ITO, Wd. 1(1),, Aurangabad v. Lukas Folc,, Aurangabad

ITA 21/PUN/2011 | 2007-2008
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 2124514 RSA 2011
Assessee PAN AAIPF9969K
Bench Pune
Appeal Number ITA 21/PUN/2011
Duration Of Justice 2 month(s) 25 day(s)
Appellant ITO, Wd. 1(1),, Aurangabad
Respondent Lukas Folc,, Aurangabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-03-2011
Assessment Year 2007-2008
Appeal Filed On 06-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER. SR.NO. ITA NO. A.Y. APPELLANT RESPONDENT 1. 21/PN/2011 2007-08 ITO WARD 1(1) AURANGABAD LUKAS FOLE C/O. SKODA AUTO INDIA PVT. LTD. PLOT NO. 1/1 MIDC SHENDRA FIVE STAR INDUSTRIAL AREA AURANGABAD PAN AAIPF 9969 K 2. 22/PN/2011 2007-08 -DO- ZDENEK CHUDOBA ADDRESS SAME AS ABOVE PAN AHRPC 7410 L 3. 23/PN/2011 2007-08 -DO- MACIEJ PLEWA ADDRESS SAME AS ABOVE PAN AQZPP 5083 B 4. 24/PN/2011 2007-08 -DO- KAREL BALAS ADDRESS SAME AS ABOVE PAN AMJPB 4710 D 5. 25/PN/2011 2007-08 -DO- JOSEF KISS ADDRESS SAME AS ABOVE PAN ANXPK 6009 P APPELLANT BY : SHRI ABHAY DAMLE RESPONDENTS BY : NONE O R D E R PER D. KARUNAKARA RAO A.M. THESE FIVE APPEALS RAISING COMMON ISSUES WERE HEAR D TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. ITA NO. 21/PN/2011 IN THE CASE OF LUKAS FOLE 2. THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: 1. ALLOWING THE DEDUCTION ON ACCOUNT OF SOCIAL SEC URITIES CHARGES CLAIMED TO BE PAID BY THE ASSESSEE IN HOME COUNTRY WHEREAS THE INCOME IS CHARGEABLE U/S. 9(1 )(II) OF THE ACT IN I NDIA. 2) IGNORING THAT THE INCOME IS CHARGEABLE U/S. 9(1 )(II) IN INDIA AND AS SUCH THE PROVISIONS OF INDIAN INCOME TAX ACT HAS T O BE APPLIED. IN ABSENCE OF ANY SPECIFIC REFERENCE IN OT AA THE SOC IAL SECURITY CHARGES CLAIMED TO BE PAID IN A HOME COUNTRY FOR PE RSONAL ADVANTAGE OF THE ASSESSEE ARE NOT DEDUCTIBLE. 3) WRONGLY RELYING ON THE JUDGMENT OF GALLOTTI RAOU L IN 61 ITO 453 AS IT WAS A CASE OF FRENCH NATIONAL AND AS SUCH THE F ACTS AND CIRCUMSTANCES COULD NEVER BE IDENTICAL. 4) NOT APPRECIATING THE RULE 10 OF THE L.T. RULES 1962 WHICH AUTHORIZES THE AO TO CALCULATE THE INCOME ACCRUING OR ARISING ITA NO.21 TO 25/PN/2011 LUKAS FOLE AND OTHERS A.Y. 2007-08 2 DIRECTLY OR INDIRECTLY IN INDIA. THE AO HAS THUS RI GHTLY DENIED THE ABOVE DEDUCTION AS NOT ADMISSIBLE UNDER THE INCOME TAX ACT. 5) ALLOWING DEDUCTION ON ACCOUNT OF HYPOTHETICAL TA X DEDUCTION I.E. THE AMOUNT OF TAX THE ASSESSEE WOULD HAVE PAID HAD HE CONTINUED WORKING IN HIS HOME COUNTRY THOUGH CLAUSE 2 OF ARTI CLE 24 OF OT AA SPEAKS ONLY ABOUT DEDUCTION OF TAX PAID IF ANY IN CZECH REPUBLIC TO BE ALLOWED IN INDIA WHEREAS IN FACT NO TAX HAD ACTUALLY BEEN PAID OR DEDUCTED IN RESPECT OF THE ASSESSEE IN HOME COUNTRY. 6) APPRECIATING THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE NOT SQUARELY APPLICABLE TO THE CASE OF MR. JAYDEV H. RAJA VS. OC IT MUMBAI IN ITA NO. 2021/M/98 AND THEREFORE THE ACTION OF THE AO IN DISALLOWING THE CLAIM OF HYPOTHETICAL TAX DEDUCTION OUGHT TO HAVE BEEN UPHELD. 7) QUASHING THE ACTION OF THE AO IN COMPUTING THE T AXABLE SALARY WITHOUT REDUCING THE HYPOTHETICAL TAX AND SOCIAL SE CURITY CHARGES FROM THE BASE SALARY WHICH WAS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT? 3. THE ISSUES INVOLVED IN THE GROUNDS OF APPEAL RE LATES TO SOCIAL SECURITY CHARGES CLAIMED TO BE PAID IN THE FOREIGN COUNTRY A ND THE TREATMENT THEREOF. THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED I N ALLOWING DEDUCTION FROM SALARY INCOME OF THE ASSESSEE CHARGEABLE TO TAX IN INDIA ON ACCOUNT OF SOCIAL SECURITY CONTRIBUTION PAID BY THE ASSESSEE IN HIS H OME COUNTRY AND THAT THE CIT(A) ERRED IN ALLOWING DEDUCTION ON ACCOUNT OF HY POTHETICAL TAX FROM SALARY INCOME OF THE ASSESSEE CHARGEABLE TO TAX IN INDIA. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE ARGUMENTATIVE IN NATURE I N SUPPORT OF THESE GRIEVANCES OF THE ASSESSING OFFICER. 4. AFTER HEARING THE LEARNED DR AND PERUSING THE MA TERIAL ON RECORD WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY A DECISION OF A CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN (2009) 124 TTJ (PUNE) 965 WHEREIN IT HAS BEEN HELD THAT TH E SOCIAL SECURITY CONTRIBUTION DEDUCTED FROM THE SALARY OF CZECH NATIONAL IN ACCOR DANCE WITH THE DOMESTIC LAW OF CZECH REPUBLIC IS DEDUCTIBLE FROM HIS SALARY AS THE INCOME IS DIVERTED AS SOURCE. THE TRIBUNAL HAS ALSO CONCLUDED THAT THE D EDUCTION MADE FROM THE SALARY OF A FOREIGN NATIONAL ON ACCOUNT OF HYPOTHET ICAL TAX IS DEDUCTIBLE; DEDUCTION IS HOWEVER TO BE MADE AT THE STAGE OF COMPUTING THE TAXABLE PERQUISITE AND NOT ITA NO.21 TO 25/PN/2011 LUKAS FOLE AND OTHERS A.Y. 2007-08 3 THE BASIC SALARY. RESPECTFULLY FOLLOWING THE SAID RATIO WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSU E AND REJECT THE GROUNDS RAISED BY THE REVENUE. ITA NO. 22 TO 25/PN/2011 5. IN THESE APPEALS SIMILAR GROUNDS HAVE BEEN RAISE D BY THE REVENUE. RESPECTFULLY FOLLOWING THE RATIO IN THE CASE OF THE ASSESSEE CITED SUPRA WE ARE NOT INCLINED TO INTERFERE WITH THE DECISION OF THE CIT(A) IN ALLOWING THE DEDUCTION ON ACCOUNT OF SOCIAL SECURITIES CHARGES CLAIMED TO BE PAID BY THE ASSESSEE IN HOME COUNTRY AND ALSO IN ALLOWING THE DEDUCTION ON ACCOUNT OF HYPOTHETICAL TAX DEDUCTION. 6. IN THE RESULT ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF MARCH 2011. SD/- SD/- (I.C. SUDHIR) ( D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 31 ST MARCH 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT- AURANGABAD 4. CIT(A) AURANGABAD 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE