VIJAY V. MEGAHANI, MUMBAI v. ACIT CIR 27(2), MUMBAI

ITA 5484/MUM/2013 | 1997-1998
Pronouncement Date: 26-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 548419914 RSA 2013
Assessee PAN AAFPM4172N
Bench Mumbai
Appeal Number ITA 5484/MUM/2013
Duration Of Justice 3 year(s) 2 month(s) 12 day(s)
Appellant VIJAY V. MEGAHANI, MUMBAI
Respondent ACIT CIR 27(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 26-10-2016
Date Of Final Hearing 04-03-2015
Next Hearing Date 04-03-2015
Assessment Year 1997-1998
Appeal Filed On 14-08-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN JUDICIAL MEMBER ITA NO. 5484/MUM/2013 (ASSESSMENT YEAR: 1997-98) SHRI VIJAY V. MEGHANI VS. ACIT CIRCLE - 27(2) FLAT NO. 1 1 ST FLOOR ATUR TERRACES; 19 CUFFE PARADE MUMBAI 400005 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN AAFPM4172N APPELLANT RESPONDENT APPELLANT BY: SHRI S.E. DASTUR & SHRI HARSH KOTHARI RESPONDENT BY: SHRI MALLIKARJUN UTTURE DATE OF HEARING: 05.10.2016 DATE OF PRONOUNCEMENT: 26.10.2016 O R D E R PER JASON P. BOAZ A.M. THIS APPEAL BY THE ASSESSEE IS SAID TO ARISE OUT OF THE ORDER OF THE CIT(A)-30 MUMBAI DATED 19.02.2004 DISMISSING THE A SSESSEES APPEAL FOR A.Y. 1997-08. 2. THE FACTS OF THE CASE BRIEFLY ARE AS UNDER: - 2.1 THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN O F INCOME FOR A.Y. 1997- 98 ON 30.06.1997 DECLARING INCOME OF ` 34 46 960/-; COMPRISING OF SALARY OF ` 23 75 048/- RECEIVED FROM FOREIGN BANK VIZ. BHF B ANK; INCOME FROM OTHER SOURCES OF ` 25 46 024/- AND LOSS FROM HOUSE PROPERTY. DEDUCTION OF ` 11 12 870/- WAS CLAIMED UNDER SECTION 80-O OF THE I NCOME TAX ACT 1961 (IN SHORT 'THE ACT') FROM THE GROSS TOTAL INCOME I N RESPECT OF SALARY RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE FROM BHF BANK FRAN KFURT. THE RETURN WAS PROCESSED UNDER SECTION 143(1)(A) OF THE ACT. SUBSE QUENTLY PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE INITIATED AND AFT ER RECORDING REASONS TO BELIEVE THAT INCOME OF THE ASSESSEE LIABLE TO TAX H AD ESCAPED ASSESSMENT ON ACCOUNT OF INCORRECT CLAIM OF DEDUCTION UNDER SE CTION 800 OF THE ACT ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 2 THE ASSESSING OFFICER (AO) ISSUED NOTICE UNDER SECT ION 148 OF THE ACT DATED 20.03.2002 TO THE ASSESSEE. IN RESPONSE THERETO TH E ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN OF INCOME OF A.Y. 1997-98 FILED ON 30.06.1997 BE TREATED AS FILED IN RESPONSE TO THE NOTICE ISSUED U NDER SECTION 148 OF THE ACT. THE ASSESSMENT WAS CONCLUDED UNDER SECTION 143 (3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 03.12.2002; WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.45 69 830/- IN VIEW OF THE AO DIS ALLOWING THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80-O OF THE ACT A MOUNTING TO ` 11 12 870/-. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR A.Y. 1 997-98 DATED 03.12.2012 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) ON 14.02.2003 RAISING THE FOLLOWING GROUNDS CHALLENGI NG THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION OF ` 11 12 870/- UNDER SECTION 88-O OF THE ACT: GROUND NO. 1:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. ERRED IN DISALLOWING CLAIM MADE BY THE ASSESSEE U/S 80-O AMO UNTING TO RS.11 121 870/-. THE A.O. FAILED TO UNDERSTAND THAT THE ASSESSEE FULFILS ALL THE CONDITIONS AND PREREQUISITES AS MEN TIONED IN THE INCOME TAX ACT 1961. THE DEDUCTION U/S 80-C THEREFORE BE ALLOWED TO THE ASSESSEE. GROUND NO. 2: - THE A.O. FURTHER ERRED IN NOT GIVING PROPER REASONS FOR DISALLOWING ASSESSEES CLAIM U/S 80-O. THE ORDER PASSED BY THE A.O. THEREFORE BE TREATED AS BAD IN LAW AND DESERVES TO BE QUASHED. 3.1 ACCORDING TO THE SR. COUNSEL FOR THE ASSESSEE THE ASSESSEE TILL DATE HAS NOT RECEIVED A COPY OF THE IMPUGNED ORDER PASSE D BY THE LEARNED CIT(A) DATED 19.02.2004 DISMISSING HIS APPEAL FOR A.Y. 199 7-98 ON THE MERITS OF ISSUES RAISED. IN THIS REGARD AN AFFIDAVIT DATED 0 8.10.2013 HAS BEEN FILED BY THE CHARTERED ACCOUNTANT/TAX CONSULTANT OF THE ASSE SSEE ONE SHRI CHANDRASEKHAR PARTNER M/S. RAJESH RAJEEV & ASSOCI ATES CHARTERED ACCOUNTANTS SUBMITTING THAT THE ADDRESS FOR COMMU NICATION IN THE APPEAL FILED BEFORE THE LEARNED CIT(A) WAS HIS OFFICE ADDR ESS VIZ. AT 2 ND FLOOR NANIK MOTWANI MARG FORT MUMBAI 400023 AND THOUGH HE WAS COLLECTING POSTAL DELIVERIES FROM THAT OFFICE EVEN AFTER VACATING THE SAME HE HAD NOT RECEIVED ANY ORDER FROM THE LEARNED CIT(A) IN RESPECT OF A.Y . 1997-98. ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 3 3.2 THE SENIOR COUNSEL SUBMITS THAT ENQUIRIES BY TH E ASSESSEE IN RESPECT OF THE ORDER OF THE LEARNED CIT(A) FOR A.Y. 1997-98 ON THE ASSESSEES APPEAL BOTH WITH THE OFFICE OF THE LEAR NED CIT(A) AND AO DID NOT RESULT IN THE ASSESSEE GETTING TO KNOW THE STAT US OF THE APPEAL. THE ASSESSEE EVOKED A RESPONSE FROM THE OFFICE OF THE C IT(A)-30 MUMBAI VIDE LETTER DATED 14.06.2013 (RECEIVED ON 15.06.2013) I N RESPONSE TO HIS APPLICATION UNDER THE RIGHT TO INFORMATION ACT 200 5 THAT HIS APPEAL FOR A.Y. 1997-98 WAS DISMISSED VIDE ORDER DATED 19.02.2 004. A COPY OF THE REGISTER OF APPEALS IN THE LEARNED CIT(A)S OFFICE WAS ENCLOSED TO CONFIRM THAT THE ASSESSEES APPEAL FOR A.Y. 1997-98 WAS DIS MISSED. THE ASSESSEE WAS ALSO INFORMED BY THIS LETTER THAT THE RECORDS O F RELEVANT APPEAL PROCEEDINGS IS NOT AVAILABLE IN THE OFFICE OF THE C IT(A)-30 MUMBAI. 3.3 ACCORDING TO THE SENIOR COUNSEL IN THESE PECUL IAR CIRCUMSTANCES OF THE CASE AS LAID OUT ABOVE THE ASSESSEE INSPITE OF HAVING NOT BEEN SERVED WITH A COPY OF THE APPELLATE ORDER DATED 19.02.2004 IN HIS CASE FOR A.Y. 1997-98 PROCEEDED TO FILE AN APPEAL FOR THIS YEAR B EFORE THE TRIBUNAL ON 14.08.2013. IT IS CONTENDED THAT IF THE DATE OF REC EIPT OF COMMUNICATION OF THE LEARNED CIT(A)S LETTER I.E. ON 15.06.2013 INF ORMING OF THE DISMISSAL OF APPEAL FOR A.Y. 1997-98 IS TAKEN TO BE THE DATE OF SERVICE OF THE ORDER OF THE LEARNED CIT(A) FOR A.Y. 1997-98 THEN THE INSTANT A PPEAL IS FILED WITHIN THE STATUTORY PERIOD OF 60 DAYS. 3.4 IT IS FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO THE ABOVE IF THE DATE OF THE CIT(A)S ORDER I.E. 19.02.2004 IS TO BE TAK EN AS THE DATE OF RECEIPT OF THE ORDER THEN THE ASSESSEE PRAYS THAT IN THE PEC ULIAR FACTS AND CIRCUMSTANCES OF THE CASE THE DELAY OF 3404 DAYS I N FILING THE APPEAL FOR A.Y. 1997-98 BEFORE THE TRIBUNAL MAY BE CONDONED AN D THE ISSUE BE DECIDED ON MERITS. IN THIS REGARD ALSO FILED IS A PETITION FOR CONDONATION OF THE DELAY IN FILING THE APPEAL ALONGWITH AN AFFIDAVIT SWORN T O BY THE ASSESSEE. 3.5 BOTH THE LEARNED D.R. FOR REVENUE AND THE AO WE RE PRESENT BEFORE THE BENCH AND SUBMITTED THAT THE ORDER OF THE CIT(A ) DATED 19.02.2004 DISMISSING THE ASSESSEES APPEAL FOR A.Y. 1997-98 W AS NOT TRACEABLE. ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 4 3.6 WE HAVE HEARD BOTH PARTIES IN RESPECT OF THE AS SESSEES PETITION FOR CONDONATION OF DELAY IN FILING THIS APPEAL FOR A.Y. 1997-98 BEFORE THE TRIBUNAL; THOUGH PRIMARILY IT IS STRONGLY CONTENDED BY THE ASSESSEE THAT HE WAS INFORMED OF THE DISMISSAL OF HIS APPEAL VIDE OR DER DATED 19.02.2004 ONLY ON 15.06.2013 AND THEREFORE HAVING FILED THIS APPEAL ON 14.08.2016 THERE IS NO DELAY AS IT IS WITHIN THE STATUTORY PER IOD OF 60 DAYS. HAVING CONSIDERED THE SUBMISSIONS PUT FORTH WE ARE OF THE OPINION THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AS LA ID OUT ABOVE THE ASSESSEE HAS FILED THIS APPEAL ON 14.08.2013; WHICH IS WITHIN THE STATUTORY PERIOD OF 60 DAYS FROM THE DATE OF BEING INFORMED T HAT HIS APPEAL WAS DISMISSED I.E. 15.06.2013. EVEN OTHERWISE IN THE INTEREST OF EQUITY FAIR PLAY AND JUSTICE AND TAKING INTO ACCOUNT THE PECULI AR FACTS AND CIRCUMSTANCES OF THIS PARTICULAR CASE WE ARE OF TH E VIEW THAT EVEN IF THE DELAY IN FILING THE APPEAL IS TO BE CONSTRUED AS 34 04 DAYS THE ASSESSEE HAD GOOD SUFFICIENT AND REASONABLE CAUSE FOR FILING TH E APPEAL FOR A.Y. 1997-98 BELATEDLY. WE THEREFORE CONDONE THE DELAY IF ANY IN FILING THE APPEAL IN THIS CASE AS IN OUR NOT DOING SO THE ASSESSEE WOUL D BE PUT TO GREAT HARDSHIP AND DIFFICULTY AS THIS WOULD RESULT IN LOS S OF EFFECTIVE REMEDY IN GETTING ITS GRIEVANCES DISPOSED OFF ON MERITS. WE H OLD AND DIRECT ACCORDINGLY. 3.7 AFTER HEARING THE PARTIES THE QUESTION BEFORE US IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE IS WHETHER THE ASSES SEES APPEAL CAN BE ADMITTED FOR ADJUDICATION IN THE ABSENCE OF THE ORI GINAL/CERTIFIED COPY OF THE ORDER OF THE CIT(A) DATED 19.02.2004 FOR A.Y. 1 997-98. IN THIS CONTEXT IT IS OBSERVED THAT THE LEARNED CIT(A) HAS CERTAINL Y DISMISSED THE ASSESSEES APPEAL VIDE ORDER DATED 19.02.2004 AS P ER INFORMATION RENDERED TO THE ASSESSEE THROUGH THE DEPARTMENTS R EPLY DATED 14.06.2013 IN RESPONSE TO THE RTI QUERY RAISED BY HIM IN THIS REGARD. AS PER THE PROVISIONS OF SECTION 253 OF THE ACT ANY ASSESSEE AGGRIEVED BY THE ORDER OF CIT(A) IS COMPETENT TO FILE AN APPEAL BEFORE THE TR IBUNAL WITHIN 60 DAYS OF THE DATE ON WHICH THE ORDER SOUGHT TO BE APPEALED A GAINST IS COMMUNICATED TO THE ASSESSEE. THOUGH RULE 9(1) OF T HE I.T. RULES 1962 (IN SHORT THE RULES) MANDATES REQUIREMENT OF THE ORIG INAL OR CERTIFIED COPY OF ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 5 ORDER APPEALED AGAINST TO BE FILED AS PART OF THE M EMORANDUM OF APPEAL RULE 9(3) OF THE RULES EMPOWERS THE TRIBUNAL IN IT S DISCRETION TO ACCEPT A MEMORANDUM OF APPEAL WHICH IS NOT ACCOMPANIED BY AL L OR ANY OF THE DOCUMENTS REFERRED TO IN RULE 9(1) OF THE RULES. IN OUR CONSIDERED VIEW IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE ON HAND WE INVOKE THE PROVISIONS OF SECTION 253 R.W. RULE 9(3) AND THE AS SESSEES APPEAL IS HELD TO BE MAINTAINABLE AND IS THEREFORE ADMITTED FOR CONSI DERATION AND ADJUDICATION ON MERITS. 4. IN THIS APPEAL BEFORE THE TRIBUNAL THE ASSESSEE H AS RAISED THE FOLLOWING GROUNDS: - 1. NATURAL JUSTICE THE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - :XXVII ['LD. CIT (A)'] IS BAD IN LAW I N AS MUCH AS THE SAME IS PASSED IN VIOLATION OF THE PRINCIPLE OF NAT URAL JUSTICE AS NO PROPER EFFECTIVE AND REASONABLE OPPORTUNITY GIVEN TO THE APPELLANT. WITHOUT PREJUDICE TO THE ABOVE 2. REASSESSMENT WITHOUT JURISDICTION IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMST ANCES OF THE CASE AND IN LAW THE REASSESSMENT FRAMED U/S. 143 (3) R. W.S. 147 IS BAD ILLEGAL AND VOID AS THE NECESSARY CONDITION FOR INITIATING AS WELL AS COMPLETING THE REASSESSMENT P ROCEEDING WERE NOT FULFILLED. WITHOUT FURTHER PREJUDICE TO THE ABOVE 3. DISALLOWANCE OF DEDUCTION U IS 80 - 0 3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUM STANCES OF THE CASE AND IN LAW THE DISALLOWANCE OF THE CLAIM OF DEDUCT ION OF RS.11 12 8701- U/S. 80 0 OF THE ACT WAS NOT CALL ED FOR. 4. LIBERTY: 4.1 THE APPELLANT CRAVES LEAVE TO ADD ALTER DELE TE OR MODIFY ALL OR ANY THE ABOVE GROUNDS AT THE TIME OF HEARING. 5. GROUNDS NO. 1 & 2: - 5.1 AT THE OUTSET ITSELF THE LEARNED SENIOR COUNSE L FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE GROUNDS RAISED AT SR. NO. 1 AND 2 CANNOT BE SUPPORTED AND ARE LIABLE TO BE DISMISSED AS IT CAN BE SEEN T HAT THE SAME HAVE NOT BEEN RAISED IN THE GROUNDS RAISED IN THE APPEAL FIL ED BY THE ASSESSEE BEFORE ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 6 THE CIT(A) AS EXTRACTED AT PARA 2.2 OF THIS ORDER ( SUPRA). WE THEREFORE DISMISS GROUND 1 AND 2 OF THE ASSESSEES APPEAL. 6. GROUND NO. 4 (4.1): - BEING GENERAL IN NATURE NO ADJUDICATION IS CALLED FOR THEREON. 7. GROUND NO. 3 DEDUCTION UNDER SECTION 80-O OF THE ACT 7.1 A PERUSAL OF THE GROUNDS 1 & 2 RAISED BY THE A SSESSEE BEFORE THE LEARNED CIT(A) AGAINST THE ORDER OF ASSESSMENT FOR A.Y. 1997-98 (AT PARA 2.2 OF THIS ORDER) AND THIS GROUND NO. 3 RAISED IN THIS APPEAL (SUPRA AT PARA 4 OF THIS ORDER) IN OUR VIEW GO TO SHOW THAT THE ONLY ISSUE FOR CONSIDERATION AND ADJUDICATION BEFORE US IS THE DEN IAL OF THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80-O OF THE ACT A MOUNTING TO ` 11 12 870/- BY BOTH THE AUTHORITIES BELOW; SINCE TH E ASSESSEES APPEAL ON THIS SOLE ISSUE WAS DISMISSED BY THE CIT(A)S ORDER DATED 19.02.2004. 7.2 ON THE MERITS OF THE ASSESSEES CLAIM FOR BRING ALLOWED DEDUCTION UNDER SECTION 80-O OF THE ACT FOR A.Y. 1997-98 THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE BROUGHT TO THE NOTICE OF THE BENCH THAT THIS ISSUE STAND COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 1993-94 IN ITA NO. 433 9/MUM/1997 DATED 29.05.2006; WHEREIN THE COORDINATE BENCH AFTER CONS IDERING THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80-O OF THE ACT RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION. THE LEARNED SENIOR COUNSEL FURTHER SUBMITTED A COPY OF THE AOS ORDER DATED 19.02.2009 GIVING EFFECT TO THE TRIBUNALS ORDER IN ITA NO. 43 99/MUM/1997 FOR A.Y. 1993-94 WHEREIN THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80-O OF THE ACT WAS ALLOWED. 7.3.1 WE HAVE HEARD BOTH THE LEARNED D.R. FOR REVEN UE AND THE SENIOR COUNSEL FOR THE ASSESSEE AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNC EMENTS CITED. WE FIND THAT THE ISSUE OF THE ASSESSEES CLAIM FOR DEDUCTIO N UNDER SECTION 80-O OF THE ACT WAS ALSO UP FOR CONSIDERATION BEFORE A COOR DINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES CASE FOR A.Y. 1993-94. I N THEIR DECISION IN ITA NO. 4339/MUM/1997 DATED 29.05.2006 THE COORDINATE BENCH RESTORED ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 7 THE ISSUE OF THE ASSESSEES CLAIM FOR DEDUCTION UND ER SECTION 80-O OF THE ACT TO THE FILE OF THE AO FOR CONSIDERATION ON MERI TS HOLDING AS UNDER AT PARAS 39 TO 46 AS UNDER: - 39. GROUND NO. 10 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE VIEW OF THE ASSESSIN G OFFICER THAT YOUR APPELLANT WAS NOT ENTITLED TO A DEDUCTION OF RS.5 71 250/- UN DER THE PROVISIONS OF SECTION 80-O OF THE INCOME-TAX ACT 1961. 40. THE FACTS WITH REGARD TO THIS ISSUE ARE THAT FO R THE FIRST TIME IN RESPECT OF THE PRESENT ASSESSMENT YEAR THE ASSESSEE CLAIMED DEDUCTION U/S/80-O IN RESPECT OF THE SALARY INCOME RECEIVED FROM BHF BANK IN CONVERTIBLE FOREIGN EXCHANGE. THE AO CALLED UPON THE ASSESSEE TO JUSTIFY THIS CLAIM AND IT WAS STATED BE FORE HIM THAT THE ASSESSEE WAS THE CHIEF REPRESENTATIVE OF THE LIAISO N OFFICE IN INDIA OF BHF BANK GERMANY. UNDER THE RESERVE BANK OF INDIA APPROVAL THE OFFICE AND THE REPRESENTATIVE OF BHF BANK IN INDIA CANNOT CARRY ON ANY BUSINESS OR PROVIDE ANY SERVICES IN INDIA NOR CAN EARN ANY REMUNERATION IN INDIA IN ANY FORM WHATSOEVER. IT WA S POINTED OUT THAT THE INDIAN OFFICE CAN OPERATE SOLELY FOR THE PURPOS E OF ASSISTING THE HEAD OFFICE AND ITS BRANCHES OVERSEAS. IT WAS CLAIM ED THAT THE CHIEF REPRESENTATIVE THROUGH THE LIAISON OFFICE SENDS NEC ESSARY INFORMATION AND FEED BACK TO THE HEAD OFFICE AND OTHER OVERSEAS BRANCHES OF BHF BANK FOR THEIR USE OUTSIDE INDIA. IT WAS ALSO POINT ED OUT BEFORE US THAT THE BENEFIT OF SECTION 80-0 HAS BEEN EXTENDED TO AN INDIVIDUAL WHO IS RESIDENT IN INDIA WITH EFFECT FROM THE ASSESSMENT Y EAR 1992-93. THE ASSESSING OFFICER REJECTED THE CLAIM ON THE GROUND THAT THE ASSESSEE WAS ONLY AN EMPLOYEE AND WAS RECEIVING SALARY WHICH IS NOT COVERED UNDER SECTION 80-0. 41. THE LEARNED CIT(A) CONCURRED WITH THE VIEW OF THE ASSESSING OFFICER WITH THE FOLLOWING SHORT DISCUSSION AT PARA 19 OF HIS ORDER: 'THE A.O. HAS DISCUSSED THE REASONS FOR DOING SO IN DETAIL IN HIS ASSESSMENT ORDER. I HAVE GONE THROUGH THEM VERY CAREFULLY AND I DO NOT FIND ANY REASONS FOR NOT CONCURRING WITH HIM. THIS GROUND IS ALSO DI SMISSED. FURTHER IT IS NOT THE APPELLANT WHO IS RENDERING PROFESSIONAL SERVICE S IN INDIA IN HIS PERSONAL CAPACITY. IT IS ONLY THE EMPLOYER BANK WHO IS RENDE RING SUCH SERVICES'. 42. FROM THE ABOVE IT APPEARS THAT THE ASSESSEE'S CLAIM WAS REJECTED ON THE BASIS THAT SALARY INCOME EARNED BY AN EMPLOY EE FROM THE EMPLOYER WOULD NOT QUALIFY FOR DEDUCTION U/S.80-0. 43. THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE CONTENDED BEFORE US THAT THE ASSESSEE'S CLAIM HAS B EEN REJECTED BY THE REVENUE AUTHORITIES SOLELY ON THE BASIS THAT THE SA LARY INCOME EARNED BY THE ASSESSEE IS IN HIS CAPACITY AS AN EMPLOYEE A ND THEREFORE THE SAME IS OUTSIDE THE PURVIEW OF SECTION 80-0. THE LE ARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT SECTION 80-0 DOES NOT E XCLUDE SALARY INCOME AND IF ALL OTHER CONDITIONS OF SECTION 80-0 ARE FULFILLED THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION UNDER THAT SECTION. THE ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 8 LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF AUTHORITY FOR ADVANCE RULINGS (AAR) IN THE CASE OF A.S. MANI VS. CIT 227 ITR 380. THE LEARNED COUNSEL FOR THE ASSESSEE INVITED O UR ATTENTION TO THE FOLLOWING OBSERVATIONS MADE BY THE AAR AT PAGE 386 OF THE REPORT: 'THE AUTHORITY IS OF THE OPINION THAT THE APPLICANT IS ENTITLED TO THE EXEMPTION CLAIMED ON THE ASSUMPTION THAT THE SERVICES ARE RE NDERED BY HIM TO MABANAFT OUTSIDE INDIA. THE SECTION CONFERS EXEMPTI ON IN TWO SITUATIONS: (A) THE REMUNERATION IS PAID BY THE FOREIGN ENTERPR ISE IN CONSIDERATION FOR ITS USE OUTSIDE INDIA OF THE INDUSTRIAL OR COMMERCIAL I NFORMATION PROVIDED BY THE APPLICANT; OR (B) THE PAYMENT IS RECEIVED IN CONSIDERATION OF TEC HNICAL OR PROFESSIONAL SERVICES RENDERED OUTSIDE INDIA. THE APPLICANT DOES NOT CLAIM THAT SITUATION (E) PRE VAILS IN THE PRESENT CASE. THE ONLY QUESTION IS WHETHER SITUATION (B) DOES. THE CONTROVERSY WHETHER THE APPLICANT IS AN INDEPEN DENT CONSULTANT OR JUST AN EMPLOYEE OF MABANAFT IS NOT STRICTLY RELEVANT AS THE SECTION ONLY TALKS OF SERVICES RENDERED OR INFORMATION PROVIDED BY A PERS ON TO A FOREIGN ENTERPRISE. IT MAY HAVE SOME RELEVANCE IF THE APPLICANT WANTS T O CLAIM (AND HE SEEMS TO FROM THE ARGUMENTS ADDRESSED AND CASES CITED BY HIM ) THAT HE IS RENDERING 'PROFESSIONAL' SERVICES. BUT THE AUTHORITY IS OF TH E VIEW THAT IT IS UNNECESSARY TO GO INTO THE QUESTION WHETHER THE APPLICANT CAN B E SAID TO CARRY ON A PROFESSION AS THE SERVICES RENDERED BY THE APPLICA NT CAN BE CLEARLY DESCRIBED AS 'TECHNICAL SERVICES.' THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT TH E ASSESSEE HAS RENDERED SUCH SERVICES WHICH ARE COVERED UNDER SECT ION 80-0 AND THEREFORE THE ASSESSEE IS ENTITLED TO DEDUCTION U/ S.80-0 IN RESPECT OF SALARY INCOME. 44. THE LEARNED DEPARTMENTAL REPRESENTATIVE FORCEFU LLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND CONTENDED THA T SECTION 80-0 DOES NOT VISUALIZE DEDUCTION ON SALARY INCOME. IT IS POI NTED OUT THAT DEDUCTION IS ADMISSIBLE ON INCOME BY WAY OF ROYALTY COMMISSION FEES OR ANY SIMILAR PAYMENTS RECEIVED BY THE ASSESSEE I F ALL THE CONDITIONS OF SECTION 80-0 ARE FULFILLED. IT IS ARGUED THAT TH E SALARY INCOME CANNOT BE SAID TO BE IN THE NATURE OF ANY SIMILAR PAYMENT AS ROYALTY COMMISSION OR FEES. 45. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND HAVE GONE THROUGH THE FACTS AS ALSO THE RELEVANT PR OVISIONS OF LAW IN THIS REGARD. SECTION 80-0 AS APPLICABLE TO THE ASSE SSMENT YEAR UNDER APPEAL READS AS UNDER: WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE BEING AN INDIA COMPANY OR A PERSON OTHER THAN A COMPANY WHO IS RESIDENT IN INDI A INCLUDES ANY INCOME BY WAY OF ROYALTY COMMISSION FEES OR ANY SIMILAR PAY MENT RECEIVED BY ASSESSEE FROM THE GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRISE IN CONSIDERATION FOR THE USE OUTSIDE INDIA OR ANY PATE NT INVENTION MODE DESIGN SECRET FORMULA OR PROCESS OR SIMILAR PROPE RTY RIGHT OR INFORMATION CONCERNING INDUSTRIAL COMMERCIAL OR SCIENTIFIC KNOW LEDGE EXPERIENCE OR SKILL MADE AVAILABLE OR PROVIDED OR AGREED TO BE MADE AVA ILABLE OR PROVIDED TO SUCH GOVERNMENT OR ENTERPRISE BY THE ASSESSEE OR I N CONSIDERATION OF ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 9 TECHNICAL OR PROFESSIONAL SERVICES RENDERED OR AGRE E TO BE RENDERED OUTSIDE INDIA TO SUCH GOVERNMENT OR ENTERPRISE BY THE ASSES SEE AND SUCH INCOME IS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA OR HAVING BEEN RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE OUTSIDE INDIA IS BROU GHT INTO INDIA BY OR ON BEHALF OF THE ASSESSEE IN ACCORDANCE WITH ANY LAW F OR THE TIME BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FOREIGN EXC HANGE THERE SHALL BE ALLOWED IN ACCORDANCE WITH AND SUBJECT TO THE PROV ISIONS OF THIS SECTION A DEDUCTION OF AN AMOUNT EQUAL TO FIFTY PER CENT OF T HE INCOME SO RECEIVED IN OR BROUGHT INTO INDIA IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE .... EXPLANATION - FOR THE PURPOSES OF THIS SECTION (I) ..... (II) ..... (III) SERVICES RENDERED OR AGREED TO BE RENDERED O UTSIDE INDIA SHALL INCLUDE SERVICES RENDERED FROM INDIA BUT SHALL NOT INCLUDE SERVICES RENDERED IN INDIA.' THE REVENUE AUTHORITIES HAVE NOT EXAMINED THE CLAIM OF THE ASSESSEE ON MERITS. THERE IS NO FINDING AS TO WHETH ER THE SALARY RECEIVED BY THE ASSESSEE IS IN CONSIDERATION OF TEC HNICAL OR PROFESSIONAL SERVICES RENDERED OUTSIDE INDIA TO THE FOREIGN ENTERPRISES. THERE IS ALSO NO FINDING AS TO WHETHER THE SALARY HAS BEEN PAID TO THE ASSESSEE IN CONVERTIBLE FOREIGN EX CHANGE. THE CLAIM OF THE ASSESSEE HAS BEEN REJECTED ON THE SHORT GROU ND THAT THE SALARY INCOME IS NOT ENTITLED TO DEDUCTION U/S.80-O . IN THE CASE OF A.S. MANI VS. CIT 227 ITR 380 THE AAR HAVE HELD T HAT WHETHER THE ASSESSEE IS AN INDEPENDENT CONSULTANT OR JUST AN EM PLOYEE IS NOT STRICTLY RELEVANT WHILE DECIDING THE ADMISSIBILITY OF DEDUCTION U/S.80- O. WE AGREE WITH THE VIEW TAKEN BY THE AAR THAT THE REVENUE AUTHORITIES SHOULD NOT BE CARRIED AWAY BY THE NOMEN CLATURE OF THE PAYMENT RECEIVED AND THE CLAIM OF THE ASSESSEE MUST BE CONSIDERED ON MERITS. IT MAY BE THAT THE SALARY OR PART OF IT RECEIVED BY AN ASSESSEE MAY BE ATTRIBUTABLE TO THE SERVICES RENDER ED BY SUCH ASSESSEE WHICH ARE COVERED U/S. 80-O. IN THIS CONNE CTION A REFERENCE MAY BE MADE TO THE DECISION OF .THE HON'B LE SUPREME COURT IN THE CASE OF CONTINENTAL CONSTRUCTION LTD. V. CIT 195 ITR 81. IN THIS CASE THE SUPREME COURT HAS EXPLAINED THE TERM 'ANY SIMILAR PAYMENT' OCCURRING IN SECTION 80-0. THE RELEVANT PA RT OF THE RATIO OF THIS CASE MAY BE REPRODUCED BELOW FROM THE HEAD-NOT E: 'THE TRUE CLUE TO THE INTERPRETATION OF THE EXPRESS ION ''ANY SIMILAR PAYMENT' IN SECTION 80-0 LIES NOT IN THE PRECEDING THREE WORDS BUT REALLY IN THE SECOND PART OF THE SECTION. THE ESSENCE OF THE EXEMPTION LIES NOT IN CONSIGNING THE RECEIPT TO ONE OF THESE PIGEON-HOLES BUT IN EXAMINING WHETH ER THE RECEIPT IS A PAYMENT IN CONSIDERATION OF ONE OF THE TWO SITUATIO NS ENVISAGED IN THE SECTION. TO ILLUSTRATE: WHERE THE ASSESSEE IS THE O WNER OF A PATENT OR INVENTION HE MAY GENERALLY PERMIT ANOTHER TO MAKE USES OF THE PATENT OR THE INVENTION IN CONSIDERATION OF A 'ROYALTY' PAYMENT. OR AGAIN WHERE THE ASSESSEE IS IN POSSESSION OF TECHNICAL KNOW-HOW HE MAY BE PREPARED TO ALLOW ANOTHER TO MAKE USE THEREOF IN CONSIDERATION OF A 'FEE' TO THE ASSESSEE. HE MAY ALSO STIPULATE A CONSIDERATION IN THE FORM O F A COMMISSION BASED ON THE SALES OF THE PRODUCTS THE OTHER PARTY IS ABLE T O MANUFACTURE WITH THE AID ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 10 OF SUCH INVENTION OR KNOW-HOW. AGAIN AN ASSESSEE M AY HAVE ACHIEVED SOME SPECIALITY AND HE MAY AGREE TO LEND HIS SERVICES TO SOME OTHER PERSON AND STIPULATE A CONSIDERATION THEREFORE WHICH MAY BE VA RIOUSLY DESCRIBED. THE NATURE OF THE ASSET RIGHT INFORMATION OR SERVICES WHICH CAN BE BROUGHT UNDER THIS PROVISION MAY BE VARIED AND THE CONSIDERATION STIPULATED FOR ALLOWING ANOTHER TO AVAIL OF THE ASSESSEES ASSET KNOWLEDGE OR SERVICES CAN LIKEWISE ASSUME MULTIFARIOUS FORMS. THE WORD ''SIMILAR'' CON NOTES THAT THE PAYMENT MADE TO THE ASSESSEE NEED NOT BE IN THE NATURE OF R OYALTY COMMISSION OR FEES ONLY; IT COULD BE ANY PAYMENT OF LIKE NATURE I.E. MADE IN CONSIDERATION OF THE USE OR SUPPLY OF SUCH AN ASSET KNOWLEDGE OR SERVIC ES IN THE SAME MANNER AS ROYALTY FEES OR CONSIDERATION COULD BE. THEREFORE ANY TYPE OF PAYMENT RECEIVED BY AN ASSESSEE WILL QUALIFY FOR DEDUCTION UNDER THE SECTION SO LONG ONLY AS IT IS A PAYMENT MADE IN CONSIDERATION OF ON E OF THE TWO TYPES OF TRANSACTIONS REFERRED TO IN THE SECTION.' 46. FOLLOWING FROM THE DISCUSSION GIVEN ABOVE WE A RE OF THE VIEW THAT THE ASSESSEE'S CLAIM IS REQUIRED TO BE CONSIDE RED ON MERITS HAVING REGARD TO THE VARIOUS REQUIREMENTS AND CONDITIONS O F SECTION 80-0. THIS ISSUE IS THEREFORE RESTORED BACK TO THE AO FOR FR ESH CONSIDERATION AFTER ALLOWING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO SHALL EXAMINE THE ISSUE IN ACCORDANCE WITH THE PROV ISIONS OF LAW AND SHALL RECORD A FINDING AS TO WHETHER THE ASSESSEE F ULFILS ALL THE CONDITIONS OF SECTION 80-0. THE ASSESSEE SHALL BE F REE TO PRODUCE ANY EVIDENCE BEFORE THE AO TO SUBSTANTIATE HIS CLAIM. G ROUND NO.10 IS ALLOWED FOR STATISTICAL PURPOSES. 7.3.2 WE ALSO OBSERVE THAT THE AO IN HIS ORDER DATE D 19.02.2009 GIVING EFFECT TO THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 4329/MUM/1997 DATED 29.04.2006 FOR A.Y. 1993-94 (SU PRA) HAS ALLOWED THE ASSESSEES CLAIM FOR DEDUCTION UNDER SE CTION 80-O OF THE ACT. FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR A.Y. 1993-94 (SUPRA) WE ARE OF THE VI EW THAT FOR THIS A.Y. 1997-98 THE ASSESSEES CLAIM FOR DEDUCTION UNDER SE CTION 80-O OF THE ACT IS REQUIRED TO BE CONSIDERED ON MERITS HAVING R EGARD TO THE VARIOUS REQUIREMENTS AND CONDITIONS OF SECTION 80-O. WE TH EREFORE SET ASIDE THE FINDINGS OF THE AUTHORITIES BELOW AND RESTORE T HIS ISSUE TO THE FILE OF THE AO FOR FRESH CONSIDERATION IN ACCORDANCE WITH T HE PROVISIONS OF LAW AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY O F BEING HEARD AND TO FILE DETAILS/SUBMISSIONS REQUIRED IN THE MATTER TA KING GUIDANCE FROM THE DIRECTIONS IN THE ORDER OF THE COORDINATE BENCH FOR A.Y. 1993-94 (SUPRA) AND THE AOS ORDER DATED 19.02.2009 GIVING EFFECT THERETO. CONSEQUENTLY GROUND NO. 3 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 5484/MUM/2013 SHRI VIJAY V. MEGHANI 11 8. IN THE RESULT THE ASSESSEES APPEAL FOR A.Y. 1997- 98 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 26 TH OCTOBER 2016 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT CONCERNED 5. THE DR F BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.