The assessee’s claim of exemption under section 10(10CC), in respect of tax paid by the employer in respect of salary paid to its employees, is to be allowed.

CASE LAWS DETAILS

DECIDED BY: ITAT, DELHI BENCH `E’, NEW DELHI, IN THE CASE OF: Transocean Discoverer 534 v. ACIT,  APPEAL NO: ITA NOS. 1715/Del/2006 to 1720/Del/2006, DECIDED ON June 9, 2010

FACTS

At the outset, it was submitted by the learned AR that the first common ground raised by the assessees in the present appeals relating to exemption u/s 10(10CC) is covered by the decision of the Special Bench of the Tribunal in the case of RBF Rig Corpn. LLC (RBFRC) Vs. Asstt. Commissioner of Income Tax – 109 ITD 141 wherein it was concluded that payment of taxes by the employer, on behalf of the employee, is a perquisite within the meaning of clause (2) of section 17 of the Income-tax Act. It cannot be a monetary payment to the assessee within the meaning of above clause which is intended to be excluded from application of clause 10(10CC) of the Act.

HELD
In view of the decision of the Special Bench in the above referred case, we hold that the tax borne by the employer on perquisites of the employees would constitute non-monetary benefit and as such the same is exempted u/s 10(10CC) of the Act. We, therefore, reverse the order of the authorities below on this point and allow the assessee’s claim that the tax paid by the employer in respect of salary paid to the aforesaid assessees would constitute non-monetary perquisite eligible for exemption u/s 10(10CC) of the Act. In other words, the assessee’s claim of exemption u/s 10(10CC) of the Act in respect of tax paid by the employer in respect of salary paid to its employees, of the Act is directed to be allowed. The AO shall modify the assessment orders of all these assessees accordingly.

RELEVANT EXTRACTS:

4. In view of the decision of the Special Bench in the above referred case, we hold that the tax borne by the employer on perquisites of the employees would constitute non-monetary benefit and as such the same is exempted u/s 10(10CC) of the Act. We, therefore, reverse the order of the authorities below on this point and allow the assessee’s claim that the tax paid by the employer in respect of salary paid to the aforesaid assessees would constitute non-monetary perquisite eligible for exemption u/s 10(10CC) of the Act. In other words, the assessee’s claim of exemption u/s 10(10CC) of the Act in respect of tax paid by the employer in respect of salary paid to its employees, of the Act is directed to be allowed. The AO shall modify the assessment orders of all these assessees accordingly.

5. It is pertinent to mention that the Tribunal vide order dated 13.8.2009, in the case of this assessee itself decided the issue in favour of the assessee by following the decision of the Special Bench referred to above. The AO is directed to allow assessee’s claim of exemption u/s 10(10CC) in terms indicated hereinabove.