Acit New Delhi v. Shri Sanjay Sethi New Delhi

Page 1 Income Tax Appellate Tribunal Delhi Bench G New Delhi Before Shri H S Sidhu Judicial Member And Shri Prashant Maharishi Accountant Member Ita No 1652 Del 2011 Assessment Year 2007 08 Acit Circle 46 1 Room No 425 A 4 Th Floor Mayur Bhawan New Delhi Vs Sanjay Sethi B 80 Sarvodaya Enclave New Delhi Pan Anrps 4525 N Appellant Respondent Revenue By Shri Kaushlendra Tiwari Sr Dr Assessee By Shri Pramod Jain Ca Date Of Hearing 25 09 2017 Date Of Pronouncement 1 3 1 2 2017 O R D E R Per Prashant Maharishi A M 1 This Appeal Is Preferred By Assistant Commissioner Of Income Tax Circle 46 1 New Delhi Hereinafter Referred To As The L D Assessing Officer Against The Order Of The Ld Commissioner Of Income Tax Appeals Xxx New Delhi Dated 25 01 2011 For Assessment Year 2007 08 In Case Of The Assessee Where The Addition Of Rs 888383 1 Was Deleted The Ld Assessing Officer Has Raised Following Ground S Of Appeal Before Us I Deleting The Addition Of Rs 88 83 831 Rightly Made By The Ao On Account Of Profit In Lieu Of Salary U S 17 3 Ii Of The It Act 1961 Not Considering The Fact That A The Trust Was Established By The Settler Employer Co Mpany For The Welfare Of The Employees Only B The Objectives Of The Trust Make It Amply Clear That The Sum Received By The Assessee Is Nothing But A Reward For Employment With The Employer Settler Company And C That The Connection Of The Assessee With The Trust Was Only On Account Of His Connection With The Employer Company Ii Holding That The Trust Is A Discretionary Trust Without Considering The Discussion Made By The Ao In The Assessment Order In Point No I Of Sub Para 3 1 Which Makes It Clear T Hat The Trust Is A Specific Or Determinate Trust And Not A Discretionary Trust Since All The Beneficiaries Of The Trust Are Specially Known And Determinate And The Trust Deed No Where Mentioned That The Income Of The Trust Was To Be Distributed On The Comp Lete Discretion Of The Trustees Iii Not Considering The Fact That The Amount Of Rs 88 83 8317 Is Taxable In The Hands Of The Assessee As A In The Relevant Computation Of Income The Trust Has Declared Income In The Income Expenditure Account Post Distribution To The Beneficiaries And Hence This Is Not A Case Of Double Taxation Or Double Assessment B The Assessee Acit Vs Sanjay Sethi Ita No 1652 Del 2011 Assessment Year 2007 08 Page 2 Is The Right Person To Be Taxed For The Said Amount Since His Share Is Determinate C The Said Income Of The Assessee Falls Within T He Scope Of Section 5 Of The Act And Chargeable To Tax U S 4 Of The It Act 1961 2 The Brief Facts Of The Case Shows That Assessee Is An Individual Earning Salary Income For The Year He Filed His Return Of Income On 31 7 2007 Declaring Total Income Of Rs 4 925510 During The Course Of Assessment Proceedings On Verification Of The Bank Account Of The Assessee Ld Assessing Officer Found That Rs 8883831 Had Been Deposited In The Hdfc Bank Account Of The Assessee On 16 01 2007 The Assessee Was Asked To Explain The Detail Of The Above Amount Which Was Treated By Assessee As A Capital Receipt Before The Ld Assessing Officer The Assessee Explained That Assessee Is A Beneficiary Of A Discreti Onary Trust Of The Employees Welfare Trust Of The Employer During The Year The Trustees Of The Trust Have Distributed The Amount To The Assessee As A Beneficiary The Trust Has Already Discharged Its Obligation Under The Income Tax Act By Paying The Tax At The Appropriate Rate On The Income Earned By The Trust The Assessee Stated That As A Beneficiary He Has Received The Above Sum Being Part Of The Distribution Made By The Trustees To The Beneficiaries Of The Trust And Therefore Same Is A Capital Receipt And Not Chargeable To Tax 3 The Ld Assessing Officer Rejected The Contention Of The Assessee And Held That Above Sum Received Is Chargeable To Tax Within The Scope Of Provisions Of Section 17 3 Ii Of The Act And Thus Of The Nature Of Profits In Lieu Of Salary According To Him The Said Sum Of Rs Rs 8883831 Is Chargeable To Tax Therefore The Total Income Of The Assessee Was Assessed That Rs 13809341 Against The R Eturned Income Of Rs 4 925510 Wherein The Addition Of Rs 8883831 Has Been M Ade Vide Assessment Order Dated 30 12 2009 Passed Under Section 143 3 Of The Income Tax Act 1961 4 Aggrieved With The Order Of The Ld Ao The Assessee Preferred An Appeal Before The Ld First Appellate Authority Vide Order Dated 25 01 2011 The Above Addition Was Deleted Therefore Revenue Is In Appeal Before Us 5 The Ld Departmental Representative Relied Upon The Order Ld Ao 6 The Ld Authorised Representative Filed A Paper Book Containing 68 Pages And Vehemently Relied Upon The Order Of The Ld Cit A He Further Stated That Issue Is Squarely Covered In Favour Of The Assessee By The Decision Of The Coordinate Bench In Case Of Ita No 1651 Del 2011 Wherein The Addition Has Been Deleted Following The Decision Of The Honble Supreme Court In The C Ase Of Cit V S Kamalini Khatau 209 Itr 101 7 We Have Carefully Considered The Rival Contention And Perused The Orders Of The Lower Authorities The Identical Issue Arose In Case Of Mr Manu Khochar In Ita No 1651 Del 2011 Acit Vs Sanjay Sethi Ita No 1652 Del 2011 Assessment Year 2007 08 Page 3 For Assessment Year 2007 08 Wherei N V Ide Order Dated 27 04 2017 Coordinate Bench Has Deleted The Addition In The Hands Of That Assessee On The Identical Facts And Circumstances Of The Case Therefore Respectfully Following The Decision Of The Coordinate Bench We Find No Infirmity In The Order Of The Ld Cit A In Deleting The Impugned Addition In The Result All The Three Grounds Raised By The Ld Assessing Officer With Respect To The Taxation Of Rs 8883831 Of The Distribution From The Beneficiary Trust Taxed By The Ld Assessing Of Ficer Under Section 17 3 Ii Of The Act 8 In The Result Appeal Of The Revenue Is Dismissed Order Pronounced In The Open Court On 1 3 1 2 2017 S D S D H S Sidhu Prashant Maharishi Judicial Member Accountant Member Dated 1 3 12 2017 A K Keot Copy Forwarded To 1 Applicant 2 Respondent 3 Cit 4 Cit A 5 Dr Itat Assistant Registrar Itat New Delhi