ALLOWANCE COMPONENT INTER ALIA INCLUDED IN THE GROSS SALARY W AS RECEIVED BY THEM OUTSIDE INDIA AND THAT TOO FOR THE SERVICES RENDERED OUTSIDE INDIA AN D THEREFORE FELL OUTSIDE THE AMBIT OF TOTAL INCOME U/S. 5(2) OF THE ACT. IN THE ASSESSMENTS COM PLETED U/S 143(3) THE AO ACCEPTED THE ASSESSEES CLAIM FOR EXCLUSION OF SUCH FOREIGN ASSI GNMENT ALLOWANCE FROM THE AMBIT OF TOTAL INCOME. THIS ACTION OF THE AO HAS BEEN INTERFERED W ITH BY THE LD. CIT U/S. 263 OF THE ACT ON THE GROUND THAT AOS ACTION IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVENUE. THE LEGAL ISSUE RAISED BY ALL THE ASSESSEES IN THE PRESENT A PPEALS IS AGAINST THE ACTION OF THE LD. CIT TO USURP THE REVISIONAL JURISDICTION U/S. 263 OF THE A CT. SINCE THE FACTS AND QUESTIONS OF LAW INVOLVED IN ALL THESE CASES ARE IDENTICAL WE TAKE THE APPEAL OF SHRI BODHISATTVA CHATTOPADHYAY IN ITA NO.1314/KOL/2019 AS THE LEAD CASE THE RESULT OF WHICH WILL BE APPLIED MUTATIS MUTANDIS IN ALL OTHER CASES. 3. BRIEFLY STATED THE FACTS OF THE LEAD CASE IS THA T THE ASSESSEE (SHRI BODHISATTVA CHATTOPADHYAY) WAS SENT BY HIS EMPLOYER IBM ON SHO RT TERM ASSIGNMENT TO SWITZERLAND 4 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 FOR WHICH HE WAS STATIONED THERE FOR 349 DAYS DURIN G THE RELEVANT FINANCIAL YEAR 2013-14. SINCE HIS STAY OUTSIDE INDIA FOR THE PURPOSE OF EMP LOYMENT EXCEEDED 182 DAYS DURING THE RELEVANT YEAR HIS RESIDENTIAL STATUS FOR THE YEAR UNDER CONSIDERATION WAS NON-RESIDENT. DURING THE YEAR THE ASSESSEE HAD RECEIVED THE FOLL OWING EMOLUMENTS FROM IBM. A) GROSS SALARY RECEIVED IN INDIA - RS.18 65 7 67/- AND B) FOREIGN ALLOWANCES ON ACCOUNT OF THE INTERNATIONAL ASSIGNMENT RECEIVED IN SWITZERLAND - RS.42 97 092/- 4. IT IS NOTED THAT IBM HAD DEDUCTED TAX AT SOURCE (TDS) OF RS.16 94 180/- ON THE ENTIRE EMOLUMENTS PAID TO THE ASSESSEE INCLUDING THE FOREI GN ASSIGNMENT ALLOWANCE U/S. 192(1) OF THE ACT. THE ASSESSEE FILED HIS RETURN OF INCOME F OR THE ASST. YEAR 2014-15 DECLARING TAXABLE INCOME OF RS.17 52 360/- (COMPRISING ONLY O F THE SALARY OF RS.18 65 767/- RECEIVED IN INDIA) AFTER CLAIMING THE DEDUCTION OF RS.1 01 4 05/- UNDER CHAPTER VIA OF THE ACT. AFTER CLAIMING THE CREDIT OF TAXES DEDUCTED AT SOURCE BY THE EMPLOYER U/S 192 THE ASSESSEE CLAIMED A REFUND OF RS.13 27 800/- IN HIS RETURN OF INCOME. ACCORDING TO THE ASSESSEE THE FOREIGN ASSIGNMENT ALLOWANCE OF RS.42 97 092/- HAD BEEN RECEIVED OUTSIDE INDIA IN CONNECTION WITH THE SERVICES HE RENDERED OUTSIDE IN DIA AND THEREFORE HE DID NOT OFFER IT TO TAX IN THE RETURN OF INCOME FILED IN INDIA SINCE IT DID NOT FORM PART OF HIS TOTAL INCOME CHARGEABLE U/S. 5(2) OF THE ACT. 5. WE NOTE FROM THE DOCUMENTS ON RECORD THAT THE CA SE OF THE ASSESSEE WAS SELECTED FOR COMPLETE SCRUTINY UNDER CASS WHEREIN ONE OF THE PAR AMETERS FOR SELECTION WAS THAT THE INCOME DECLARED UNDER THE HEAD SALARY IN THE RETU RN OF INCOME WAS LOWER THAN THE SALARY REPORTED IN FORM 26AS. IN THE COURSE OF ASSESSMENT THE AO CALLED FOR SEVERAL DETAILS IN HIS NOTICE ISSUED U/S 142(1) DATED 11.11.2016 ALONG WIT H WRITE-UPS ON THE ISSUES FOR WHICH THE ASSESSEES CASE WAS SELECTED UNDER CASS. BEFORE THE AO THE ASSESSEE EXPLAINED THE MODALITIES OF RECEIPT OF FOREIGN ASSIGNMENT ALLOWAN CE THROUGH HIS TCC ISSUED BY AXIS BANK WHICH SHOWED THAT THE FOREIGN ASSIGNMENT ALLOWANCE WAS RECEIVED OUTSIDE INDIA. THE ASSESSEE ALSO FURNISHED A CERTIFICATE FROM HIS EMPL OYER THAT SUCH ALLOWANCE WAS PAID FOR THE SERVICES RENDERED OUTSIDE INDIA. ADDITIONALLY THE ASSESSEE FURNISHED THE SWITZERLAND TAX DOCUMENTS FOR 2013 & 2014 EVIDENCING THAT THE FOREI GN ASSIGNMENT ALLOWANCE HAD BEEN 5 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 TAXED IN SWITZERLAND. TAKING NOTE OF THE REPLIES FU RNISHED BY THE ASSESSEE THE AO IN HIS ASSESSMENT ORDER DATED 23.12.2016 HAD ACCEPTED THE RETURN OF INCOME (ROI) FILED BY THE ASSESSEE CLAIMING THE ASSIGNMENT ALLOWANCE RECEIVED BY THE ASSESSEE AT SWITZERLAND AS NOT TAXABLE IN INDIA IN TERMS OF SECTION 5(2) OF THE AC T. THE AO ACCORDINGLY ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.17 61 110/-. SUBSEQUEN T TO PASSING OF THE ORDER U/S 143(3)OF THE ACT THE LD. CIT ISSUED SHOW CAUSE NOTICE DT. 1 3-03-2019 TO THE ASSESSEE STATING THAT THE TAXABILITY OF THE FOREIGN ASSIGNMENT ALLOWANCE REQU IRED RECONSIDERATION IN VIEW OF THE PROVISIONS OF SECTION 5(2)(B) OF THE ACT WHICH WAS HELD ERRONEOUSLY TO BE NON-TAXABLE BY THE AO IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. 6. IN REPLY THE ASSESSEE FURNISHED HIS OBJECTIONS TO THE SCN. THE LD. CIT HOWEVER DID NOT AGREE WITH THE CONTENTIONS PUT FORTH BY THE ASS ESSEE. ACCORDING TO THE CIT THE CONTRACT OF EMPLOYMENT OF THE ASSESSEE WAS WITH IBM WHICH WA S LOCATED IN INDIA AND THEREFORE ANY AND ALL RIGHTS ARISING FROM THE CONTRACT INTER ALIA INCLUDING THE RIGHT TO RECEIVE SALARY AROSE ONLY IN INDIA. REFERRING TO THE TERM RECEIVE OR DEEMED TO RECEIVE AS USED IN SECTION 5(2)(B)OF THE ACT THE LD. CIT OBSERVED THAT THE SI TUS OF INCOME RECEIVED WOULD BE THE PLACE OF DELIVERY OF CASH/CHEQUE. ACCORDING TO LD. CIT THE POINT OF RECEIPT IS THE POINT OF PAYMENT. HE OBSERVED THAT THE INCOME WAS RECEIVED BY THE ASSESSEE IN INDIA WHEN THE EMPLOYER TRANSFERRED HIS FOREIGN ASSIGNMENT ALLOWAN CE FROM THEIR BANK ACCOUNT HELD IN BANGALORE TO AXIS BANKS NOSTRO ACCOUNT FOR TOP-UP TO THE TRAVEL CURRENCY CARD (TCC) WHICH WAS EARLIER MADE AVAILABLE TO THE ASSESSEE IN INDIA. HE THUS HELD THAT IN REAL TERMS THE INCOME WAS RECEIVED IN INDIA. TO SUPPORT HIS CASE THE LD. CIT FURTHER REFERRED TO THE SALARY STATEMENT OF THE ASSESSEE WHEREIN THE ALLOWANCE WAS DENOMINATED IN INDIAN CURRENCY. THE LD. CIT ALSO EMPHASIZED THAT THE ASSESSEE HAD NOT O FFERED THE FOREIGN ASSIGNMENT ALLOWANCE IN SWITZERLAND NOR CLAIMED THE BENEFIT OF THE DTAA AND THEREFORE THE ASSESSEE HAD ALLEGEDLY NOT PAID TAXES ON THE FOREIGN ASSIGNMENT ALLOWANCE EITHER IN INDIA OR IN SWITZERLAND. RELYING ON THE DECISION OF THIS TRIBUN AL IN THE CASE OF TAPAS KR BANDOPADHYAY VS DDIT (159 ITD 309) THE LD. CIT OBSERVED THAT TH E INCOME PAID/LOADED IN TCC WAS ACTUALLY RECEIVED IN INDIA AND HENCE TAXABLE IN TER MS OF SECTION 5(2)(A) OF THE ACT. THE LD CIT IN HIS ORDER U/S. 263 OF THE ACT DATED 29.03.20 19 THUS CONCLUDED THE ORDER PASSED BY THE AO U/S. 143(3) OF THE ACT DATED 23.12.2016 FOR AY 2 014-15 IS ERRONEOUS AND PREJUDICIAL TO 6 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 THE INTEREST OF REVENUE SINCE IN HIS OPINION THE AS SESSMENT ORDER WAS PASSED WITHOUT EXAMINING THE LEGAL ISSUES INVOLVED AND INTERPRETAT ION EXAMINATION OF MATERIAL ON RECORD ETC. AND ACCEPTING THE ASSESSEES CLAIM THAT THE IN COME OF RS.42 97 092/- HAD NOT BEEN RECEIVED IN INDIA. INVOKING EXPLANATION (2) OF SECT ION 263OF THE ACT THE LD. CIT SET ASIDE THE ASSESSMENT ORDER OF THE AO DIRECTING HIM TO PAS S A FRESH ASSESSMENT ORDER AFTER MAKING NECESSARY ENQUIRIES ON ALL THE ISSUES INCLUDING TH E POINTS ON WHICH THE ASSESSEE HAS NOT FURNISHED AS DISCUSSED SUPRA AFTER EXAMINING THE V ARIOUS CASE LAWS AND CORRECT INTERPRETATION OF THE LAW IN THE FACTS OF THE CASE TO EXAMINE AND DECIDE THE ISSUE OF EXEMPTION FROM TAXATION ON SALARY AMOUNTING TO RS.4 2 97 092/-. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT THE ASSESSEE IS IN APPEAL BEF ORE US. 7. IN THE GROUNDS TAKEN IN THE APPEAL THE ASSESSEE HAS CHALLENGED THE LEGAL VALIDITY OF USURPATION OF REVISIONAL JURISDICTION BY THE LD. CI T U/S 263 OF THE ACT. ACCORDING TO ASSESSEE THE LD. CIT HAS WRONGLY EXERCISED THE REVISIONAL JU RISDICTION U/S 263OF THE ACT SINCE THE AO'S ORDER ON THIS ISSUE CANNOT BE HELD TO BE ERRON EOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS THE ASSESSEES CASE THAT THE AO PASSED THE ASSESSMENT ORDER AFTER CONSIDERING THE ISSUE OF TAXABILITY OF FOREIGN ALLO WANCE AND IT WAS ONLY AFTER THE AO EXAMINED THE FACTS AND THE RELEVANT DOCUMENTS THAT THE AO TOOK A PLAUSIBLE VIEW ON THIS ISSUE WHICH IS IN CONSONANCE WITH THIS TRIBUNALS VIEW LAID ON THIS PRECISE ISSUE IN THE CASE OF DCIT VS SUDIPMAITY & OTHERS IN ITA NOS. 428 41 6 & 425/KOL/2017. ACCORDING TO THE ASSESSEE THEREFORE ON THE FACTS OF THE CASE THE A OS ACTION OF ACCEPTING THE ASSESSEES CLAIM FOR EXCLUSION OF FOREIGN ALLOWANCE FROM THE COMPUTA TION OF TOTAL INCOME CANNOT BE SAID TO AN UNSUSTAINABLE VIEW IN LAW AND HENCE THE ASSESSM ENT ORDER CANNOT BE HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE WHICH IS A CONDITION PRECEDENT TO USURP/INVOKE THE REVISIONAL JURISDICTION U/S 263 OF THE ACT BY THE LD. CIT. IN THE CIRCUMSTANCES SINCE THE CONDITIONS PRECEDENT TO USU RP THE REVISIONARY JURISDICTION U/S 263OF THE ACT IS CLAIMED TO BE ABSENT IN THE PRESENT CASE THE ASSESSEE HAS CONTENDED THAT THE IMPUGNED ORDER IS WHOLLY WITHOUT JURISDICTION AND I S THEREFORE BAD IN LAW. 8. HAVING HEARD BOTH THE PARTIES AND ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE LD. CIT INVOKED THE REVISIONARY JURISDICTION ON 7 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 THE BROAD ALLEGATION THAT THE AO HAD FAILED TO COND UCT ENQUIRIES WHICH THE FACTS OF THE CASE REQUIRED THE AO TO CONDUCT. ACCORDING TO LD. CIT BE FORE PASSING OF THE ASSESSMENT ORDER THERE WAS LACK OF APPLICATION MIND TO THE FACTS AND INCORRECT APPLICATION OF APPLICABLE LEGAL PROVISIONS IN THE FACTS OF THE CASE. AS A RESULT TH E AO PASSED AN ORDER WHICH IN THE OPINION OF LD. CIT WAS UNSUSTAINABLE IN LAW AND THEREFORE L IABLE FOR REVISION U/S 263 OF THE ACT. BEFORE ADJUDICATING THE ISSUES ARISING FROM THE IMP UGNED ORDER OF THE LD. CIT WE HAVE TO REMIND OURSELVES AS TO THE SCOPE OF REVISIONAL JURI SDICTION U/S. 263 OF THE ACT. FOR THAT LET US TAKE THE GUIDANCE OF JUDICIAL PRECEDENCE LAID DO WN BY THE HON'BLE APEX COURT IN MALABAR INDUSTRIES LTD. VS. CIT [2000] 243 ITR 8 3(SC) WHEREIN THEIR LORDSHIP HAVE HELD THAT TWIN CONDITIONS SHOULD BE SATISFIED BEFORE JUR ISDICTION U/S 263 OF THE ACT IS EXERCISED BY THE LD. CIT. THE TWIN CONDITIONS WHICH NEED TO BE S ATISFIED ARE THAT (I) THE ORDER OF THE ASSESSING OFFICER MUST BE ERRONEOUS AND(II) AS A CO NSEQUENCE OF PASSING AN ERRONEOUS ORDER PREJUDICE IS CAUSED TO THE INTEREST OF THE R EVENUE. IN THE FOLLOWING CIRCUMSTANCES THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS I.E. (I ) IF THE ASSESSING OFFICER'S ORDER WAS PASSED ON ASSUMPTION OF INCORRECT FACTS; OR ASSUMPT ION OF INCORRECT LAW; (II) ASSESSING OFFICER'S ORDER IS IN VIOLATION OF THE PRINCIPLES O F NATURAL JUSTICE; (III) IF THE AO'S ORDER IS PASSED BY THE WITHOUT APPLICATION OF MIND; OR (IV) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM. IN THE CIRCUMSTANCES ENUMERATED ABOVE O NLY THE ORDER PASSED BY THE ASSESSING OFFICER CAN BE TERMED AS ERRONEOUS FOR THE PURPOSE OF S.263 OF THE ACT. COMING NEXT TO THE SECOND LIMB THE AO'S ERRONEOUS ORDER CAN BE REVISE D BY THE LD. CIT ONLY WHEN IT IS SHOWN THAT THE SAID ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE. WHEN THIS ASPECT IS EXAMINED ONE HAS TO UNDERSTAND WHAT IS PREJUDICIAL TO THE IN TEREST OF THE REVENUE. THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES (SU PRA) HELD THAT THIS PHRASE I.E. 'PREJUDICIAL TO THE INTEREST OF THE REVENUE'' HAS T O BE READ IN CONJUNCTION WITH AN 'ERRONEOUS' ORDER PASSED BY THE ASSESSING OFFICER. THE HONBLE SUPREME COURT HELD THAT FOR INVOKING POWERS CONFERRED BY S.263; THE CIT SHOULD NOT ONLY SHOW THAT THE AO'S ORDER IS ERRONEOUS AS A RESULT OF ANY OF THE SITUATIONS ENUMERATED ABO VE BUT CIT MUST ALSO FURTHER SHOW THAT AS A RESULT OF AN ERRONEOUS ORDER SOME LOSS IS CAUSED TO THE INTEREST OF THE REVENUE. THEIR LORDSHIP IN THE SAID JUDGMENT HELD THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICI AL TO THE INTEREST OF THE REVENUE. IT WAS FURTHER OBSERVED THAT WHEN THE ASSESSING OFFICER AD OPTS ONE OF THE COURSE PERMISSIBLE IN 8 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 LAW AND IT HAS RESULTED IN LOSS TO THE REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE LD. CIT DOES NOT AGREE IT CANNOT BE TREATED AS AN ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW . 9. IN THE GIVEN FACTS OF THE PRESENT CASE WE FIND THAT THE PRIMARY FAULT FOUND BY THE LD. CIT TO INTERFERE WITH THE ORDER OF AO WAS THE ALLEG ED NON-EXAMINATION OF THE RELEVANT FACTS CONCERNING TAXABILITY OF THE FOREIGN ASSIGNMENT PAI D THROUGH TCC. WE ARE AWARE OF THE FACT THAT THE ASSESSING OFFICER'S ROLE WHILE FRAMING AN ASSESSMENT IS NOT ONLY AS THAT OF AN ADJUDICATOR BUT HE IS ALSO AN INVESTIGATOR. THE AO HAS A DUAL ROLE TO PERFORM I.E. HE IS AN INVESTIGATOR AS WELL AS AN ADJUDICATOR AND THEREFOR E IF HE FAILS IN ANY ONE OF THE TWO ROLES AS AFORE-STATED HIS ORDER CAN BE TERMED AS ERRONEOUS. FROM THE ORDER OF THE LD. CIT WE NOTE THAT HE FIRSTLY FOUND FAULT WITH THE AO'S ROLE OF A N INVESTIGATOR BECAUSE IN HIS SUBJECTIVE OPINION THE AO DID NOT PROPERLY CONDUCT THE INVESTI GATION OF THE RELEVANT FACTS AND LEGAL ASPECTS CONCERNING TAXABILITY OF FOREIGN ASSIGNMENT ALLOWANCE. WE HOWEVER NOTE THAT THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY ASSESSMEN T ON THE CASS PARAMETER OF SALARY INCOME SHOWN IN ITR IS LESS THAN THE SALARY INCOME AS PER FORM 26AS . WE FIND THAT THE ASSESSEES EMPLOYER IBM HAD DEDUCTED ON THE GROSS SALARY INTER ALIA INCLUDING FOREIGN ASSIGNMENT ALLOWANCE AND THE TDS WAS REPORTED IN ST ATEMENT 26AS IN THE ASSESSEES NAME. IN THE RETURN FURNISHED THE ASSESSEE HOWEVER DID N OT INCLUDE THE SAID ALLOWANCE IN HIS TOTAL INCOME ON THE PLEA THAT IT WAS NOT INCOME EARNED OR ACCRUED IN INDIA AND THEREFORE NOT FORMING PART OF THE TOTAL INCOME IN TERMS OF SECTIO N 5(2) READ WITH SECTION 9(1)(II) OF THE ACT. CONSEQUENTLY THEREFORE THERE APPEARED DIFFEREN CE BETWEEN THE SALARY INCOME REPORTED IN FORM 26AS WITH THE SALARY INCOME DECLARED IN THE RETURN OF INCOME. AS A RESULT THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY ASSESSMEN T FOR MAKING ENQUIRIES ABOUT SUCH DIFFERENTIAL AMOUNT. WE NOTE THAT IN THE NOTICE U/S 142(1) OF THE ACT DATED 11.11.2016 THE AO RAISED SPECIFIC QUERY REQUIRING THE ASSESSMENT T O EXPLAIN THE SAID DIFFERENCE AND FURNISH HIS EXPLANATION ALONG WITH SUPPORTING DOCUMENTS. IN RESPONSE THE LD. AR OF THE ASSESSEE FURNISHED DETAILED REPLIES THROUGH LETTERS DATED 30 .11.2016 05.12.2016&15.12.2016. IN HIS LETTER DATED 30.11.2016 AVAILABLE AT PAGES 54 TO 5 5 OF PAPER BOOK THE AR EXPLAINED DURING THE RELEVANT YEAR THE ASSESSEE WAS PHYSICALLY PRESE NT OUTSIDE INDIA FOR MORE THAN 182 DAYS 9 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 AND THEREFORE HE WAS A NON-RESIDENT UNDER SECTION 6 OF THE ACT. DRAWING ATTENTION TO SECTION 5(2) OF THE ACT HE SUBMITTED THAT THE ASSE SSEE BEING A NON-RESIDENT THE INCOME WOULD BE TAXABLE IN INDIA ONLY IF THE INCOME WAS RE CEIVED OR DEEMED TO BE RECEIVED OR ACCRUED OR DEEMED TO ACCRUE IN INDIA. THE ASSESSEE SUBMITTED THAT SINCE FOREIGN ASSIGNMENT ALLOWANCE OF RS.42 97 092/- WAS RECEIVED OUTSIDE I NDIA FOR RENDERING SERVICES IN SWITZERLAND THE SAME DID NOT FORM PART OF HIS TOTA L INCOME. THE AR OF THE ASSESSEE ALSO FURNISHED COPIES OF THE SWISS TAX DOCUMENT FOR 2013 & 2014 TO SUBSTANTIATE THAT THE ALLOWANCE RECEIVED OUTSIDE INDIA FROM THE EMPLOYER HAD SUFFERED TAX IN THE COUNTRY WHERE THE SERVICES WERE RENDERED. VIDE LETTER DATED 05.12 .2016 [PAGES 52 TO 53 OF PAPER BOOK] THE AR OF THE ASSESSEE FILED COPIES OF HIS BANK STATEME NTS IN INDIA TO SHOW THAT FOREIGN ASSIGNMENT ALLOWANCE WAS NOT RECEIVED BY THE ASSESS EE IN INDIA. THE AR ALSO FURNISHED COPY OF CERTIFICATE BY THE EMPLOYER CERTIFYING THAT THE FOREIGN ASSIGNMENT ALLOWANCE WAS PAID FOR RENDERING OF SERVICES IN SWITZERLAND. IN T HE LETTER DATED 16.12.2016 [PAGES 52 TO 53 OF PAPER BOOK] THE A/R OF THE ASSESSEE EXPLAINED T HE MODALITY OF PAYMENT OF FOREIGN ASSIGNMENT ALLOWANCE BY IBM AS UNDER: 'WE WOULD LIKE TO SUBMIT BEFORE YOUR GOODSELF THAT THE FOREIGN ASSIGNMENT ALLOWANCE PAID BY IBM INDIA PRIVATE LIMITED EMPLOYER OF THE CAPTIONED ASSESSEE TO THE INTERNATIONAL TRAVEL CARD OUTSIDE INDIA. THE SAID CARD IS DENOMINATED I N FOREIGN CURRENCYONLY AND CAN BE USED ONLY OUTSIDE INDIA. ONCE AN EMPLOYEE IS SENT ON FOR EIGN ASSIGNMENT A TRAVEL CURRENCY CARD IS ISSUED TO THE EMPLOYEE BY AXIS BANK LIMITED. UPON INSTRUCTIONS FROM IBM AXIS BANK PAYS THE AMOU NT OF FOREIGN ASSIGNMENT ALLOWANCE TO THE INTERNATIONAL TRAVEL CARD OF THE EMPLOYEE OUTSI DE INDIA THROUGH ITS NOSTRO ACCOUNT SITUATED OUTSIDE INDIA. A NOSTRO ACCOUNT IS A BANK ACCOUNT H ELD IN A FOREIGN COUNTRY BY A DOMESTIC BANK DENOMINATED IN THE CURRENCY OF THAT COUNTRY. NOSTRO ACCOUNTS ARE USED TO FACILITATE SETTLEMENT OF FOREIGN EXCHANGE AND TRADE TRANSACTIO NS. A NOSTRO ACCOUNT IS ALWAYS MAINTAINED OUTSIDE INDIA AND DENOMINATED IN FOREIGN CURRENCY. IN VIEW OF THE SAME SINCE THE FOREIGN ASSIGNMENT A LLOWANCES ARE PAID FROM NOSTRO ACCOUNT SITUATED OUTSIDE INDIA TO THE INTERNATIONAL TRAVEL CARD OUTSIDE INDIA THE SAME IS NOT TAXABLE UNDER SECTION 5(2) OF THE ACT IN CASE OF NON-RESIDE NTS. IN THIS REGARD WE HAVE ALSO ENCLOSED A LETTER ISSUED BY AXIS BANK CONFIRMING THAT THE AMOU NT IS CREDITED TO THE INTERNATIONAL TRAVEL CARD OF THE EMPLOYEES OUTSIDE INDIA THROUGH THE NOS TRO ACCOUNT MAINTAINED OUTSIDE INDIA AS ANNEXURE 1 IN CONNECTION WITH THE SAME WE WOULD LIKE 10 REFER TO THE LETTER FROM AXIS BANKISSUED IN CASE OF AN EMPLOYEE OF IBM INDIA PRIVATE LIMITED ( IBM) MRSUDIPTAMAITY (COPY ENCLOSED AS ANNEXURE 2) WHEREIN AXIS BANK HAS CLARIFIED THE MET HODOLOGY OF TRANSFER OF FUNDS TO THE AXIS TRAVEL CARD OF EMPLOYEES OF IBM FROM ITS NOSTRO ACC OUNT WITH ZURCHERKANTONAL BANK (ZKB) OUTSIDE INDIA. THE LETTER STATES THAT THE FUNDS ARE TRANSFERRED TO THE INTERNATIONAL TRAVEL CARD OF THE EMPLOYEE OUTSIDE INDIA UPON INSTRUCTION OF IBMF ROM THE NOSTRO ACCOUNT MAINTAINED 10 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 OUTSIDE INDIA. THE MODALITY OF PAYMENT AS CONFIRMED BY AXIS BANK LTD FOR SUDIPTAMAITY IS SAME FOR THE CAPTIONED ASSESSEE. ' 10. FROM THE FOREGOING DISCUSSION IT IS ABUNDANTLY CLEAR THAT PRIOR TO COMPLETION OF THE ASSESSMENT U/S 143(3)OF THE ACT THE AO HAD REQUIRE D THE ASSESSEE TO FURNISH HIS EXPLANATIONS WITH REGARD TO HIS CLAIM FOR EXCLUSION OF FOREIGN ASSIGNMENT ALLOWANCE FROM THE AMBIT OF HIS TAXABLE TOTAL INCOME IN INDIA. IN RESPONSE THE LD. AR OF THE ASSESSEE HAD FURNISHED BEFORE THE AO THE RELEVANT DOCUMENTARY EV IDENCES AND ALSO SUBSTANTIATED HIS EXPLANATIONS IN SUPPORT OF HIS CONTENTIONS BY PLACI NG RELIANCE ON THE RELEVANT APPLICABLE LEGAL PROVISIONS OF THE ACT. THE LD. AR OF THE ASSE SSEE HAD ALSO FURNISHED BEFORE THE AO REQUISITE DOCUMENTARY EVIDENCES WHICH PROVED THE FO REIGN ASSIGNMENT ALLOWANCE WHICH WAS EXCLUDED FROM THE AMBIT OF TOTAL INCOME TAXABLE IN INDIA HAD SUFFERED APPLICABLE TAX IN SWITZERLAND BEING THE COUNTRY WHERE THE SERVICES WE RE ACTUALLY RENDERED. HAVING CONSIDERED THESE EVIDENCES EXPLANATIONS AND APPLICABLE LEGAL PROVISIONS THE AO RECORDED THE SPECIFIC FINDING THAT THE ASSESSEE WAS IN INDIA ONLY FOR 16 DAYS AND THE REST OF THE PERIOD HE WAS IN ASSIGNMENT TO SWITZERLAND AND HAD RECEIVED FOREIGN ASSIGNMENT ALLOWANCE . ALL THESE FACTS AND DOCUMENTS CONSIDERED HARMONIOUSLY GO ON TO SHOW THAT THE AO HAD INDEED CALLED FOR INFORMATION AND DOCUMENTS AND AFTER DUE APPLICATION OF MIND PASSED THE ASSESSMENT ORDER U/S 143(3) OF THE ACT IN WHICH HE ACCEPTED THE ASSE SSEES PLEA FOR EXCLUSION OF FOREIGN ASSIGNMENT ALLOWANCE WAS NOT CHARGEABLE TO TAX IN I NDIA. IN SUCH A SCENARIO THE FINDING RECORDED BY THE LD. CIT THAT THE ACTION OF THE AO I N ALLOWING THE AMOUNT OF RS.42 97 092/- AS EXEMPT FROM TAXATION (I.E. THE FOREIGN ASSIGNMEN T ALLOWANCE) IS IN VIOLATION OF THE PROVISION OF SEC. 5(2)(A) OF THE ACT WITHOUT ANY EN QUIRY IS FACTUALLY ERRONEOUS. 11. IN ORDER TO UNDERSTAND THE DIFFERENCE BETWEEN ' LACK OF INQUIRY' AND 'INADEQUATE INQUIRY' AND WHEN IT CAN BE TERMED AS ERRONEOUS LE T US LOOK AT THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS J.L. MORR ISON (I) LTD (366 ITR 593) WHEREIN ON SIMILAR FACTS & CIRCUMSTANCES THEIR LORDSHIPS EXPL AINED THE DIFFERENCE BETWEEN THE TWO AS FOLLOWS:- '14. THE CASE OF THE CIT IN HIS NOTICE DATED 26TH N OVEMBER 2009 UNDER SECTION 263 OF THE ACT READS AS FOLLOWS :-- 11 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 '1. DURING THE SAID A.Y. YOU HAVE RECEIVED A SUM O F RS.18.00 CRORE FROM M/S. BEIERDORF AG. GERMANY (BDF) AS ONE-TIME SETTLEMENT FOR TERMINATIO N OF CONTRACTS OF PRODUCING AND SELLING OF THE PRODUCTS OF THE LATTER COMPANY IN INDIA AS WELL AS ISSUING A NOC FOR SETTING UP A 100% SUBSIDIARY BY THEM IN INDIA. THE SAID RECEIPT SHOUL D HAVE BEEN CONSIDERED AS INCOME IN THE AMBIT OF EITHER SEC.28 OR SEC.56 IF THE SAME IS CO NSIDERED AS VOLUNTARY PAYMENT ON A GOODWILL GESTURE AS POINTED OUT BY YOU. BUT THE SAID RECEIP T HAS BEEN ALLOWED TO BE TRANSFERRED DIRECTLY TO CAPITAL RESERVE ACCOUNT WHILE PASSING THE ASSESS MENT ORDER FOR THE A.Y. 2006-07.' .... 76. HE DREW OUR ATTENTION TO THE NOTICE UNDER SECTI ON 142(1) OF THE ACT AND IN PARTICULAR TO THE ANNEXURE THERETO FROM WHICH IT WOULD APPEAR THAT TH E ASSESSING OFFICER WANTED THE ASSESSEE TO 'FURNISH IN WRITING AND VERIFIED IN THE PRESCRIBED MANNER INFORMATION CALLED FOR AS PER ANNEXURES AND ON THE POINTS OR MATTERS SPECIFIED TH EREIN BEFORE ME AT MY OFFICE AT 18 RABINDRASARANI PODDAR COURT 5TH FLOOR ON 04.02.2 008 AT 11.30 AM.'. THE ANNEXURE TO THE NOTICE UNDER SECTION 142(1) OF THE ACT READS AS FOL LOWS:-- 'REQUISITION U/S 142(1) OF THE IT ACT '61. M/S. J. L. MORISON (INDIA) LTD. - AY 06-07. (1) A WRITE-UP ON RECEIPT OF RS.18 CRORE FROM FOREIGN C O. (2) 77. MR. PODDAR ALSO DREW OUR ATTENTION TO THE REPLY DATED 19TH MARCH 2008 GIVEN BY THE ASSESSEE TO THE NOTICE DATED 21ST JANUARY 2008 UN DER SECTION 142(1) OF THE ACT. HE CONTENDED THAT ALL THE REQUISITE PARTICULARS WERE FURNISHED T OGETHER WITH DOCUMENTS. THEREAFTER THE MATTER WAS HEARD FROM TIME TO TIME BY THE ASSESSING OFFICER AS WOULD APPEAR FROM THE LIST OF DATES SUBMITTED BY MR. NIZAMUDDIN LEARNED ADVOCATE FOR THE APPELLANT. FROM THE LIST OF DATES IT APPEARS THAT ON 21ST JANUARY 2008 NOTICE UNDER SECTION 142(1) WAS ISSUED. ON 4TH FEBRUARY 2008 THE ASSESSEE APPEARED AND FIL ED DETAILS AND PARTICULARS. ON 18TH FEBRUARY 2008 4TH MARCH 2008 19TH MARCH 2008 A ND 26TH MARCH 2008 THE MATTER WAS HEARD. THE ASSESSING OFFICER HAS RECORDED IN THE OR DER SHEET THAT THE CASE WAS DISCUSSED AND THE OFFICIAL DOCUMENTS AND PARTICULARS WERE FILED B Y THE ASSESSEE. 78. MR. PODDAR CONTENDED THAT THE FACT THAT THE ASS ESSING OFFICER HAD ISSUED THE NOTICE UNDER SECTION 142(1) OF THE ACT REQUIRING THE ASSES SEE TO GIVE PARTICULARS AND TO FURNISH DOCUMENTS IN RESPECT OF SEVENTEEN ITEMS INDICATES T HAT THE ASSESSING OFFICER HAD IN FACT APPLIED HIS MIND. WITHOUT APPLICATION OF MIND ACCORDING TO HIM THE AFORESAID NOTICE ITSELF COULD NOT HAVE BEEN ISSUED. THE FACT THAT ALL THE REQUISITE P APERS REQUIRED BY THE ASSESSING OFFICER WERE DULY FURNISHED AND THE MATTER WAS DISCUSSED FROM TI ME TO TIME ON THE VARIOUS DAYS INDICATED ABOVE APPEARING FROM THE ASSESSMENT RECORDS PRODUC ED BY MR. NIZAMUDDIN LEAVE NO SCOPE FOR ANY DOUBT AS REGARDS THE FACT THAT THE ASSESSING OF FICER AFTER SATISFYING HIMSELF PASSED THE ORDER DATED 28TH MARCH 2008. 79. MR. PODDAR ALSO DREW OUR ATTENTION TO THE IMPUG NED JUDGMENT OF THE LEARNED TRIBUNAL WHICH READS AS FOLLOWS:-- 12 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 'THEREFORE ON COMBINED READING OF THE ASSESSMENT O RDER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ALONG WITH THE ORDER SHEET ENTRIES I T CAN BE SAID THAT THE A.O. HAD CARRIED OUT SUCH ENQUIRY AS THE CIRCUMSTANCES WARRANTED AND PER MITTED BEFORE ACCEPTING THE CLAIM OF THE ASSESSEE AND PASSING ASSESSMENT ORDER ACCORDINGLY. IT WAS AN ENTIRELY DIFFERENT MATTER THAT THE COMMISSIONER DID NOT AGREE WITH THE CONCLUSION DERI VED BY THE A.O. FROM THE ENQUIRIES MADE. FAILURE TO CARRY OUT AN ENQUIRY IS ONE THING AND IN SUCH CASES THE COMMISSIONER WOULD BE JUSTIFIED IN SAYING THAT THE MERE FAILURE TO MAKE A NY ENQUIRY WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT IT WOULD NOT BE O PEN TO HIM TO HOLD THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF T HE REVENUE MERELY BECAUSE HE IS OF THE OPINION THAT SOME MORE ENQUIRIES ARE REQUIRED TO BE MADE AND HE COULD NOT AGREE WITH THE CONCLUSION ARRIVED AT BY THE A.O. FROM THE ENQUIRIE S MADE. IT WAS AFTER VERIFYING THE BOOKS OF ACCOUNT AND VARIOUS MATERIALS GATHERED FROM THE ASS ESSEE DURING ASSESSMENT PROCEEDING AND AFTER CONSIDERING THE EXPLANATION OFFERED BY THE AS SESSEE THAT THE A.O. HAD EXERCISED A JUDICIAL DISCRETION IN THE MATTER WHILE COMPLETING THE ASSES SMENT U/S 143(3) OF THE ACT. IN SUCH CIRCUMSTANCES THE VIEW TAKEN BY THE A.O. CANNOT BE SAID TO BE PREJUDICIAL TO THE REVENUE NOR CAN IT BE SAID TO BE ERRONEOUS SIMPLY BECAUSE IN HI S ORDER THE A.O. DID NOT MAKE ANY ELABORATE DISCUSSIONS IN THAT REGARD.' 80. MR. PODDAR CONTENDED THAT NEITHER BEFORE THE TR IBUNAL NOR IN THE PRESENT APPEAL HAS ANY QUESTION HAS BEEN SUGGESTED THAT THE ASSESSMENT ORD ER WAS BAD BECAUSE THE SAME DID NOT DISCLOSE ANY REASONS. THE CONTENTION RAISED AND THE JUDGMENTS CITED BY MR. NIZAMUDDIN AS REGARDS EXERCISE OF POWER U/S. 263 OF THE ACT ARE MISCONCEIVED AND ALSO OUT OF THE CONTEXT. 81. MR. PODDAR CONTENDED THAT THE FINDING OF THE LE ARNED TRIBUNAL THAT THE ORDER DATED 28TH MARCH 2008 WAS NOT PASSED WITHOUT APPLICATION OF M IND HAS NOT BEEN CHALLENGED BEFORE THIS COURT. NO ATTEMPT FAR LESS ANY SERIOUS ATTEMPT WAS MADE ON BEHALF OF THE REVENUE TO DEMONSTRATE THAT THE ORDER PASSED ON 28TH MARCH 20 08 BY THE ASSESSING OFFICER WAS WRONG EITHER ON FACTS OR LAW. THE APPELLANT HAS ALSO NOT BEEN ABLE NOR IN FACT HAS MADE ANY ATTEMPT TO ESTABLISH THAT THE FINDING OF THE LEARNED TRIBUNAL THAT THE ORDER DATED 28TH MARCH 2008 WAS NOT PASSED WITHOUT THE APPLICATION OF MIND IS BASED OTH ERWISE THAN ON EVIDENCE. ON THE CONTRARY THE RECORDS OF ASSESSMENT THE LIST OF DATES PRODUC ED BY MR. NIZAMUDDIN GO TO ESTABLISH THAT THE ASSESSMENT ORDER WAS PASSED AFTER DUE APPLICATION O F MIND. 82. MR. PODDAR CONTENDED THAT THERE IS NO PROVISION IN THE INCOME TAX ACT WHICH REQUIRES THE ASSESSING OFFICER WHILE ACCEPTING THE CLAIM OF THE ASSESSEE TO PASS A REASONED ORDER. THE REASONS ACCORDING TO HIM ARE REQUIRED ONLY WHEN A N ISSUE IS DECIDED AGAINST THE ASSESSEE. HE ALSO DREW OUR ATTENTION TO THE JUDGMENT IN THE CASE OF S.S GADGIL V. LAL & CO. [1964] 53 ITR 231 WHEREIN THE APEX COURT HELD AS FOLLOWS :-- 'A PROCEEDING FOR ASSESSMENT IS NOT A SUIT FOR ADJU DICATION OF A CIVIL DISPUTE. THAT AN INCOME TAX PROCEEDING IS IN THE NATURE OF A JUDICIAL PROCEEDIN G BETWEEN CONTESTING PARTIES IS A MATTER WHICH IS NOT CAPABLE OF EVEN A PLAUSIBLE ARGUMENT. THE INCOME TAX AUTHORITIES WHO HAVE POWER TO ASSESS AND RECOVER TAX ARE NOT ACTING AS JUDGES DECIDING A LITIGATION BETWEEN THE CITIZEN AND THE STATE: THEY ARE ADMINISTRATIVE AUTHORITIES WHOS E PROCEEDINGS ARE REGULATED BY STATUTE BUT WHOSE FUNCTION IS TO ESTIMATE THE INCOME OF THE TAX PAYER AND TO ASSESS HIM TO TAX ON THE BASIS OF THAT ESTIMATE. TAX LEGISLATION NECESSITATES THE SET TING UP OF MACHINERY TO ASCERTAIN THE TAXABLE INCOME AND TO ASSESS TAX ON THE INCOME BUT THAT D OES NOT IMPRESS THE PROCEEDING WITH THE CHARACTER OF AN ACTION BETWEEN THE CITIZEN AND THE STATE.' 13 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 83. HE ALSO DREW OUR ATTENTION TO THE JUDGMENT IN T HE CASE OF CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 108 /71 TAXMAN 585 (BOM.) 'THE INCOME-TAX O FFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY THE CLAIM WAS ALLOWED BY THE INCOM E-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF THE INCOME-TAX OFFICER CANNOT BE H ELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN T HAT REGARD.' 84. THE AFORESAID VIEWS EXPRESSED BY THE BOMBAY HIG H COURT WAS QUOTED IN THE CASE OF CIT V. SUNBEAM AUTO LTD. [2011] 332 ITR 167/[2010] 189 TAX MAN 436 (DELHI). 85. HE ALSO DREW OUR ATTENTION TO A JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARI IRON TRADING CO. V. CIT [2003] 263 ITR 437/ 131 TAXMAN 535 WHEREIN THE FOLLOWING VIEWS WERE EXPRESSED:-- 'THE EXPRESSION 'RECORD' HAS ALSO BEEN DEFINED IN C LAUSE (B) OF THE EXPLANATION SO AS TO INCLUDE ALL RECORDS RELATING TO ANY PROCEEDINGS AVAILABLE A T THE TIME OF EXAMINATION BY THE COMMISSIONER. THUS IT IS NOT ONLY THE ASSESSMENT O RDER BUT THE ENTIRE RECORD WHICH HAS TO BE EXAMINED BEFORE ARRIVING AT A CONCLUSION AS TO WHET HER THE ASSESSING OFFICER HAD EXAMINED ANY ISSUE OR NOT. THE ASSESSEE HAS NO CONTROL OVER THE WAY AN ASSESSMENT ORDER IS DRAFTED. THE ASSESSEE ON ITS PART HAD PRODUCED ENOUGH MATERIAL O N RECORD TO SHOW THAT THE MATTER HAD BEEN DISCUSSED IN DETAIL BY THE ASSESSING OFFICER. THE L EAST THAT THE TRIBUNAL COULD HAVE DONE WAS TO REFER TO THE ASSESSMENT RECORD TO VERIFY THE CONTEN TIONS OF THE ASSESSEE. INSTEAD OF DOING THAT THE TRIBUNAL HAS MERELY BEEN SWAYED BY THE FACT THAT TH E ASSESSING OFFICER HAS NOT MENTIONED ANYTHING IN THE ASSESSMENT ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER EXAMINES NUMEROUS ISSUES. GENERALLY THE IS SUES WHICH ARE ACCEPTED DO NOT FIND MENTION IN THE ASSESSMENT ORDER AND ONLY SUCH POINTS ARE TA KEN NOTE OF ON WHICH THE ASSESSEE'S EXPLANATIONS ARE REJECTED AND ADDITIONS/DISALLOWANC ES ARE MADE. AS ALREADY OBSERVED WE HAVE EXAMINED THE RECORDS OF THE CASE AND FIND THAT THE ASSESSING OFFICER HAD MADE FULL INQUIRIES BEFORE ACCEPTING THE CLAIM OF THE ASSESSEE QUA THE AMOUNT OF RS.10 LAKHS ON ACCOUNT OF DISCREPANCY IN STOCK. NOT ONLY THIS HE HAS EVEN GO NE A STEP FURTHER AND APPENDED AN OFFICE NOTE WITH THE ASSESSMENT ORDER TO EXPLAIN WHY THE ADDITI ON FOR ALLEGED DISCREPANCY IN STOCK WAS NOT BEING MADE. IN THE ABSENCE OF ANY SUGGESTION BY THE COMMISSIONER AS TO HOW THE INQUIRY WAS NOT PROPER WE ARE UNABLE TO UPHOLD THE ACTION TAKE N BY HIM UNDER SECTION 263 OF THE ACT.' 86. WHETHER THE ASSESSMENT ORDER DATED 28TH MARCH 2008 WAS PASSED WITHOUT APPLICATION OF MIND IS BASICALLY A QUESTION OF FACT. THE LEARNED T RIBUNAL HAS HELD THAT THE ASSESSMENT ORDER WAS NOT PASSED WITHOUT APPLICATION OF MIND. THE REC ORDS OF THE ASSESSMENT INCLUDING THE ORDER SHEETS GO TO SHOW THAT APPROPRIATE ENQUIRY WAS MADE AND THE ASSESSEE WAS HEARD FROM TIME TO TIME. IN DECIDING THE QUESTION COURT HAS TO BEAR IN MIND THE PRESUMPTION IN LAW LAID DOWN IN SECTION 114 CLAUSE - E OF THE EVIDENCE ACT:-- 'THAT JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULARL Y PERFORMED;' 87. THEREFORE THE COURT HAS TO START WITH THE PRES UMPTION THAT THE ASSESSMENT ORDER DATED 28TH MARCH 2008 WAS REGULARLY PASSED. THERE IS EVIDENCE TO SHOW THAT THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO ANSWER 17 QUESTIONS AND TO FILE DOCUMENTS IN REGARD THERETO. IT IS 14 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 DIFFICULT TO PROCEED ON THE BASIS THAT THE 17 QUEST IONS RAISED BY HIM DID NOT REQUIRE APPLICATION OF MIND. WITHOUT APPLICATION OF MIND THE QUESTIONS RAISED BY HIM IN THE ANNEXURE TO NOTICE UNDER SECTION 142 (1) OF THE ACT COULD NOT HAVE BEE N FORMULATED. 88. THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE T HE RETURN FILED BY THE ASSESSEE IN ORDER TO ASCERTAIN HIS INCOME AND TO LEVY APPROPRIATE TAX ON THAT BASIS. WHEN THE ASSESSING OFFICER WAS SATISFIED THAT THE RETURN FILED BY THE ASSESSEE W AS IN ACCORDANCE WITH LAW HE WAS UNDER NO OBLIGATION TO JUSTIFY AS TO WHY WAS HE SATISFIED. O N THE TOP OF THAT THE ASSESSING OFFICER BY HIS ORDER DATED 28TH MARCH 2008 DID NOT ADVERSELY AFFE CT ANY RIGHT OF THE ASSESSEE NOR WAS ANY CIVIL RIGHT OF THE ASSESSEE PREJUDICED. HE WAS AS S UCH UNDER NO OBLIGATION IN LAW TO GIVE REASONS. 89. THE FACT THAT ALL REQUISITE PAPERS WERE SUMMON ED AND THEREAFTER THE MATTER WAS HEARD FROM TIME TO TIME COUPLED WITH THE FACT THAT THE VIEW TA KEN BY HIM IS NOT SHOWN BY THE REVENUE TO BE ERRONEOUS AND WAS ALSO CONSIDERED BOTH BY THE TRIBU NAL AS ALSO BY US TO BE A POSSIBLE VIEW STRENGTHENS THE PRESUMPTION UNDER CLAUSE (E) OF SEC TION 114 OF THE EVIDENCE ACT. A PRIMA FACIE EVIDENCE ON THE BASIS OF THE AFORESAID PRESUMPTION IS THUS CONVERTED INTO A CONCLUSIVE PROOF OF THE FACT THE ORDER WAS PASSED BY THE ASSESSING OFFI CER AFTER DUE APPLICATION OF MIND. 90. THE JUDGMENTS CITED BY MR. NIZAMUDDIN DO NOT RE ALLY SUPPORT HIS CONTENTION. THE JUDGMENT IN THE CASE OF MEERUT ROLLER FLOUR MILLS (P.) LTD. (SUPRA) DOES NOT APPLY BECAUSE THE HIGH COURT IN THAT CASE WAS SATISFIED THAT THE ASSESSMENT ORDE R WAS PASSED WITHOUT ENQUIRY. 91. THE JUDGMENT OF COCHIN BENCH OF INCOME TAX APPE LLATE TRIBUNAL IN ITA NO. 116 /COCH/ 2012 RELIED UPON BY MR. NIZAMUDDIN IS EVIDENTLY BAS ED ON AN ERRONEOUS IMPRESSION THAT 'THE PROCEEDINGS BEFORE THE ASSESSING OFFICER ARE JUDICI AL PROCEEDINGS'. THIS IMPRESSION WHICH IS PATENTLY CONTRARY TO THE VIEWS EXPRESSED BY APEX CO URT IN THE CASE OF S.S. GADGILL (SUPRA) WAS RESPONSIBLE FOR THE VIEWS TAKEN BY THE TRIBUNAL. WH EN THE PREMISE IS WRONG THE CONCLUSION IS BOUND TO BE WRONG. 92. THE JUDGMENT IN THE CASE OF INFOSYS TECHNOLOGIE S LTD. (SUPRA) IS DISTINGUISHABLE ON FACTS. THE STEP TAKEN BY THE CIT UNDER SECTION 263 IN THAT CASE WAS JUSTIFIED BECAUSE THE INCOME TAX RECORDS PRODUCED BEFORE HIM DID NOT SHOW THAT THE A SSESSING OFFICER HAD CONSIDERED THE DOUBLE TAXATION AVOIDANCE AGREEMENT ON THE BASIS WHEREOF T HE CLAIMS WERE MADE BY THE ASSESSEE. THEREFORE THAT WAS A CLEAR CASE TO SHOW THAT THE A SSESSMENT ORDER WAS PASSED WITHOUT CONSIDERING THE RELEVANT PIECES OF EVIDENCE. 93. THE JUDGMENT IN THE CASE OF ANUSAYABAN. A. DOSH I (SUPRA) DOES NOT APPLY BECAUSE THE HIGH COURT IN THAT CASE WAS DEALING WITH THE NEED ON THE PART OF THE LEARNED TRIBUNAL TO GIVE REASONS IN SUPPORT OF ITS ORDER. 94. THE JUDGMENT IN THE CASE OF HINDUSTHAN TIN WORK S LTD. (SUPRA) ALSO DOES NOT APPLY BECAUSE THERE THE DELHI HIGH COURT WAS DEALING WITH THE DUT Y OF THE LEARNED TRIBUNAL TO DISCLOSE REASONS IN SUPPORT OF ITS APPELLATE ORDER. 95. THE JUDGMENT IN THE CASE OF S.N. MUKHERJEE (SUP RA) IS CLEARLY DISTINGUISHABLE. THE POINT FOR CONSIDERATION IN THAT CASE WAS WHETHER IT WAS INCUM BENT FOR THE CHIEF OF ARMY STAFF WHILE CONFIRMING THE FINDINGS AND THE SENTENCE OF THE GEN ERAL COURT MARTIAL AND FOR THE CENTRAL GOVT. WHILE REJECTING THE POST CONFIRMATION PETITIO N OF THE APPELLANT TO RECORD REASONS FOR THE ORDERS PASSED BY THEM. 15 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 96. THE FUNCTION OF AN ASSESSING OFFICER IS TO ESTI MATE THE INCOME OF THE ASSESSEE AND TO RECOVER TAX ON THE BASIS OF SUCH ESTIMATE AS LAID DOWN BY T HE APEX COURT IN THE CASE OF S.S GADGIL (SUPRA). THEIR LORDSHIPS OPINED THAT THE INCOME TAX PROCEEDINGS DO NOT PARTAKE THE CHARACTER OF A JUDICIAL PROCEEDING BETWEEN THE STATE AND THE CIT IZEN. THEREFORE THE PRINCIPLES APPLICABLE TO A PROCEEDING BEFORE A JUDICIAL OR A QUASI-JUDICIAL AU THORITY WHERE THERE ARE TWO CONTESTING PARTIES CANNOT BE MADE APPLICABLE TO THE PROCEEDINGS BEFORE AN ASSESSING OFFICER. 97. MR. NIZAMUDDIN CONTENDED THE JUDGMENTS CITED BY MR. PODDAR INDICATE THAT THE ASSESSING OFFICER IS NOT REQUIRED TO WRITE AN ELABORATE JUDGM ENT. HE CONTENDED THAT THE ASSESSING OFFICER MAY NOT HAVE ANY SUCH OBLIGATION BUT IT CANNOT BE S AID ACCORDING TO HIM THAT THE ASSESSING OFFICER IS UNDER NO OBLIGATION TO RECORD ANYTHING I N HIS ASSESSMENT ORDER. IT IS NOT IN THE FIRST PLACE A FACT THAT HE HAS NOT RECORDED ANYTHING. FRO M THE ASSESSMENT ORDER THE FOLLOWING FACTS AND CIRCUMSTANCES APPEAR:-- 'RETURN WAS FILED ON 29/11/06 SHOWING TOTAL INCOME OF RS.3 80 66 940/-. IN RESPONSE TO NOTICES U/S. 143(2) AND 142(1) OF THE I. T. ACT 1961 SRI P. R. KOTHARI A/R APPEARED FROM TIME TO TIME AND EXPLAINED THE RETURN. NECESSARY DETAILS AND PAR TICULARS WERE FILED. THE BUSINESS OF THE ASSESSEE IS MANUFACTURING AND TRADING OF COSMETICS AND DENTAL CARE PRODUCTS AS IN EARLIER YEARS. IN VIEW OF ABOVE TOTAL INCOME IS COMPUTED IS UNDER: ' 98. UNLESS THE AFORESAID RECITAL IS FACTUALLY INCOR RECT OR THE COMPUTATION IS LEGALLY WRONG IT IS NOT POSSIBLE TO HOLD THAT THE ASSESSMENT ORDER WAS PASSED WITHOUT APPLICATION OF MIND. ON THE TOP OF THAT WHEN THE ASSESSING OFFICER ACCEPTED THE CONTENTION OF THE ASSESSEE THERE WAS NO OCCASION FOR HIM TO MAKE ANY DISCUSSION IN HIS ORDE R. 99. IF THE ASSESSING OFFICER CANNOT BE SHOWN TO HAV E VIOLATED ANY FORM PRESCRIBED FOR WRITING AN ASSESSMENT ORDER IT WOULD NOT BE CORRECT TO HOLD T HAT HE ACTED ILLEGALLY OR WITHOUT APPLYING HIS MIND. THE THIRD QUESTION IS FOR THE REASONS DISCUS SED ABOVE ANSWERED IN THE NEGATIVE.' 12. WE NOTE THAT THE SHEET ANCHOR ON WHICH THE LD. CIT HAS FOUND FAULT WITH THE AO'S ORDER IN THE PRESENT CASE IS THE LACK OF ENQUIRY ON THE PART OF THE AO IN NOT ENQUIRING INTO THE NATURE OF FOREIGN ASSIGNMENT ALLOWANCE AND ITS TAXABILITY IN TERMS OF SECTION 5(2) OF THE ACT. IN THIS CONTEXT WE FIND THAT THERE IS A CLEAR DISTINCTION BETWEEN 'LACK OF ENQUIRY' AND 'INADEQUATE ENQUIRY'. IF THERE IS AN ENQUIRY EVEN IF INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE LD. CIT TO INTERDICT AND INTERFERE BY EXERCISING HIS REVISIONAL JURISDICTION MERELY BECAUSE HE IS OF THE OPINION THAT SOME MORE ENQUIRIES SHOULD HAVE BEEN CONDUCTED IN THE MATTER. IN A CASE WHERE THE LD. CIT FINDS THAT THE ENQUIRY CONDUCTED BY THE AO IS NOT IN ACCORDANCE WITH HIS SUBJECTIVE STANDARDS THEN THE LD. CIT SHOULD HIMSELF CONDUCT THE INVESTIGATION AND THEREAFTER RECORD A CLEAR FINDING IN HIS ORDER U/S. 263 THAT THE VIEW FOLLOWED OR ACTED UPON BY THE AO IN HIS ORDER WAS U NSUSTAINABLE IN LAW AND THEREFORE THE 16 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 ORDER OF THE AO WAS ERRONEOUS. IN ADDITION THE LD. CIT SHOULD ALSO PRIMA FACIE SHOW THAT THE ERRONEOUS ORDER CAUSED PREJUDICE TO THE REVENUE AND THEREBY TWIN CONDITIONS PRESCRIBED BY SECTION 263 ARE SATISFIED. IF EVEN ONE CONDITION IS NOT SATISFIED THEN IT IS OPEN FOR THE LD. CIT TO USURP THE REVISIONARY JURISDICTION U/S 263 O F THE ACT. 13. IN THE GIVEN FACTS OF THE PRESENT CASE AS NOTE D EARLIER THE AO HAD MADE DUE ENQUIRIES INTO THE NATURE AND MODE OF RECEIPT OF FO REIGN ASSIGNMENT ALLOWANCE AS ALSO ABOUT ITS TAXABILITY IN INDIA. THE AO HAD ALSO OBTAINED D ECLARATION FROM THE EMPLOYER TO THE EFFECT THAT THE ALLOWANCE IN QUESTION WAS PAID IN RELATION TO SERVICES RENDERED IN SWITZERLAND. THE AO HAD ALSO OBTAINED REQUISITE DOCUMENTARY EVIDENCE IN SUPPORT OF FACT THAT THE APPLICABLE TAXES ON SUCH ALLOWANCE WAS PAID IN SWITZERLAND. AF TER EXAMINING THE SPECIFIC DETAILS FURNISHED BY THE ASSESSEE THE AO DID NOT FIND ANY FAULT WITH THE CLAIM OF THE ASSESSEE THAT THE FOREIGN ASSIGNMENT ALLOWANCE WAS NOT TAXABLE IN INDIA. ON THESE FACTS WE ARE THEREFORE OF THE FIRM VIEW THAT NOT ONLY DID THE AO ENQUIRE I NTO THE ISSUE OF TAXABILITY OF FOREIGN ASSIGNMENT ALLOWANCE BUT HAD CONSCIOUSLY APPLIED HI S MIND TO THE FACTS MADE AVAILABLE BEFORE HIM AND ADOPTED THE VIEW PERMISSIBLE IN LAW. FOR THESE REASONS WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT ORDER DID NOT S UFFER FROM THE ERROR OF NON-ENQUIRY OR NON-APPLICATION OF MIND OR ASSUMPTION OF WRONG FACT S. 14. IN THE IMPUGNED ORDER THE LD. CIT PLACED EMPHAS IS ON THE FACT THAT THE ALLOWANCE IN QUESTION WAS RECEIVED BY THE ASSESSEE FROM AN ENTIT Y ESTABLISHED IN INDIA. HE FURTHER EMPHASIZED ON THE FACT THAT THE ASSESSEES EMPLOYME NT CONTRACT WAS WITH INDIAN COMPANY AND THE CONTRACT OF THE EMPLOYMENT WHICH GAVE RISE TO THE PAYMENT IN QUESTION WAS EXECUTED IN INDIA. ACCORDINGLY THE ASSESSEES RIGHT TO RECEIVE REMUNERATION INTER ALIA INCLUDING FOREIGN ASSIGNMENT ALLOWANCE HAD ACCRUED IN INDIA AND CONSEQUENTLY THEREFORE THE ASSESSEE WAS LIABLE TO PAY TAX ON SUCH ALLOWANCE IN INDIA. THE LD. CIT FURTHER OBSERVED THAT THE ALLOWANCE IN QUESTION WAS COMPUTED IN INR DENOM INATION WHICH CLEARLY SHOWED THAT THE PAYMENT WAS INTENDED TO BE MADE IN INDIA. THE L D. CIT ALSO FOUND THAT THE PAYMENT OF THE ALLOWANCE WAS MADE FROM THE EMPLOYERS DEUSTCHE BANK ACCOUNT WHICH WAS LOCATED IN INDIA. IN HIS OPINION THE POINT OF PAYMENT WAS T HE POINT OF RECEIPT AND CONSEQUENTLY THEREFORE THE INCOME WAS DEEMED TO BE RECEIVED AT T HE PLACE WHERE THE PAYMENT ORIGINATED. ACCORDING TO THE LD. CIT THE PAYMENT OF ALLOWANCE F ROM DEUSTCHE BANK BANGALORE TO AXIS 17 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 BANKS NOSTRO A/C OUTSIDE INDIA AND THEREAFTER TO T CC OF THE ASSESSEE HAPPENED ON THE EXPRESS DIRECTION OF THE ASSESSEE AND THEREFORE THE PAYMENT WAS ACTUALLY EFFECTED IN INDIA. FOR THE FOREGOING REASONS THEREFORE THE LD. CIT CON CLUDED THAT THE FOREIGN ASSIGNMENT ALLOWANCE WAS TAXABLE IN INDIA AND IN PASSING THE A SSESSMENT ORDER THE AO HAD NOT CONSIDERED THESE MATERIAL FACTS. 15. AFTER DUE CONSIDERATION OF THE FACTS AND MATERI AL ON RECORD AS ALSO APPLICABLE LEGAL PROVISIONS WE HOWEVER DO NOT FIND SUBSTANCE IN THE REASONS ADDUCED BY THE LD. CIT IN HIS ORDER JUSTIFYING HIS INTERFERENCE UNDER SECTION 263 OF THE ACT. IT MAY BE TRUE THAT THE ALLOWANCE IN QUESTION WAS RECEIVED BY THE ASSESSEE PURSUANT TO HIS EMPLOYMENT CONTRACT WITH A COMPANY WHICH WAS TAX RESIDENT IN INDIA. IT MAY ALSO BE TRUE THAT THE CONTRACT OF EMPLOYMENT WAS EXECUTED IN INDIA. HOWEVER FOR SUCH FACT ALONE IT CANNOT BE HELD THAT ASSESSEES RIGHT TO RECEIVE THE ENTIRE REMUNERATION ACCRUED OR DEEMED TO ACCRUE IN INDIA. ADMITTEDLY THE ASSESSEE WOULD NOT HAVE BEEN ENTITLE D TO RECEIVE THE ALLOWANCE IN QUESTION IF THE SERVICES WERE RENDERED OR PERFORMED BY THE ASSE SSEE IN INDIA. THE ESSENTIAL PRE-REQUISITE FOR RECEIVING THE FOREIGN ASSIGNMENT ALLOWANCE WAS THAT THE ASSESSEE WAS REQUIRED TO RENDER HIS SERVICES IN A FOREIGN COUNTRY VIZ. SWITZERLAND IN THIS CASE. IN OTHER WORDS IT WAS ONLY IN THE EVENT THAT THE ASSESSEE LEFT THE PLACE WHERE HI S EMPLOYMENT CONTRACT WAS SIGNED AND HE MIGRATED TO A FOREIGN COUNTRY FOR RENDERING SERVICE S THAT SUCH FOREIGN ASSIGNMENT ALLOWANCE WAS RECEIVABLE BY HIM. IT IS NOT IN DISPUTE THAT TH E AMOUNT IN QUESTION WAS RECEIVED BY THE ASSESSEE IN CONNECTION WITH THE SERVICES WHICH THE ASSESSEE ACTUALLY RENDERED TO HIS EMPLOYER OUTSIDE INDIA. IN THE CIRCUMSTANCES THEREF ORE BEFORE THE SAID FOREIGN ASSIGNMENT ALLOWANCE WAS BROUGHT WITHIN THE TAXING NET IT WAS NECESSARY FOR THE AUTHORITIES BELOW TO DEMONSTRATE THAT THE INCOME CHARGEABLE UNDER THE SA LARY ACCRUED OR DEEMED TO ACCRUE IN INDIA AS DEFINED IN SECTION 9(1)(II) OF THE ACT W HICH READ AS FOLLOWS: 9. (1) THE FOLLOWING INCOMES SHALL BE DEEMED TO AC CRUE OR ARISE IN INDIA : (II) INCOME WHICH FALLS UNDER THE HEAD 'SALARIES' IF IT IS EARNED IN INDIA. EXPLANATION.FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT THE INCOME OF THE NATURE REFERRED TO IN THIS CLAUSE PAYABLE FOR (A) SERVICE RENDERED IN INDIA; AND (B) THE REST PERIOD OR LEAVE PERIOD WHICH IS PRECED ED AND SUCCEEDED BY SERVICES RENDERED IN INDIA AND FORMS PART OF THE SERVICE CONTRACT OF EMPLOYMEN T 18 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 SHALL BE REGARDED AS INCOME EARNED IN INDIA 16. FROM THE FOREGOING PROVISION IT IS QUITE EVIDEN T THAT THE INCOME UNDER THE HEAD SALARIES IS DEEMED TO BE EARNED IN INDIA ONLY IF SUCH INCOME IS PAID FOR SERVICES RENDERED IN INDIA. IN OTHER WORDS RENDERING OF SERVICES TO THE EMPLOYER IN INDIA IS SINE QUA NON FOR INVOKING DEEMING PROVISIONS OF SECTION 9(1)(II) OF THE ACT. IN THE PRESENT CASE IT IS NOT DENIED BY THE LD. CIT THAT FOR THE RELEVANT ASSESSM ENT YEAR THE STATUS OF THE ASSESSEE WAS NON-RESIDENT BECAUSE HIS PHYSICAL STAY IN INDIA WAS LESS THAN 182 DAYS. HE ALSO DID NOT DENY THE FACT THAT THE SERVICES WERE RENDERED BY THE ASS ESSEE IN SWITZERLAND AND FOR WHICH THE IMPUGNED ALLOWANCE WAS RECEIVED. ONCE THESE ARE THE ADMITTED FACTS THEN THE SAME CLEARLY TAKES THE ASSESSEES CASE OUTSIDE THE AMBIT OF SECT ION 9(1)(II) OF THE ACT AND THEREBY THE SAID ALLOWANCE WAS NOT INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSES OF TAX IN INDIA. 17. WE ALSO DO NOT SEE ANY MERIT IN THE LD. CITS FINDING THAT THE ASSESSEE HAD RECEIVED THE IMPUGNED SUM IN INDIA. ACCORDING TO LD. CIT THE POINT OF PAYMENT WAS THE POINT OF RECEIPT AS WELL AND THEREFORE SINCE THE PAYMENT OR IGINATED FROM THE EMPLOYERS BANK ACCOUNT IN INDIA WITH DEUTSCHE BANK THE INCOME WAS RECEIVED BY THE ASSESSEE IN INDIA AND THEREFORE LIABLE FOR TAX IN INDIA UNDER SECTION 5(2 )(B) OF THE ACT. WE HAVE NO HESITATION IN HOLDING THAT THIS INTERPRETATION OF THE FACTS AND L EGAL POSITION BY THE LD. CIT IS PATENTLY WRONG. GOING BY THE LD. CITS CONCLUSION IN CASE OF EVERY INTERNATIONAL TRANSACTION WHERE THE PAYMENT MADE TO NON-RESIDENT ORIGINATES FROM A BANK SITUATED IN INDIA THE INCOME OF THE NON-RESIDENT SHALL BE DEEMED TO BE RECEIVED IN INDI A AND THEREFORE LIABLE TO TAX IN INDIA IN TERMS OF SECTION 5(2) OF THE ACT. ACCORDINGLY EVEN WHERE THE ASSESSEES MAKE PAYMENTS FOR IMPORT OF GOODS AND FOR WHICH THE PAYMENT IS MADE B Y THE INDIAN IMPORTER FROM HIS INDIAN BANK ACCOUNT THE FOREIGN SUPPLIER OF THE GOODS SHA LL BE LIABLE TO BE TAXED IN INDIA SINCE THE POINT OF PAYMENT AS WELL AS RECEIPT IS IN INDIA AND THEREFORE THE INCOME IS RECEIVED IN INDIA. SUCH PROPOSITION IS DEVOID OF ANY MERIT. 18. IT IS ALSO NOTED THAT THE LD. CIT WAS FACTUALLY INCORRECT IN CONCLUDING THAT THE PAYMENT OF FOREIGN ASSIGNMENT ALLOWANCE WAS FIRST RECEIVED BY THE ASSESSEE IN INDIA AND THEREAFTER REMITTED TO HIS TCC AT HIS EXPRESS DIRECTIONS. WE N OTE THAT THERE NO MATERIAL OR EVIDENCE 19 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 WAS BROUGHT ON RECORD BY THE LD. CIT TO SUPPORT THI S CONCLUSION. AS NOTED IN THE EARLIER PARA THE MODUS OPERANDI FOR RECEIVING THE SAID ALLOWANCE THROUGH TCC WAS AS FOLLOWS: A) WHEN AN EMPLOYEE OF IBM INDIA PRIVATE LIMITED IS SENT ON INTERNATIONAL ASSIGNMENT AXIS BANK UPON INSTRUCTION FROM IBM IS SUES A TRAVEL CURRENCY CARD (TCC) TO AN EMPLOYEE WHO IS SENT TO A FOREIGN ASSIG NMENT. B) IBM MAINTAINS AN EXCHANGE EARNERS FOREIGN CURREN CY (EEFC) ACCOUNT WITH DEUTSCHE BANK BANGALORE. C) FROM THE EEFC ACCOUNT OF DEUTSCHE BANK FUNDS AR E TRANSFERRED TO THE NOSTRO ACCOUNT OF AXIS BANK MAINTAINED OUTSIDE INDIA. D) UPON INSTRUCTION FROM IBM THE FUNDS ARE THEN TR ANSFERRED FROM THE NOSTRO ACCOUNT OF AXIS BANK MAINTAINED OUTSIDE INDIA TO TH E AXIS TCC OF THE RESPECTIVE EMPLOYEE. 19. FROM THE FOREGOING IT IS EVIDENT THAT THE FUND S WERE TRANSFERRED OUTSIDE INDIA TO THE FOREIGN CURRENCY DENOMINATED ACCOUNT OF THE EMPLOYE R AT THE EXPRESS DIRECTION OF THE EMPLOYER AND EVEN THE PAYMENT TOWARDS TCC WAS MADE ON THE INSTRUCTIONS OF THE EMPLOYER. WE THEREFORE DO NOT FIND ANY MERIT IN THE LD. CITS FINDING THAT THE IMPUGNED ALLOWANCE WAS FIRST RECEIVED BY THE ASSESSEE IN IND IA AND THEREAFTER AT HIS INSTANCE THE AMOUNTS WERE REMITTED OUTSIDE INDIA IN THE FORM OF TCC. 20. ANOTHER ISSUE WHICH WEIGHED ON THE LD. CITS MI ND WAS THAT THE IMPUGNED ALLOWANCE DID NOT SUFFER ANY TAX IN THE COUNTRY OF RESIDENCE I.E. SWITZERLAND AND THEREFORE IT WAS A CASE OF DOUBLE NON-TAXATION WHICH COULD NOT B E PERMITTED IN LAW. IN THE FIRST INSTANCE WE DO NOT FIND MUCH FORCE IN THIS PLANK OF THE LD. CITS REASONING. THE QUESTION FOR DETERMINATION BY THE LD. CIT WAS WHETHER IN LAW THE AMOUNT RECEIVED BY THE ASSESSEE FOR RENDERING SERVICES OUTSIDE INDIA WAS LEGALLY CHARGE ABLE TO TAX IN INDIA. FOR DECIDING THIS QUESTION IT WAS WHOLLY IMMATERIAL WHETHER OR NOT SUCH INCOME SUFFERED TAX IN THE COUNTRY OF RESIDENCE I.E. SWITZERLAND. DOUBLE TAXATION OF I NCOME IS NOT ALIEN PHENOMENON IN CROSS BORDER TRANSACTIONS. IN THE CIRCUMSTANCES IN DECIDI NG THE ISSUE OF TAXABILITY OF THE PARTICULAR 20 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 RECEIPT IN INDIA IT WAS WHOLLY IRRELEVANT WHETHER OR NOT SUCH RECEIPT SUFFERED TAX IN THE OTHER JURISDICTION. WE THEREFORE HOLD THAT THIS GROUND ON WHICH THE LD. CIT CONSIDERED THE AOS ORDER TO BE ERRONEOUS IS LEGALLY NOT TENABLE. EVEN ON FACTS WE FIND THAT BEFORE THE AO THE ASSESSEE HAD SUFFICIENTLY DEMONSTRATED THAT THE FOR EIGN ASSIGNMENT ALLOWANCE HAD SUFFERED APPROPRIATE TAX IN SWITZERLAND. THE ASSESSEE HAD FU RNISHED BEFORE THE AO THE COPIES OF THE SWITZERLAND TAX DOCUMENTS FOR THE YEAR 2013 AND 201 4 AS ANNEXURE 6 & 7 TO HIS LETTER DATED 30.11.2016 WHICH IS FOUND PLACED AT PAGES 79 TO 80 OF THE PAPER BOOK. THE ANNEXURE 6 & 7 REFERRED IN THIS LETTER BY ASSESSEE TO AO REVEALS THAT ASSESSEE HAD BEEN SUBJECTED TO TAX DEDUCTION FROM 01.01.2013 TO 31.12.2013 AND FOR 01. 01.2014 TO 02.05.2014 @ 16.58% AND 12.68% RESPECTIVELY. IN LIGHT OF THESE DOCUMENTARY EVIDENCES THEREFORE THE LD. CITS FINDING THAT THE FOREIGN ASSIGNMENT ALLOWANCE IN QUESTION D ID NOT SUFFER ANY TAX IN SWITZERLAND AND THEREFORE THE CASE OF ASSESSEE IS DISTINGUISHABLE W ITH THAT OF SHRI SUDIPTAMAITY DECIDED BY THIS TRIBUNAL REPORTED IN (2018) 172 ITD 94 (KOL) SINCE THE ASSESSEE HAS NOT SHOWN HIS FOREIGN ASSIGNMENT ALLOWANCE WAS SUBJECTED TO TAX I N SWITZERLAND IS THEREFORE PER SE WRONG. 21. IN THE IMPUGNED ORDER THE LD. CIT RELYING ON TH E DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF TAPAS KUMAR BANDYOPADH YAY (SUPRA) HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM HIS INDIAN EMPLOYER W HICH HE HAD RECEIVED IN INDIA WAS CHARGEABLE TO TAX IN TERMS OF SECTION 5(2) OF THE A CT. ACCORDING TO LD. CIT THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT REPORTED IN 397 ITR 406 OVERTURNING THE DECISION OF THE TRIBUNAL IN THAT CASE WAS OF NO HELP TO THE ASSESSE E BECAUSE THE HONBLE HIGH COURT HAD REVERSED THE DECISION OF THE TRIBUNAL KEEPING IN VI EW THE CONCESSION GRANTED BY THE BOARD TO THE SPECIFIC CLASS OF ASSESSEES BEING SEA-FARER S. SINCE THE ASSESSEE IN THE PRESENT CASE WAS NOT A SEAFARER IT WAS THE LD. CITS STAND THAT T HE BENEFIT OF THE CBDT CIRCULAR NO.13 OF 2017 AS WELL AS THE JUDGMENT OF THE HONBLE CALCUTT A HIGH COURT WAS OF NO HELP TO THE ASSESSEE. AFTER DUE CONSIDERATION OF THE FACTS AND MATERIAL ON RECORD WE ARE UNABLE TO AGREE WITH THE LD. CITS SUCH CONTENTION. IN THE FIRST IN STANCE WE FIND THAT THE FACTS OF THE CASE ARE MATERIALLY DIFFERENT FROM THE FACTS INVOLVED IN THE CASE OF TAPAS KUMAR BANDYOPADHYAY (SUPRA). IN THAT CASE THE ASSESSEE A MARINE ENGINEE R WAS RENDERING HIS SERVICES IN INTERNATIONAL WATERS AND HIS SALARY FROM THE EMPLOY ER WAS ADMITTEDLY DEPOSITED IN HIS BANK ACCOUNT MAINTAINED IN INDIA. FURTHER SUCH SALARY DI D NOT SUFFER ANY TAX IN ANY OTHER COUNTRY. ON THESE FACTS THE TRIBUNAL HELD THAT THE INCOME W AS CHARGEABLE TO TAX IN INDIA SINCE THE 21 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 SALARY WAS DEPOSITED IN BANK ACCOUNT MAINTAINED IN INDIA. IN THE PRESENT CASE HOWEVER AS NOTED IN THE PRECEDING PARAGRAPHS NO MONEY WAS FOU ND DEPOSITED IN ASSESSEES ACCOUNT MAINTAINED IN INDIA AND THE FOREIGN ASSIGNMENT ALLO WANCE RECEIVED FOR SERVICES RENDERED IN SWITZERLAND THE DUE TAXES WERE PAID IN THAT COUNTR Y. MOREOVER SECTION 9(1)(II) MAKES IT ABUNDANTLY CLEAR THAT INCOME CHARGEABLE UNDER THE H EAD SALARY CONSTITUTES INCOME DEEMED TO ACCRUE IN INDIA ONLY IF THE SERVICES ARE RENDERE D IN INDIA. SINCE IN THE PRESENT CASE ADMITTEDLY NO SERVICES WERE RENDERED IN INDIA FOR W HICH THE FOREIGN ASSIGNMENT ALLOWANCE WAS RECEIVED BY THE ASSESSEE THE SAME WAS NOT CHAR GEABLE TO TAX IN INDIA EVEN IN TERMS OF THE DEEMING PROVISIONS OF SECTION 9(1)(II) OF THE A CT. 22. WE NOTE THAT IN THE IMPUGNED ORDER THE LD. CIT HAS NOT MADE ANY DISCUSSION WITH REGARD TO APPLICATION OF SECTION 9(1)(II) WHICH WAS THE MOST APPROPRIATE LEGAL PROVISION IN DECIDING WHETHER THE FOREIGN ASSIGNMENT ALLOWANCE R ECEIVED FOR RENDERING OF SERVICES OUTSIDE INDIA WAS TAXABLE IN INDIA OR NOT. WE NOTE THAT THE LD. CIT DISCUSSED SEVERAL REASONS FOR HOLDING THE AMOUNT TO BE TAXABLE IN INDIA BUT S URPRISINGLY HIS ORDER IS CONSPICUOUSLY SILENT ABOUT THE APPLICABILITY OF SECTION 9(1)(II) OF THE ACT ACCORDING TO WHICH THE INCOME COULD BE MADE LIABLE TO TAX IF AND ONLY IF THE INCO ME WAS RECEIVED FOR SERVICES RENDERED IN INDIA. WE NOTE THAT THIS SPECIFIC ISSUE WAS ADJUDIC ATED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI SUDIPTAMAITY (SUPRA) W HICH INVOLVED IDENTICAL FACTS. IN THE DECIDED CASE THE TRIBUNAL HAS NOTED THE FOLLOWING FACTS: 4. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AS SESSEE WAS AN EMPLOYEE IN IBM INDIA PRIVATE LIMITED AND DURING THE FINANCIAL YEAR 2012-13 WAS S ENT ON SHORT TERM ASSIGNMENT TO SWITZERLAND. HE HAD STATIONED IN SWITZERLAND FOR 3 31 DAYS DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY HIS RESIDENTIAL STATUS FOR THE YEAR UNDER CONSIDERATION WOULD BE NON-RESIDENT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD RECEIVED THE FOLLOWING EMOLUMENTS FROM IBM :- A) GROSS SALARY RECEIVED IN INDIA RS 6 77 128/- AND B) FOREIGN ALLOWANCES ON ACCOUNT OF THE INTERNATION AL ASSIGNMENT RECEIVED IN SWITZERLAND RS 51 84 489/- IBM HAD EFFECTED TDS OF RS 16 04 063/- ON THE ENTIR E EMOLUMENTS PAID TO THE ASSESSEE INCLUDING THE FOREIGN ALLOWANCES PAID TO THE ASSESS EE U/S 192(1) OF THE ACT. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASST YEAR 2013-14 DECL ARING TAXABLE INCOME OF RS 5 73 320/- (BEING THE SALARY RECEIVED IN INDIA ALONE) AFTER CL AIMING DEDUCTION OF RS 1 01 405/- UNDER CHAPTER VIA OF THE ACT AND CLAIMED A REFUND OF RS 1 5 58 060/- IN HIS RETURN OF INCOME. 4.1. DURING THE FINANCIAL YEAR 2012-13 THE ASSESSE E HAD RECEIVED RS 51 84 489/- OUTSIDE INDIA FOR SERVICES RENDERED OUTSIDE INDIA . THE ASSESSEE PLEADED THAT THE ENTIRE FOREIGN ALLOWANCE OF 22 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 RS 51 84 489/- WAS NOT OFFERED TO TAX IN INDIA AS T HE SAME WAS RECEIVED BY THE ASSESSEE OUTSIDE INDIA FOR THE SERVICES RENDERED OUTSIDE INDIA WHICH DOES NOT FORM PART OF THE TOTAL INCOME U/S 5(2) OF THE ACT. THE ASSESSEE HOWEVER OFFERED THE ENTIRE SALARY RECEIVED IN INDIA OF RS 6 77 128/- TO TAX IN INDIA. IN THE COURSE OF ASSE SSMENT PROCEEDINGS THE ASSESSEE SUBMITTED A LETTER DATED 24.9.2015 WITH REGARD TO EXEMPTION CLA IMED BY HIM TOWARDS FOREIGN ASSIGNMENT ALLOWANCE WHICH WAS PAID BY CREDITING THE ASSESSEE S TRAVEL CURRENCY CARD (TCC) . THE ASSESSEE ALSO FURNISHED A CERTIFICATE FROM IBM INDI A PRIVATE LIMITED STATING THAT THE ASSESSEE HAD RECEIVED RS 51 84 489/- OUTSIDE INDIA FOR RENDE RING SERVICES IN SWITZERLAND. IN THE SAID CERTIFICATE IT WAS ALSO MENTIONED BY IBM THAT TAXE S TO THE TUNE OF RS 16 04 063/- WAS DEDUCTED AT SOURCE INCLUDING ON THE PORTION OF FOREIGN ASSIG NMENT ALLOWANCE BECAUSE THE RESIDENTIAL STATUS AS WELL AS THE TAX RESIDENCY OF THE ASSESSEE WAS NOT KNOWN. 23. WITH REFERENCE TO THE FOREGOING FACTS THE ISSU E FOR ADJUDICATION BEFORE THE TRIBUNAL WAS WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETIN G THE ADDITION MADE OF RS.51 84 489/- WHICH WAS BROUGHT TO TAX BY THE AO BY APPLYING THE PROVISIONS OF SECTION 5(2) OF THE ACT. SO WE NOTE THAT THIS ISSUE ON SIMILAR FACTS AND A PPLICABLE PROVISIONS OF LAW WAS ADJUDICATED IN RESPECT OF AN ASSESSEE WHO WAS WORKI NG WITH THE SAME COMPANY IBM AS THAT OF THE ASSESSEE IN THIS CASE; AND THE AO HAD TAXED THE FOREIGN ASSIGNMENT ALLOWANCE BY INVOKING PROVISIONS OF SECTION 5(2) OF THE ACT WHI CH WAS DELETED BY THE LD. CIT(A). THIS ACTION OF THE LD. CIT(A) WAS CHALLENGED BY THE REVE NUE BEFORE THE TRIBUNAL AND THE TRIBUNAL UPHOLDING THE ACTION OF THE LD. CIT(A) HEL D AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE G ONE THROUGH THE FOLLOWING DOCUMENTS ENCLOSED IN THE PAPER BOOK OF THE ASSESSEE:- A) COPY OF PASSPORT FOR THE RELEVANT PERIOD ENCLO SED IN PAGES 124 TO 128 OF PAPER BOOK. B) CERTIFICATE ISSUED BY IBM INDIA PRIVATE LIMITED EXPLAINING THE ENTIRE FACTS OF PAYMENTS TO ASSESSEE INCLUDING THE DETAILS OF DEDUCTION OF TAX AT SOURCE THEREON TOGETHER WITH ITS PURPOSE ENCLOSED IN PAGE 129 OF PAPER BOOK. C) STATEMENT OF ACCOUNT OF AXIS BANK TCC FOR THE PE RIOD 30.11.1999 TO 14.12.2015 ENCLOSED IN APGES 130 TO 145 OF PAPER BOOK. D) LIST OF VARIOUS NOSTRO ACCOUNTS HELD BY AXIS BAN K IN VARIOUS COUNTRIES OUT OF THIS LIST THE RELEVANT NOSTRO ACCOUNT FROM WHERE PAYMENTS WERE MA DE TO ASSESSEE HEREIN IS ZURCHERKANTONAL BANK (ZKB) FROM ACCOUNT NUMBER 0700-00037.370 ENC LOSED IN PAGE 146 OF PAPER BOOK. E) SAMPLE INSTRUCTIONS GIVEN BY IBM INDIA PRIVATE L IMITED AUTHORIZING THE AXIS BANK BANGALORE TO LOAD CURRENCIES TO THE TCC OF ASSESSEE - ENCLOS ED IN PAGES 147 TO 148 OF PAPER BOOK. 7.1. FROM THE FACTS NARRATED ABOVE AND ON HEARING T HE LEARNED COUNSELS OF ASSESSEE AS WELL AS FOR THE REVENUE WE FIND THAT:- A) THE ASSESSEE IS A NON-RESIDENT INDIVIDUAL AND HA D RENDERED SERVICES OUTSIDE INDIA FOR WHICH HE HAS RECEIVED FOREIGN ASSIGNMENT ALLOWANCE. 23 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 B) IBM MAINTAINS MONEY IN FOREIGN CURRENCY IN ITS E EFC ACCOUNT MAINTAINED WITH DEUTSCHE BANK BANGALORE. C) IBM INSTRUCTS AXIS BANK TO ISSUE TRAVEL CURRENCY CARD TO ITS EMPLOYEES WHO ARE SENT ON FOREIGN ASSIGNMENT WHICH IS LOOSELY CALLED AXIS TC C. D) AXIS BANK HAS MAINTAINED A NOSTRO ACCOUNT WITH I TS CORRESPONDENT BANKER (ZUERCHERKANTONAL BANK ZURICH). E) IBM TRANSFERS FUNDS FROM ITS EEFC ACCOUNT FROM D EUTSCHE BANK TO THE NOSTRO ACCOUNT OF AXIS BANK (I.EZUERCHERKANTONAL BANK) FOR THE PURPOSE OF LOADING / RELOADING THE AXIS TCC ISSUED TO THE ASSESSEE WHO IS SENT ON FOREIGN ASSIGNMENT. F) THE EMPLOYEE WHO IS SENT ON FOREIGN ASSIGNMENT U SES THE SAID FUNDS OUTSIDE INDIA OUT OF MONIES TOPPED UP OR CREDITED IN HIS AXIS TCC. HENCE IT C OULD BE SAFELY CONCLUDED THAT THE FIRST POINT OF RECEIPT FOR THE ASSESSEE HAPPENS OUTSIDE INDIA. TH IS MONEY IS USED BY HIM FOR HIS SUSTENANCE IN SWITZERLAND. BOTH THE ACCRUAL AND RECEIPT OF INCOME HAPPENS OUTSIDE INDIA. HENCE THE SAME IS OUTSIDE THE AMBIT OF TAX AS PER THE PROVISIONS OF S ECTION 5(2) OF THE ACT. THE SERVICES OF THE ASSESSEE ARE ALSO UTILIZED ONLY OUTSIDE INDIA. G) THIS FOREIGN ASSIGNMENT ALLOWANCE IS DULY SUBJEC TED TO TAX IN THE COUNTRY OF SWITZERLAND AND THE ASSESSEE HAD DULY PAID THE SAID TAX TO THE SWIS S GOVERNMENT. H) THE ASSESSEE HAD PAID TAXES IN INDIA IN RESPECT OF SALARY RECEIVED BY HIM IN INDIA WHICH IS NOT IN DISPUTE. 7.2. WE FIND THAT THE LD DR HAD ARGUED THAT THE FOR EIGN ASSIGNMENT ALLOWANCE GIVEN TO THE ASSESSEE IS NOTHING BUT SALARY AND THAT THE SAME I S FIRST DEPOSITED IN INDIA AND THEREAFTER IT GETS LOADED INTO THE TCC BY AXIS BANK AS INSTRUCTED BY I BM. IN THIS REGARD WE FIND FROM THE ACCOUNT STATEMENT OF TCC ENCLOSED IN PAGES 130 TO 145 OF P APER BOOK FOR THE PERIOD 30.11.1999 TO 14.12.2015 THAT THE ASSESSEE IS SENT OUTSIDE INDI A WITH A TCC CONTAINING ZERO BALANCE AND THE SAME IS LOADED/RELOADED PERIODICALLY AS PER THE REQ UIREMENT . THIS LOADING OR RELOADING OF FUNDS IN TCC HAPPENS WHEN THE ASSESSEE WAS RENDERING SERV ICES OUTSIDE INDIA AND WAS STAYING OUTSIDE INDIA. HENCE THE FUNDS GET DEPOSITED / LOADED / RE LOADED IN TCC FOR THE FIRST TIME OUTSIDE INDIA. THEREAFTER THE ASSESSEE WITHDRAWS THE MONIES FOR HI S SUSTENANCE OUTSIDE INDIA . HENCE THE FIRST POINT OF RECEIPT OF THESE FUNDS LOADED / RELOADED I N TCC FOR THE ASSESSEE IS OUTSIDE INDIA. WE FIND THAT THIS SUBMISSION OF THE LD DR IS FACTUALLY INCO RRECT AND IS NOT BORNE OUT FROM THE FACTS NARRATED ABOVE. 7.3. WE FIND THAT THE ASSESSEES CASE SQUARELY FALL S UNDER THE PROVISIONS OF EXPLANATION TO SECTION 5(2) OF THE ACT WHICH ARE REPRODUCED FOR THE SAKE O F CONVENIENCE AS UNDER:- EXPLANATION 1 INCOME ACCRUING OR ARISING OUTSIDE INIA SHALL NOT BE DEEMED TO BE RECEIVED IN INDIA WITHIN THE MEANING OF THIS SECTION BY REASON ONLY OF THE FACT THAT IT IS TAKEN INTO ACCOUNT IN A BALANCE SHEET PREPARED IN INDIA. EXPLANATION 2 FOR THE REMOVAL OF DOUBTS IT IS HE RBY DECLARED THAT INCOME WHICH HAS BEEN INCLUDED IN THE TOTAL INCOME OF A PERSON ON THE BAS IS THAT IT HAS ACCRUED OR ARISEN OR IS DEEMED TO HAVE ACCRUED OR ARISEN TO HIM SHALL NOT AGAIN BE SO INCLUDED ON THE BASIS THAT IT IS RECEIVED OR DEEMED TO BE RECEIVED BY HIM IN INDIA. 7.4. WE FIND THAT THE RELIANCE PLACED BY THE LD AR ON THE CO-ORDINATE BENCH DECISION OF JAIPUR TRIBUNAL IN THE CASE OF ADIT (INTERNATIONAL TAXATIO N) VS SRI KARTIK VYAS IN ITA NO. 375/JP/2012 DATED 31.12.2014 IS DIRECTLY ON THIS POINT WHICH WA S RENDERED IN THE CONTEXT OF AN IBM EMPLOYEE UNDER SIMILAR CIRCUMSTANCES. IT WAS HELD AS UNDER :- 24 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 5. AT THE OUTSET THE LEARNED AR FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE APPELLANT IS AN EMPLO YEE OF IBM INDIA PVT. LTD. WAS SENT ON AN INTERNATIONAL ASSIGNMENT TO NETHERLANDS DURING THE PREVIOUS YEAR 2007-08. THE APPELLANT RECEIVED FOREIGN ALLOWANCES OF RS. 17 27 360/- OUTS IDE INDIA FOR THE SERVICES RENDERED IN NETHERLANDS. AS THE APPELLANT QUALIFIED AS A NON-R ESIDENT DURING THE RELEVANT ASSESSMENT YEAR AND FOREIGN ALLOWANCES RECEIVED BY THE APPELLANT IS NOT LIABLE TO TAX U/S 5(2) OF THE ACT. THE APPELLANT HAD DISCLOSED TOTAL INCOME OF RS. 3 27 91 0/- EXCLUDING THE FOREIGN ALLOWANCES AND AGAINST THIS INCOME THE TAX OF RS. 48 790/- WAS PA ID BY THE APPELLANT. THE EMPLOYER DEDUCTED TDS WRONGLY AT RS. 6 36 484.65 AND APPELLANT ALSO P AID SELF ASSESSMENT TAX AT RS. 4 653/- ON ACCOUNT OF HIS INTEREST INCOME FROM BANK DEPOSITS. THEREFORE THE APPELLANT HAD CLAIMED REFUND OF RS. 5 92 305/- BY FILING THE RETURN. THE LEARNED AS SESSING OFFICER SUBMITTED THAT THE AMOUNT OF RS. 17 27 360/- WAS RECEIVED BY THE APPELLANT IN NETHER LANDS FROM HIS EMPLOYMENT ON ACCOUNT OF FOREIGN ALLOWANCES FOR WHICH HE PRODUCED CERTIFICA TE FROM THE EMPLOYER. THE EMPLOYER WAS NON- RESIDENT DURING THE YEAR AND PROVISIONS OF SECTION 6(1) OF THE ACT IS APPLICABLE. THEREFORE FOREIGN ALLOWANCES RECEIVED BY HIM OUTSIDE THE INDIA FOR SE RVICES RENDERED OUTSIDE INDIA ARE NOT LIABLE TO BE TAXED IN INDIA U/S 5(2) OF THE ACT. HE ALSO RELI ED ON THE VARIOUS CASE LAWS WHICH WERE RELIED UPON BEFORE THE LEARNED CIT(A) THEREFORE HE PRAYE D TO CONFIRM THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE APPELLANT WAS NON-RESIDENT DURING THE YEAR UNDE R CONSIDERATION AND ALLOWANCES WERE RECEIVED BY HIM IN NETHERLANDS. THE EMPLOYER WRONGL Y DEDUCTED TDS THE APPELLANT HAD CLAIMED REFUND ON IT. THE INDIAN INCOME HAS BEEN CONSIDERED BY THE APPELLANT AS TAXABLE BUT THE ALLOWANCES PAID OUTSIDE THE INDIA ARE NOT TAXABLE U /S 5(2) OF THE ACT IN THE CASE OF NON-RESIDENT. THE CASE LAW RELIED UPON BY THE LEARNED CIT(A) ARE SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE THEREFORE WE CONFIRM THE ORDER OF THE LE ARNED CIT(A). 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 7.5. WE FIND THAT THE LD DR PLACED RELIANCE ON THE CO-ORDINATE BENCH DECISION OF CHENNAI TRIBUNAL IN THE CASE OF SRI BALAMUTHUKADIRESAN VS I TO IN ITA NO. 353/MDS/2016 DATED 29.4.2016 IN SUPPORT OF HIS CONTENTIONS. WE FIND T HAT THE SAID DECISION IN PARA 9.1. OF THE ORDER HAD CONSIDERED THE DECISION OF JAIPUR TRIBUNAL IN T HE CASE OF ADIT(INTERNATIONAL TAXATION) VS SRI KARTHIK VYAS IN ITA NO. 375/JP/2012 DATED 31.12.201 4 AND OBSERVED THAT THE JAIPUR TRIBUNAL DECISION IS FACTUALLY DISTINGUISHABLE WITH THE FACT S BEFORE THE CHENNAI TRIBUNAL. HENCE THE RELIANCE PLACED ON THE DECISION OF CHENNAI TRIBUNAL SUPRA DOES NOT COME TO THE RESCUE OF THE ASSESSEE HEREIN. 7.6. WE ALSO FIND THAT THE HONBLE KARNATAKA HIGH C OURT IN THE CASE OF DIT (INTERNATIONAL TAXATION) VS PRAHLADVIJENDRA RAO REPORTED IN 198 TA XMAN 551 (KAR) AND HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS AVTAR SINGH WADHWAN REP ORTED IN 247 ITR 260 (BOM) HAD HELD THAT IN THE CASE OF A NON-RESIDENT WHEN SERVICES ARE RENDE RED OUTSIDE INDIA THE ACCRUAL OF INCOME THEREON HAPPENS OUTSIDE INDIA AND HENCE THE SAME CA NNOT BE BROUGHT TO TAX IN INDIA AS PER SECTION 5(2) OF THE ACT. AS STATED ABOVE WE FIN D THAT THE ASSESSEE WAS ABLE TO GET CONTROL OVER THE FUNDS IN HIS TCC FOR THE FIRST TIME ONLY IN SWI TZERLAND AND NOT IN INDIA AND FIRST POINT OF RECEIPT ALSO HAPPENS ONLY IN SWITZERLAND. HENCE IT COULD BE SAFELY CONCLUDED THAT BOTH ACCRUAL AND RECEIPT OF FUNDS HAPPENS OUTSIDE INDIA THEREBY MAKING THE SAID RECEIPT TO STAY OUTSIDE THE AMBIT OF TAXABILITY U/S 5(2) OF THE ACT. 7.7. WE ALSO FIND THAT IDENTICAL CLAIM OF EXEMPTION OF THE ASSESSEE WAS ALLOWED BY THE LD AO FOR THE ASST YEAR 2014-15 U/S 143(3) OF THE ACT DATED 1 0.12.2016 AFTER DETAILED EXAMINATION OF THE SAME AND BY GIVING PROPER FINDINGS IN THE ASSESSMEN T ORDER VIDE PARA 5.02 AND 5.03. 7.8. IN VIEW OF THE AFORESAID FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND BY RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDE NTS RELIED UPON HEREINABOVE WE HOLD THAT THE LD 25 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 CITA HAD RIGHTLY DELETED THE ADDITION MADE ON ACCOU NT OF DISALLOWANCE OF CLAIM OF EXEMPTION IN RESPECT OF FOREIGN ASSIGNMENT ALLOWANCE RECEIVED BY THE ASSESSEE OUTSIDE INDIA. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN T HIS REGARD. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 24. FROM THE AFORESAID DECISION RENDERED BY THE COO RDINATE BENCH OF THIS TRIBUNAL DATED 11.07.2018 WE FIND THAT THE ISSUE INVOLVED BEFORE US IS NO LONGER RES INTEGRA. WE NOTE THAT THE CLAIM OF THE ASSESSEE IN THE PRESENT CASE FOR E XCLUSION OF FOREIGN ASSIGNMENT ALLOWANCE WHICH WAS ACCEPTED BY THE AO WAS IN CONSONANCE WIT H THE VIEW OF LD. CIT(A) IN SHRI SUDIPTAMAITYS CASE (SUPRA) WHICH HAS BEEN UPHELD B Y THE TRIBUNAL. IN LIGHT OF THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL WITH WHICH WE ARE IN AGREEMENT WE HOLD THAT THE ACTION OF THE AO CANNOT BE HELD TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS HELD BY THE HONBLE SUPREME COURT IN MAL ABAR INDUSTRIAL CO. LTD. (SUPRA). 25. WE NOTE THAT IN THE IMPUGNED ORDER THE LD. CIT HAS FORTIFIED HIS USURPATION OF REVISIONARY JURISDICTION U/S 263 OF THE ACT BY REL YING ON THE AMENDMENT TO SECTION 263 WHEREBY SECOND EXPLANATION TO SUB-SECTION (1) OF SE C. 263 OF THE ACT WAS INSERTED WITH EFFECT FROM 01.06.2015. THE SAID AMENDMENT INSERTED THE WORDS IN THE OPINION OF PRINCIPAL COMMISSIONER OR COMMISSIONER . ACCORDING TO LD. CIT AFTER THIS AMENDMENT WAS B ROUGHT INTO STATUTE THE ORDER PASSED BY THE AO CAN BE DEE MED TO BE ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE IF IN THE OPINION OF THE PR. CIT OR CIT THE ORDER HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHI CH SHOULD HAVE BEEN MADE. ACCORDING TO US HOWEVER THE INSERTION OF THE AMENDMENT WHIC H HAS BROUGHT IN THE WORD IN THE OPINION OF PRINCIPAL COMMISSIONER OR COMMISSIONER CANNOT BE READ IN ISOLATION. AND IT HAS TO BE KEPT IN MIND THAT EXPLANATION CANNOT OVER-R IDE THE SUBSTANTIVE PROVISION OF THE LAW WHICH THE EXPLANATION ONLY TRIES TO EXPLAIN/CLARIFY . BEFORE WE ADVERT FURTHER LET US LOOK AT SECTION 263 OF THE ACT WHICH IS REPRODUCED AS U NDER:- 263. (1) THE PRINCIPAL COMMISSIONER OR] COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE HE MAY AFTER GIVING THE ASS ESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT. [EXPLANATION 1.]FOR THE REMOVAL OF DOUBTS IT IS H EREBY DECLARED THAT FOR THE PURPOSES OF THIS SUB- SECTION (A) AN ORDER PASSED [ON OR BEFORE OR AFTER THE 1S T DAY OF JUNE 1988] BY THE ASSESSING OFFICER SHALL INCLUDE 26 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER] OR THE INCOME-TAX OFFICER ON THE BASI S OF THE DIRECTIONS ISSUED BY THE [JOINT] COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE [JOINT] COMMISSIONER IN EXERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICE R CONFERRED ON OR ASSIGNED TO HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BO ARD OR BY THE [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR [PRINCIPAL D IRECTOR GENERAL OR] DIRECTOR GENERAL OR [PRINCIPAL COMMISSIONER OR] COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) 'RECORD' [SHALL INCLUDE AND SHALL BE DEEMED A LWAYS TO HAVE INCLUDED] ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTI ON AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTEROF ANY APPEAL [FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE 1988] THE POWERS OF THE [PRINCIPAL COMMISSIONER OR] COMMISSIO NER UNDER THIS SUB -SECTION SHALL EXTEND [AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SU CH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL.] [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION I T IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF T HE REVENUE IF IN THE OPINION OF THE PRINCIPAL COMMIS SIONER OR COMMISSIONER (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHO UT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WIT H ANY ORDER DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE W ITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE RENDERED BY THE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON.] [(2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) A FTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVI SED WAS PASSED.] (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2) AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HA S BEEN PASSED IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF T HE APPELLATE TRIBUNAL [NATIONAL TAX TRIBUNAL ] THE HIGH COURT OR THE SUPREME COURT. EXPLANATION.IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2) THE TIME TAKEN IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS S TAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED.' 26. A READING OF SECTION 263 OF THE ACT AND THE EXP LANATIONS AS WELL AS THE AMENDMENTS BROUGHT IN BY THE FINANCE ACT 2015 W.E.F. 01.06. 2015 BY INSERTING EXPLANATION 2 WE NOTE THAT EXPLANATION -2 IS A DEEMING PROVISION AND THE WELL SETTLED POSITION OF LAW IS THAT WHILE CONSTRUING A DEEMING PROVISION IT HAS TO BE STRICT LY INTERPRETED AND THAT THE LEGAL FICTIONS SHOULD NOT BE STRETCHED BEYOND THE PURPOSE FOR WHIC H THEY WERE ENACTED AND SHOULD NOT EXTEND THAT LEGITIMATE FIELD (RAYMOND VS. STATE OF CHATTISGARH AIR 20-07 SC 2854) AND IT SHOULD BE KEPT IN MIND THAT DEEMING PROVISION SHOUL D BE IN RESPECT OF FACTS FROM WHICH 27 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 LEGAL CONSEQUENCES WILL FOLLOW. HOWEVER A LEGAL CO NSEQUENCE CANNOT BE DEEMED [DCM VS. STATE OF RAJASTHAN (1996) 2 SCC 449. AIR 1996 SC 2 930 (3 JUDGES OF HONBLE SUPREME COURT) AND SAME VIEW REITERATED IN STATE OF KARNATA KA VS. STATE OF TAMIL NADU (2017) 3 SCC 362. SO WHEN WE LOOK AT EXPLANATION-2 WE NOTE THAT DEEMING FICTION OF LAW THAT THE ORDER OF THE ASSESSING OFFICER IS DEEMED TO BE ERRO NEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE ONLY IF IN THE OPINION OF T HE LD. CIT WHICH NECESSARILY HAS TO BE A FINDING OF FACT IN THE FOLLOWING FOUR EVENTS. THEN LEGAL CONSEQUENCE FOLLOWS IF NOT IT DOES NOT. SO THE CIT HAS TO MAKE A FINDING OF FACT IN THE FOLLOWING: (A) THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER IS WITHOUT INQUIRY OR VERIFICATION (B) THE ASSESSING OFFICER ALLOWED A CLAIM WITHOUT E NQUIRY (C) THE ASSESSING OFFICER PASSED THE ORDER NOT IN A CCORDANCE WITH ANY ORDER DIRECTIONS OR INSTRUCTIONS ISSUE BY THE CBDT U/S 119 OF THE ACT (D) THEASSESSING OFFICER PASSED THE ORDER NOT IN AC CORDANCE TO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OR THE HONBLE SUPREME CO URT WHICH IS PREJUDICIAL TO THE ASSESSEE WHICH IS RENDERED EITHER IN THE ASSESSEE S CASE OR ANY OTHER PERSON. 27. SO THE AMENDMENT BROUGHT BY THE FINANCE ACT 2 015 BY WAY OF INSERTION OF EXPLANATION-2 CAN COME TO THE AID OF THE LD. PR. C IT OR LD. CIT ONLY WHEN ANY OF THE FOUR CONDITIONS IS SATISFIED AND THERE IS A CLEAR FINDIN G OF FACT TO THAT EFFECT IS RECORDED BY THE LD. CIT THEN ONLY THE LEGAL CONSEQUENCE THAT AOS ORDE R IS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE REVENUE CAN BE DEEMED OR ELSE IT CANNOT BE DEEM ED. THEN IN THAT CASE ONLY THE ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER CA N BE DEEMED TO BE ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE NOT OTH ERWISE. TO SAY IT DIFFERENTLY THE OPINION OF LD. PR. CIT OR CIT CANNOT BE READ IN ISOLATION AND IT HAS TO BE READ WITH THE FOUR CONDITIONS STIPULATED UNDER EXPLANATION-2 AS (A) TO (D) AND HAS TO BE READ ALONG WITH IT. AND ONLY IN THE EVENT THAT ANY ONE OF THE SITUATION IS SATISFIED AND THERE IS A FINDING OF FACT BY THE LD. CIT TO THAT EFFECT IN HIS SEC. 263 ORDER THEN ONLY THE DEEMING PROVISION OF EXPLANATION- 2 CAN BE PRESSED INTO SERVICE FOR RENDERING AN ASSE SSMENT ORDER AS ERRONEOUS INSOFAR AS 28 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 PREJUDICIAL TO THE REVENUE WHICH IS THE JURISDICTI ONAL FACT & LAW REQUIRED FOR THE LD. PR. CIT/CIT TO INVOKE REVISIONAL JURISDICTION U/S 263 O F THE ACT. 28. COMING TO THE EXPRESSION IN EXPLANATION -2 IN THE OPINION OF THE LD. CIT IT CANNOT BE AN ARBITRARY OPINION BEREFT OF FACTS OR LAW BY T HE LD CIT. IT MUST BE THE CONSIDERED OPINION OF THE CIT WHICH IS BASED ON THE CORRECT FA CTS AND IN ACCORDANCE TO WELL ESTABLISHED PRINCIPLES OF LAW. THE AFORESAID CLAUSE ONLY PROVI DES FOR SITUATION WHERE INQUIRIES OR VERIFICATIONS SHOULD BE MADE BY REASONABLE AND PRUD ENT OFFICER IN THE CONTEXT OF THE CASE. SUCH CLAUSE CANNOT BE READ TO AUTHORIZE OR GIVE UNF ETTERED POWERS TO THE COMMISSIONER TO REVISE EACH AND EVERY ASSESSMENT ORDER. THE APPLICA BILITY OF THE CLAUSE IS THUS ESSENTIALLY CONTEXTUAL. IT HAS TO BE THE OPINION OF A PRUDENT PERSON INSTRUCTED IN LAW. THE HONBLE SUPREME COURT IN MANEKA GANDHI VS. UNION OF INDIA R EPORTED IN 1978 AIR (SC) 597 HAS LAID DOWN THE LAW THAT A PUBLIC AUTHORITY SHOULD DI SCHARGE HIS DUTIES IN A FAIR JUST AND REASONABLE MANNER AND THE PRINCIPLE OF DUE PROCESS OF LAW WAS RECOGNIZED BY THE HONBLE SUPREME COURT. THEREFORE THE OPINION OF THE LD. CI T HAS TO BE IN CONSONANCE WITH THAT OF THE WELL SETTLED JUDICIAL PRINCIPLES AND CANNOT BE ARBITRARILY MADE DISCARDING THE JUDICIAL PRECEDENT ON THE SUBJECT. THE OPINION OF THE LD. P R. CIT HAS TO BE REASONABLE AND THAT OF A PRUDENT PERSON INSTRUCTED IN LAW. MOREOVER IT HAS TO BE KEPT IN MIND THAT AN EXPLANATION TO SUBSTANTIVE SECTION SHOULD BE READ AS TO HARMONIZE WITH AND CLEAR UP ANY AMBIGUITY IN THE MAIN SECTION AND SHOULD NOT BE SO CONSTRUED AS TO W IDEN THE AMBIT OF THE SECTION AS HELD BY THE HONBLE SUPREME COURT IN BIHTA COOPERATIVE DEVE LOPMENT CANE MARKETING UNION LTD. VS. BANK OF BIHAR AIR 1967 SC 389 AND M/S. OBLUM E LECTRICAL INDUSTRIES PVT. LTD. HYDERABAD VS. COLLECTOR OF CUSTOMS BOMBAY - AIR 19 97 SC 3467 AT PAGE 3471 AND ALSO SEE JUSTICE G. P. SINGH PRINCIPAL OF STATUTORY INT ERPRETATION 234 LEXUS 2016. IT HAS TO BE KEPT IN MIND THAT WHILE THE COMMISSIONER IS EXERCIS ING HIS REVISIONAL JURISDICTION OVER THE ASSESSMENT ORDER HE HAS TO EXERCISE HIS POWER IN A N OBJECTIVE MANNER AND NOT ARBITRARILY OR SUBJECTIVELY SINCE HE IS DISCHARGING QUASI-JUDICIAL POWERS VESTED IN HIM WHILE DOING SO. THUS ACCORDING TO US EXPLANATION (2) INSERTED BY T HE PARLIAMENT U/S. 263 CANNOT OVERRIDE THE MAIN SECTION I.E. SEC. 263(1) OF THE ACT. THE LD. CIT CAN EXERCISE HIS REVISIONAL JURISDICTION IN THE EVENT THE ASSESSMENT ORDER IS E RRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS DISCUSSED ABOVE AND NOT OTHERWISE. 29 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 29. AS WE DISCUSSED ABOVE THE OPINION OF THE LD. CIT BASED ON THE DEEMING PROVISION OF EXPLANATION 2 TO SEC. 263 OF THE ACT SHOULD BE O N THE BEDROCK OF THE FINDING OF FACT THAT AOS ORDER FALLS IN THE INFIRMITIES/CONDITION STIPU LATED UNDER THE EXPLANATION 2(A) TO (D) AND THEN ONLY THE OPINION OF THE LD. CIT SHOULD PREVAIL AND NOT THAT OF ANY OTHER PERSON. THEREFORE WHEN THE ISSUE OF ASSUMPTION OF JURISDIC TION OF THE LD.CIT IS TESTED ON THE BACK- DROP OF THE JUDICIAL PRECEDENT OF THE SUBJECT WE N OTE THAT THE AO HAD CALLED FOR DOCUMENTS FROM THE ASSESSEE VIDE NOTICE ISSUED U/S. 142(1) DA TED 11.11.2016 AND HAS PASSED THE ORDER ON 23.12.2016 AFTER PERUSAL OF REPLIES OF ASSESSEE AS DISCUSSED. THE AO HAD ACKNOWLEDGED TO HAVE RECEIVED THE SAME IN THE ASSESSMENT ORDER I TSELF BY RECORDING A SPECIFIC FINDING IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAD RECEIVED FOREIGN ASSIGNMENT ALLOWANCE. SO THE ISSUE OF FOREIGN ASSIGNMENT ALLOWANCE TO THE TUNE O F RS.42 97 092/- WHICH IS THE BONE OF CONTENTION IN THIS CASE WAS INDEED CONSIDERED AND E XAMINED BY THE AO. WE ALSO NOTE THAT THE ASSESSEE HAD ALSO FURNISHED BEFORE THE AO REQUI SITE DOCUMENTARY EVIDENCES WHICH PROVED THE FOREIGN ASSIGNMENT ALLOWANCE WHICH WAS E XCLUDED FROM THE AMBIT OF TOTAL INCOME TAXABLE IN INDIA HAD SUFFERED APPLICABLE TA X IN SWITZERLAND BEING THE COUNTRY WHERE THE SERVICES WERE ACTUALLY RENDERED. HAVING CONSIDE RED THESE EVIDENCES EXPLANATIONS AND APPLICABLE LEGAL PROVISIONS THE AO RECORDED THE SP ECIFIC FINDING THAT THE ASSESSEE WAS IN INDIA ONLY FOR 16 DAYS AND THE REST OF THE PERIOD H E WAS IN ASSIGNMENT TO SWITZERLAND AND HAD RECEIVED FOREIGN ASSIGNMENT ALLOWANCE . IN SUCH A SCENARIO THE FINDING RECORDED BY THE AO CANNOT BE TERMED AS A CASE OF NO-ENQUIRY AT ALL IN RESPECT OF FOREIGN ASSIGNMENT ALLOWANCE OF THE ASSESSEE. THEREFORE THE LD. CIT S VIEW THAT THE ACTION OF THE AO IN ALLOWING THE AMOUNT OF RS.42 97 092/- AS EXEMPT FRO M TAXATION IS IN VIOLATION OF THE PROVISION OF SEC. 5(2) OF THE ACT WITHOUT ANY ENQUI RY IS FACTUALLY INCORRECT. WE NOTE THAT THIS ISSUE WAS CONSIDERED BY THE AO AND AFTER ENQUI RY HE HAS TAKEN A VIEW TO ALLOW THE CLAIM OF THE ASSESSEE THAT THIS FOREIGN ASSIGNMENT ALLOWANCE IS NOT TAXABLE IN INDIA. WE THEREFORE HOLD THAT THE AOS VIEW CANNOT BE HELD TO BE ERRONEOUS FOR WANT OF ENQUIRY. 30. WE FURTHER FIND THAT WHEN CONFRONTED WITH THE R EASONS SET OUT IN THE SCN THE ASSESSEE HAD LED BEFORE THE LD. CIT SUFFICIENT DOCU MENTARY EVIDENCE WHICH PROVED THAT THE SCN HAD PROCEEDED ON ASSUMPTION OF INCORRECT FACTS AND WRONG INTERPRETATION OF APPLICABLE 30 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 LEGAL PROVISIONS. IT WAS ALSO ESTABLISHED BEFORE TH E LD. CIT THAT BEFORE COMPLETION OF ASSESSMENT THE AO HAD INDEED MADE ENQUIRIES INTO T HE FOREIGN ASSIGNMENT ALLOWANCE AND AFTER BEING SATISFIED ABOUT ITS NON-TAXABILITY THE ORDER U/S 143(3) OF THE ACT WAS PASSED. ON RECEIPT OF THESE OBJECTIONS THOUGH THE LD. CIT DID NOT AGREE WITH THE SUBMISSIONS WE FIND THAT ULTIMATELY THE REASONS ON WHICH THE LD. CIT P ROCEEDED TO PASS THE ORDER DID NOT CONTAIN ANY SUBSTANTIVE LEGAL OR FACTUAL MATERIAL BY WHICH HE WAS ABLE TO PROVE THAT THE SAID EXPLANATIONS SUFFERED FROM ANY INFIRMITY. INSTEAD W E NOTE THAT THE LD. CIT ULTIMATELY MERELY SET ASIDE THE ASSESSMENT ORDER DIRECTING AO TO PASS THE ORDER AFRESH IN ACCORDANCE WITH LAW WHICH IN OUR OPINION WAS NOTHING BUT GIVING THE AO SECOND INNINGS WITHOUT ESTABLISHING THAT THE AO'S ORDER WAS ERRONEOUS AS WELL AS PREJUD ICIAL TO THE INTERESTS OF THE REVENUE. OUR FINDINGS IN THIS REGARD FIND SUPPORT IN THE FOLLOWI NG JUDGMENTS: - DIT VS JYOTI FOUNDATION REPORTED IN 357 IT R 388 (DEL) - ITO VS DG HOUSING PROJECTS LTD REPORTED IN 343 ITR 329 - CIT VS ASHISH RAJPAL REPORTED IN 320 ITR 6 74 (DEL) - CIT VS SUNBEAM AUTO LTD REPORTED IN 332 IT R 167 (DEL) - CIT VS R.K.CONSTRUCTION CO. REPORTED IN 31 3 ITR 65 (GUJ) 31. IN THE LIGHT OF THE ABOVE WE ARE OF THE FIRM V IEW THAT NOT ONLY DID THE AO ENQUIRE INTO THE ISSUE OF TAXABILITY OF FOREIGN ASSIGNMENT ALLOWANCE RECEIVED BY THE ASSESSEE BUT HAD CONSCIOUSLY APPLIED HIS MIND TO THE FACTS MADE AVAI LABLE BEFORE HIM AND ADOPTED THE PERMISSIBLE VIEW IN LAW. FOR THESE REASONS WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT ORDER IS NOT THE RESULT OF NON-ENQUIRY O R NON-APPLICATION OF MIND OR ASSUMPTION OF WRONG FACTS. WE ARE ALSO OF THE CONSIDERED OPINI ON THAT WHILE PASSING THE ASSESSMENT ORDER THE AO HAD FOLLOWED THE PERMISSIBLE VIEW IN L AW WHICH CANNOT BE SAID TO BE 'UNSUSTAINABLE IN LAW'. IN THE CIRCUMSTANCES THEREF ORE THE JURISDICTIONAL FACTS FOR USURPING THE JURISDICTION U/S 263 OF THE ACT BEING ABSENT WE HOLD THAT THE ACTION OF LD. CIT WAS WITHOUT JURISDICTION AND ALL SUBSEQUENT ACTIONS ARE 'NULL' IN THE EYES OF LAW. WE THEREFORE QUASH THE ORDER IMPUGNED BEFORE US. SINCE ALL THE A PPEALS ITSELF HAS BEEN DECIDED THEREFORE THE STAY APPLICATIONS BECOME INFRUCTUOUS AND STANDS DISMISSED. 31 SA NOS. 99-104/KOL/2019 & ITA NOS. 1304 1306 1308 1311 1314&1315/KOL/2019 AY- 2014-15 32. IN THE RESULT ALL THE SIX APPEALS OF THE ASSES SEES ARE ALLOWED AND THE STAY APPLICATIONS ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15TH NOVEM BER 2019. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15TH NOVEMBER 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ASSESSEE/APPLICANT 2 RESPONDENT ACIT (IT) CIRCLE-1(2) 1(1) KOLKAT A 3. 4. CIT(IT&TP) KOLKATA. (SENT THROUGH E-MAIL) DR ITAT KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY BY ORDER ASSISTANT REGISTRAR