ITO, Hyderabad v. Chandra Sekhara Rao T., Hyderabad

ITA 1663/HYD/2008 | 2005-2006
Pronouncement Date: 05-02-2010 | Result: Allowed

Appeal Details

RSA Number 166322514 RSA 2008
Assessee PAN AANPT6277D
Bench Hyderabad
Appeal Number ITA 1663/HYD/2008
Duration Of Justice 1 year(s) 2 month(s) 21 day(s)
Appellant ITO, Hyderabad
Respondent Chandra Sekhara Rao T., Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 05-02-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 05-02-2010
Date Of Final Hearing 20-01-2010
Next Hearing Date 20-01-2010
Assessment Year 2005-2006
Appeal Filed On 14-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMEBR ITA NO.1663/HYD/08 : ASST. YEAR 2005-06 ITA NO.692/HYD/09 : ASST. YEAR 2006-07 INCOME-TAX OFFICER WRD-2(2) HYDERABAD. V/S. SHRI T.CHANDRA SEKHAR RAO HYDERABAD. ( PAN AANPT 6277 D ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.PHANI RAJU RESPONDENT BY : SHRI B.R.MAHESH O R D E R PER G.C.GUPTA VICE PRESIDENT: THESE TWO APPEALS BY THE REVENUE FOR THE ASSESSMENT YE AR 2005-06 AND 2006-07 ARE DIRECTED AGAINST SIMILAR BUT SEPARATE ORDERS OF THE CIT(A). SINCE IDENTICAL ISSUE IS INVOLVED BOTH T HESE APPEALS ARE BEING DISPOSED OFF WITH THIS CONSOLIDATED ORDER. 2. GROUNDS OF APPEAL OF THE REVENUE IN BOTH THESE A PPEALS ARE IDENTICAL AND THE SAME AS TAKEN FROM THE APPEAL FOR ASSESSMENT YEAR 2006-07 READ AS FOLLOWS- 'THE ASSESSEE HIMSELF DECLARED AS A RESIDENT OF IND IA IN THE RETURN OF INCOME. THE PROVISION OF THE SECTIONS 10(15)(IV)(FA) IS APP LICABLE TO ONLY NON RESIDENTS AND RESIDENT BUT NOT ORDINARY RESIDEN CE. THE ASSESSEE WORKED IN SULTANATE OF OMMAN FOR 20 YEARS AND RETURNED TO INDIA DURING THE YEAR 1995-96. ITA NO.1663/HYD/08&ANR SHRI T.CHANDRA SEKHARA RAO HYDERABAD 2 THE ASSESSEE HAS CONVERTED THE FOREIGN EXCHANGE MON EY IN TO INDIAN RUPEES. THE PROVISIONS UNDER SECTION 10(15) (IV)(FA) IS NOT APPLICABLE FOR CONVERSION OF FOREIGN EXCHANGE IN IN DIA RUPEES.' 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE WAS NON-RESIDENT IN THE EARLIER YEARS BUT HAS RET URNED TO INDIA DURING THE YEAR 1995-96 AND THEREAFTER HE WAS 'RESID ENT' IN INDIA. HE SUBMITTED THAT FOR THE ASSESSMENT YEARS UNDER CONSIDERATION THE ASSESSEE HAS FILED RETURNS OF INCOME IN FORM NO.2D SHOWIN G HIS STATUS AS 'RESIDENT'. THE ASSESSING OFFICER IN THE IMPUGNED ASSESSME NT ORDERS HAS ASSIGNED THE STATUS OF 'RESIDENT' TO THE ASSESSEE. THE P ROVISION OF S.10(15)(IV)(FA) OF THE INCOME-TAX ACT PROVIDES EXEM PTION FROM TAX ONLY TO THE AMOUNT OF INTEREST PAID BY A SCHEDULED BANK TO A 'NON-RESIDENT OR TO A PERSON WHO IS 'NOT ORDINARILY RESIDENT' ON DEPOSIT IN FOREIGN EXCHANGE WHERE THE ACCEPTANCE OF SUCH DEPOSIT BY THE BANK IS APPROV ED BY THE RESERVE BANK OF INDIA. HE SUBMITTED THAT THE ASSESSEE HA S CONVERTED THE FOREIGN EXCHANGE MONEY INTO INDIAN RUPEES AND MOREOVE R THIS PROVISION OF S.10(15)(IV)(FA) IS APPLICABLE ONLY TO 'NON-RESIDEN T' AND 'RESIDENT BUT NOT ORDINARILY RESIDENT' AND NOT TO THE ASSESSEE WHO IS 'RESIDENT' DURING THE RELEVANT PERIOD. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS WRONGLY ASSIGNED THE STATUS OF 'RESIDENT' BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE MONEY WAS DEPOOSITED IN FOREIGN EXCHANGE IN THE SCHEDULED BANK AND THEREFORE EVEN IF THE ASSESSEE RETURNED TO INDIA SINCE THE MONEY CONTINUED IN THE NON-RESIDENT EXTERNAL ACCOUNT WITH SCHEDULED BANK ASSESSEE IS ENTITLED TO EXEMPTION AS PROVIDED UNDER THE PROVISIONS OF S.10(15)(IV)(FA) O F THE ACT. 5. IN REPLY TO A SPECIFIC QUERY FROM THE BENCH THE L EARNED COUNSEL FOR THE ASSESSEE CONCEDED THAT THE ASSESSEE HAS NOT PRE FERRED ITA NO.1663/HYD/08&ANR SHRI T.CHANDRA SEKHARA RAO HYDERABAD 3 ANY GROUND OF APPEAL BEFORE THE CIT(A) ON THE ISSUE O F THE STATUS OF 'RESIDENT' ASSIGNED TO THE ASSESSEE BY THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. WE FIND THAT THE ASSESSEE HAS RETURNED TO INDIA FROM OMMAN DUR ING THE YEAR 1995-96. THE RELEVANT ASSESSMENT YEARS UNDER CONSIDERATIO N IN THESE APPEALS ARE 2005-06 AND 2006-07 AND THE ASSESSEE HIMSELF HAS CLAIMED THE STATUS OF 'RESIDENT' IN THE RETURNS OF INCOME FILED WITH THE DEPARTMENT ON FORM 2D COPIES OF WHICH ARE FILED BY THE REVENUE BEFORE US. IN THE ASSESSMENT ORDERS FOR THE RELEVANT ASSESSMENT YEARS THE A SSESSING OFFICER HAS ASSIGNED THE STATUS OF 'RESIDENT' TO THE ASSESSEE. THE ASSESSEE ADMITTEDLY HAS NOT PREFERRED ANY GROUND IN THE APPEALS BEFORE THE CIT(A) AGITATING THE STATUS OF 'RESIDENT ' ASSIGNED TO HIM BY THE ASSESSING OFFICER. IN THESE FACTS IT IS NOT OPEN TO T HE ASSESSEE NOW TO AGITATE THE CORRECTNESS OF THE STATUS OF 'RESIDENT' ASSIG NED TO HIM FOR THE RELEVANT ASSESSMENT YEARS BY THE ASSESSING OFFICER. THE P ROVISIONS OF S.10(15)(IV)(FA) GIVES EXEMPTION TO INTEREST PAYABLE BY A SCHEDULED BANK TO A 'NON-RESIDENT' OR A PERSON WHO IS 'NOT ORDINARILY RESIDENT' WITHIN THE MEANING OF S.6(6) OF THE INCOME TAX ACT ON DEPOSITS I N FOREIGN CURRENCY WHERE THE ACCEPTANCE OF SUCH DEPOSITS BY THE BANK IS APPRO VED BY THE RESERVE BANK OF INDIA. THIS PROVISION OF LAW NO WHERE PROVIDES EXEMPTION FROM TAX ON THE INTEREST PAYABLE BY A SCHEDU LED BANK TO A 'RESIDENT'. IN REPLY TO A SPECIFIC QUERY FROM THE BE NCH THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT CITE ANY PROVISION OF LA W OR ANY INSTRUCTION OF THE CENTRAL BOARD OF DIRECT TAXES GIV ING SUCH EXEMPTION TO INTEREST PAYABLE BY A SCHEDULED BANK TO A 'RESIDENT' ASSESSEE. THE PROVISIONS OF S.10(15)(IV)(FA) IS CLEAR ON THE ISSUE AND NOWHERE PROVIDES EXEMPTION TO A 'RESIDENT' ON THE AMOUNT OF INTEREST P AYABLE BY A SCHEDULED BANK EVEN IF OTHER CONDITIONS ARE SATISFIED. IN THESE FACTS OF THE CASE WE HOLD THAT IN THE ABSENCE OF ANY PROVISION OF LAW PROVIDING EXEMPTION FROM TAX ON THE AMOUNT OF INTEREST PAYABLE BY A SCHEDULED ITA NO.1663/HYD/08&ANR SHRI T.CHANDRA SEKHARA RAO HYDERABAD 4 BANK TO A 'RESIDENT' THE AMOUNTS OF INTEREST WERE RIG HTLY TAXED BY THE ASSESSING OFFICER IN THE YEARS UNDER CONSIDERATION. ACCORDIN GLY IMPUGNED ORDERS OF THE CIT(A) ARE REVERSED AND THE ORDERS OF T HE ASSESSING OFFICER ON THIS ASPECT ARE RESTORED. CONSEQUENTLY GROUNDS OF AP PEAL OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE ALLOWED. 7. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A RE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5.2.2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 05-02-2010 COPY FORWARDED TO: 1. SHRI T.CHANDRA SEKHAR RAO 16-2-739/48/11 ASMANG RAM MALAKPET HYDERABAD. 2. INCOME TAX OFFICER WARD 2(2) HYDERABAD. 3. COMMISSIONER OF INCOME-TAX(APPEALS) III HYDERABAD. 4. COMMISSIONER OF INCOME-TAX II HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.