Justice Hari Swarup (Retd Judge),, v. ITO, Ward-37(3),,

ITA 20/DEL/2005 | 2001-2002
Pronouncement Date: 11-02-2010 | Result: Allowed

Appeal Details

RSA Number 2020114 RSA 2005
Assessee PAN EIVED4615A
Bench Delhi
Appeal Number ITA 20/DEL/2005
Duration Of Justice 5 year(s) 1 month(s) 7 day(s)
Appellant Justice Hari Swarup (Retd Judge),,
Respondent ITO, Ward-37(3),,
Appeal Type Income Tax Appeal
Pronouncement Date 11-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 11-02-2010
Date Of Final Hearing 10-02-2010
Next Hearing Date 10-02-2010
Assessment Year 2001-2002
Appeal Filed On 03-01-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E : NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER I.T.A. NO.20/DEL/2005 ASSESSMENT YEAR : 2001-02 JUSTICE HARI SWARUP INCOME-TAX OFFICER 130 LAWYERS CHAMBER VS. WARD 37(3) NEW D ELHI. SUPREME COURT NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ SWARUP & MS. LALITA KOHLI SHRI ANUBHAV KUMAR. RESPONDENT BY : SHRI G.S. SAHOTA SR. DR. O R D E R PER B.P. JAIN ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXVIII NEW DE LHI DATED 27 TH OCTOBER 2004 IN AN APPEAL AGAINST ORDER UNDER SECT ION 143(3) OF THE INCOME-TAX ACT 1961 (THE ACT) PERTAINING TO THE AS SESSMENT YEAR 2001-02. 2. THE APPELLANT IN THE PRESENT APPEAL HAS TAKEN AS MANY AS 13 GROUNDS OF APPEAL BEFORE US MAINLY ON THE ISSUE THAT HE HAS BEEN DENIED DEDUCTION UNDER SECTION 80RRA OF THE ACT. 3. IT HAS BEEN STATED THAT THE APPELLANT IS A RETIR ED JUDGE OF ALLAHABAD HIGH COURT AND A REGULAR ASSESSEE WITH THE INCOME T AX DEPARTMENT. THE 2 ASSESSEE HAS BY LONG PRACTICE AT THE BAR AND AS JU DGE OF THE HIGH COURT ACQUIRED SPECIALIZED KNOWLEDGE OF LAW AND JURISPRUD ENCE WHICH IS A SOCIAL SCIENCE. IT HAS BEEN SUBMITTED THAT BY DOING ARBITR ATIONS RELATING TO CONSTRUCTION ENGINEERING CONTRACTS HE HAS ACQUIRED KNOWLEDGE ALSO OF CONSTRUCTION ENGINEERING WORKS. THE CONTRACT IN RE SPECT OF WHICH HE WAS APPOINTED ARBITRATOR TO CONDUCT ARBITRATION IN MONT REAL CANADA ALSO RELATED TO CONSTRUCTION ENGINEERING WORK. THE APPELLANT WA S NOT A GOVERNMENT EMPLOYEE AND THE AMOUNT PAYABLE TO EACH ARBITRATOR WAS DEPENDENT ON THE DECISION OF THE BOARD OF ARBITRATORS AS MAY BE CONT AINED IN THE FINAL AWARD THE QUESTION OF APPROVAL BY THE CENTRAL GOVERNMENT OR THE PRESCRIBED AUTHORITY DID NOT ARISE. THE APPELLANT HAS FILED HI S RETURN OF INCOME ON 30.3.2002 AT RS.7 06 870/- AFTER CLAIMING DEDUCTION U/S 80RRA OF THE INCOME TAX ACT 1961 OF RS.10 79 149/- BEING 60% OF THE TOTAL EARNED INCOME OF RS.17 98 982/- SHOWN IN THE RETURN OF INC OME FILED BEFORE THE LEARNED ASSESSING OFFICER. THE ASSESSEE HAD DERIVED INCOME IN FOREIGN EXCHANGE (CANADIAN DOLLARS) AS ARBITRATOR BEING APP OINTED AS A PERSON HAVING SPECIALISED KNOWLEDGE OF LAW AND ALSO HAVING KNOWLEDGE CONCERNING CONSTRUCTION ENGINEER WORKS AND CONTRACTS. LAW BEIN G SOCIAL SCIENCE THE APPELLANT IS COVERED WITHIN THE DEFINITIONS OF TEC HNICIAN AS ENUMERATED U/S 80RRA OF THE INCOME TAX ACT 1961. THE LEARNED ASSE SSING AUTHORITY BY ITS 3 ORDER DATED 31.12.2003 DID NOT ALLOW THE DEDUCTION UNDER SECTION 80-RRA OF THE INCOME TAX ACT. THAT THE APPELLANT FILED APP EAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS XXVII-NEW DELHI WHICH WAS REGISTERED AS APPEAL NO. 245/03-04. IN THE APPEAL ASSESSEE ALSO FILED WRITTEN SUBMISSION. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL)-XXVIII NEW DELHI DISMISSED THE APPEAL ON 27.10.2004 CONFIR MING THE DISALLOWANCE OF CLAIM MADE BY THE APPELLANT. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE FACTS AND MATERIAL AVAILABLE ON RECORD. THE DISALLOWANCE MADE BY THE AO WAS MAI NLY ON TWO GROUNDS AS UNDER:- A) THE APPELLANT IS NOT A TECHNICIAN WITHIN THE MEANIN G TO RULE 11- C OF THE I.T. RULES. B) THE TERMS AND CONDITIONS OF THE APPELLANTS SERVICE S OUTSIDE INDIA WERE NOT APPROVED BY THE CENTRAL GOVERNMENT A S REQUIRED UNDER THE PROVISIONS OF SECTION 80RRA(2)(II). 5. BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED THAT VIEW TAKEN BY THE AO IS NOT CORRECT FOR THE FOLLOWING REASONS:- I) RULE 11C DOES NOT APPLY IN THE CASE OF THE APPELLAN T WHO CLAIMS TO BE TECHNICIAN WITHIN THE MEANING OF S UB CLAUSE (V) OF EXPLANATION (C) TO SECTION 80RRA AND 4 NOT UNDER SUB CLAUSE (VI). THE RULE 11C IS APPLICA BLE ONLY IN CASE OF SUB CLAUSE (VI). II) LAW IS A FIELD OF SOCIAL SCIENCE AS OBSERVED BY MOS T OF THE JURISTS IN THEIR RESPECTIVE BOOKS ON JURISPRUDE NCE. III) THE APPELLANT IS A RETIRED HIGH COURT JUDGE AND SEN IOR ADVOCATE OF THE SUPREME COURT OF INDIA HAVING SPECIALIZED KNOWLEDGE OF LAW AND THEREFORE HE QUALIFIES AS TECHNICIAN WITHIN THE MEANING OF EXPLANATION C SUB CLAUSE (V) OF SECTION 80RRA. IV) THE SECOND GROUND FOR NOT ALLOWING THE DEDUCTION BY INCOME-TAX OFFICER IS THAT THE CONDITIONS OF ASSESS EES SERVICE OUTSIDE INDIA HAD TO BE APPROVED BY CENTRAL GOVT. OR PRESCRIBED AUTHORITY. THIS REQUIREMENT IS UNDER SUB SECTION 2(II) OF SECTION 80RRA. IN SUPPORT OF THEIR STAND THE FOLLOWING CASE LAWS H AVE BEEN CITED: I) SMT. KUNTI VERMAN VS. CBDT (1996) TAXMAN 139 (DELHI). II) CBDT VS. ADITYA V. BIRLA (1988) 170 ITR 137 (SC). III) TARU JETHAMAL LALVANI VS. SECRETARY MINISTRY OF FINANCE (1990) 185 ITR 418 (BOM.). THE LEARNED CIT(A) EXAMINED THE ISSUES WHETHER DEDU CTION UNDER SECTION 80RRA IS ADMISSIBLE I.E. WHETHER THE ASSESSEE QUALI FIES FOR BEING A TECHNICIAN WHETHER THE AMOUNT RECEIVED BY THE ASSE SSEE QUALIFIES FOR DEDUCTION AS REMUNERATION AND WHETHER THE APPROVAL OF THE CENTRAL GOVERNMENT OR PRESCRIBED AUTHORITY IS A PRE-REQUISI TE FOR CLAIM OF DEDUCTION UNDER SECTION 80RRA OF THE ACT. 5 6. IN REGARD TO THE QUALIFICATION FOR BEING TECHNIC IAN IT WAS OBSERVED VIDE PARA 9 OF CIT(A)S ORDER THAT THE ASSESSEE HAS CITE D SEPARATE DEFINITIONS OF VARIOUS JURISTS AND ACCORDINGLY THE LEARNED CIT(A) TREATED THE LAW AS A SOCIAL SCIENCE AND AS REGARDS RULE 11C HE HAD NOT DISPUTE D TO THE SAID RULE. WHEREAS ON THE ISSUE OF REMUNERATION THE LEARNED CI T(A) OBSERVED THAT THE ASSESSEE IS ONE OF THE ARBITRATORS APPOINTED BY NAT IONAL HYDRO ELECTRONIC POWER CORPORATION (NHPC) IN THE CAPACITY AS ONE OF THE THREE MEMBERS OF THE ARBITRAL TRIBUNAL AND THE PAYMENT HAD BEEN RECE IVED IN THE CAPACITY AS MEMBER OF THE ARBITRAL TRIBUNAL. THE PROCEEDINGS A RE IN THE NATURE OF ARBITRATION AND THE PAYMENT HAS BEEN MADE OUT OF TH E ACCOUNT OF THE TRUST IN WHICH BOTH THE PARTIES HAD DEPOSITED THE MONEY TO B E TREATED BY THE THIRD ARBITRATOR. THE LEARNED CIT(A) OBSERVED THAT THE S AID AMOUNT IS NOT REMUNERATION OR CONSULTATION FEES AND CANNOT BE COV ERED UNDER SECTION 80RRA FOR THE DEDUCTION. THE LEARNED CIT(A) VIDE P ARA 12 OF HIS ORDER OBSERVED THAT IT IS NOT AT ALL CORRECT THAT THE REQ UIREMENT FOR APPROVAL OF THE CENTRAL GOVERNMENT OR THE PRESCRIBED AUTHORITY IS O NLY UNDER SUB-SECTION 2(II) OF SECTION 80RRA OF THE ACT. THE QUESTION OF GETTING APPROVAL FROM THE CENTRAL GOVERNMENT DOES NOT ARISE EVEN WHEN THE APPLICATION HAS NOT BEEN FILED. THEREFORE IN THE CIRCUMSTANCES AND FA CTS OF THE CASE THE LEARNED 6 CIT(A) DISMISSED THE CLAIM OF THE ASSESSEE FOR DEDU CTION UNDER SECTION 80RR OF THE ACT. 7. AS PER SECTION 80RRA(2)(II) DEDUCTION UNDER SEC TION 80RRA SHALL BE ALLOWED IF A PERSON IS A TECHNICIAN AND THE TERMS AND CONDITIONS OF HIS SERVICE OUTSIDE INDIA ARE APPROVED BY THE CENTRAL G OVERNMENT OR THE PRESCRIBED AUTHORITY. AS PER EXPLANATION (C) TO TH E SAID SECTION `TECHNICIAN MEANS A PERSON HAVING SPECIALISED KNO WLEDGE AND EXPERIENCE IN (I) CONSTRUCTIONAL OR MANUFACTURING OPERATIONS OR M INING OR THE GENERATION OR DISTRIBUTION OF ELECTRICITY OR ANY OT HER FORM OF POWER; OR (II) AGRICULTURAL ANIMAL HUSBANDRY DAIRY FARMING DEEP SEA FISHING OR SHIP BUILDING; OR (III) PUBLIC ADMINISTRATION OR INDUSTRIAL OR BUSINE SS MANAGEMENT; OR (IV) ACCOUNTANCY; OR (V) ANY FIELD OF NATURAL OR APPLIED SCIENCE (INCLUD ING MEDICAL SCIENCE) OR SOCIAL SCIENCE; OR (VI) ANY OTHER FIELD WHICH THE BOARD MAY PRESCRIBE IN THIS BEHALF WHO IS EMPLOYED IN A CAPACITY IN WHICH SUCH SPECIALIZED KNOWLEDGE AND EXPERIENCE ARE ACTUALLY UTILIZED; ON READING OF THE SAID SECTION TECHNICIAN MEANS A P ERSON HAVING A SPECIALISED KNOWLEDGE AND EXPERIENCE IN THE FIELD O F SOCIAL SCIENCE. THE LEARNED CIT(A) DOES NOT HAVE ANY OBJECTION IN TREAT ING THE FIELD OF LAW AS A 7 SOCIAL SCIENCE AS PER HIS OBSERVATION IN PARA 9 OF HIS ORDER. THE ASSESSEE IS RETIRED JUDGE OF HONBLE ALLAHABD HIGH COLURT WHERE HE HAS ACQUIRED AS JUDGE OF THE HONBLE HIGH COURT THE SPECIALIZED KNO WLEDGE AND EXPERIENCE OF LAW AND JURISPRUDENCE WHICH IS A SOCIAL SCIENCE. THEREFORE THERE REMAINS NO DISPUTE TO THE FACT OF THE ASSESSEE FOR NOT TREA TING HIM AS A TECHNICIAN. THE ASSESSEE ACCORDING TO OUR VIEW IS A TECHNICIA N AS PER THE DEFINITION GIVEN IN EXPLANATION (C) UNDER SECTION 80RRA(2)(II ) OF THE ACT MENTIONED HEREINBEFORE. 8. AS REGARDS THE REMUNERATION THE LEARNED CIT(A) H AS RIGHTLY POINTED OUT THAT THE ASSESSEE HAS NOT RECEIVED FEES AS EMPL OYEE OR CONSULTANT BUT AS ARBITRATOR. AS ARBITRATOR ALSO THE FEES RECEIPT HA S TO BE TREATED AS REMUNERATION FOR SERVICES RENDERED FOR WHICH THE AS SESSEE HAS RECEIVED 4615 AND 6695 CANADIAN DOLLARS AFTER DEDUCTION OF TAX AT SOURCE. THE ASSESSEE ON THE LAST HEARING BEFORE THE BENCH WAS ASKED TO PLAC E ON RECORD THE PERMISSION FROM THE CENTRAL GOVERNMENT/PRESCRIBED A UTHORITY WHICH IS A PRE-REQUISITE CONDITION UNDER SECTION 80RRA(2)(I) O F THE ACT WITH A COPY TO THE DEPARTMENTAL REPRESENTATIVE. THE SAME HAS BEEN PLACED ON RECORD AND COPY WAS GIVEN TO THE LEARNED DR. IN THE CIRCUMSTA NCES AND FACTS OF THE CASE THE ASSESSEE HAVING FULFILLED CONDITIONS UNDE R SECTION 80RRA(2)(II) AND THE EXPLANATION TO THE SAID SECTION THEREFORE IS ENTITLED TO DEDUCTION 8 UNDER SECTION 80RRA OF THE ACT. THE AO IS DIRECTED TO ALLOW THE DEDUCTION UNDER SECTION 80RRA TO THE ASSESSEE. THUS GROUND NOS. 1 TO 13 RAISED BEFORE US IN THE MEMORANDUM OF APPEAL ARE ALLOWED. 9. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY 2010. (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH FEBRUARY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.