S.57 do not provide for deduction of any expenditure from salary income of an MLA

IN THE ITAT BANGALORE BENCH ‘B’

B. Nanjamari, Ex-MLA v. ACIT

IT APPEAL NO. 505 (BANG.) OF 2011

[ASSESSMENT YEAR 2007-08]

MAY 11, 2012

ORDER

Jason P. Boaz, Accountant Member

This appeal by the assessee for Assessment Year 2007-08 is directed against the order of the Commissioner of Income Tax (Appeals)-II, Bangalore dated 27.12.2010.

2. The facts of the case, in brief, are as under :

2.1 The assessee, an individual, filed his return of income for Assessment Year 2007-08 declaring income of Rs. 1,28,330 on 9.3.2009. The return was processed under section 143(1) on 19.3.2009 and the case was taken up for scrutiny by issue of notice under section 143(2) and 142(1) of the Income-tax Act, 1961 (hereinafter referred as ‘the Act’). The Assessing Officer noted that during the relevant period, the assessee was an MLA drawing pension, salary and other allowances from the Govt. of Karnataka. The assessee had claimed exemption of expenses to the extent of Rs.4,37,881. The Assessing Officer after examination of the assessee’s claims, noted that daily allowance was fully exempt under section 10(17)(i) and constituency allowance was fully exempt under section 10(17)(iii) of the Act and allowed the eligible exemption amounting to Rs. 1,61,400, disallowing the balance amount of this claim of Rs. 2,76,481 (viz. Rs. 4,37,881 less Rs. 1,61,400). Besides this, a gift of Rs. 15 lakhs allegedly made by the assessee to his son Sri B.N. Vijay Kumar was treated as an unexplained cash credits under section 68 of the Act and brought to tax in his hands. The Assessing Officer accordingly completed the assessment by an order under section 143(3) of the Act on 26.12.2009 determining the total income of the assessee at Rs. 19,04,811.

2.2 Aggrieved, the assessee went in appeal before the CIT(A). The CIT(A) after considering the claims of the assessee, dismissed the assessee’s appeals on both issues of dispute (i) being the claim for exemption of expenditure under section 10(14) and 10(17) and exemption under section 57 of the Act and (ii) unexplained gift of Rs. 15 lakhs by order dt.27.12.2010.

3. The assessee is now in appeal before us challenging the order of the CIT(A).

4. The grounds raised by the assessee in this appeal are as under :