Tax paid by the company is part and parcel of the salary and not any sum outside the salary or independent of salary

By TG Team Income Tax Judiciary April 9, 2007

TaxGuru Citation: 2007 taxguru.in 29
Case Name: BJ Services Company Middle East Ltd. Vs Asstt. Commissioner of Income-tax (ITAT Delhi 'H' Bench)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: ITAT Delhi

The company agreed to pay income-tax on behalf of Mr. Roger David Arnold and the question was whether, in view of the aforesaid agreement, the tax had to be grossed up at multiple stages or only at single stage for working out the salary liable to be taxed u/s 15 of the Income-tax Act, 1961 (the Act)?

The only inescapable conclusion is that the salary of the assessee has to be calculated on the basis of multiple grossing up method.

The tax paid by the company was part and parcel of the salary and not any sum outside the salary or independent of salary. Thus, the tax liability of the assessee was nothing but the salary and not anything outside it. Therefore, this payment of tax on behalf of the assessee will be monetary payment. In view thereof, the provision contained in section 10(10CC) is not applicable for the reason that like salary, this payment is also a monetary payment forming part of the salary.

INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘H’ DELHI

BEFORE SHRI R.V. EASWAR; HON’BLE VICE-PRESIDENT

AND

SHRI K.G. BANSAL; HON’BLE ACCOUNTANT MEMBER

ITA No. 4033(Del)/2005

Assessment year: 2004-05

BJ Services Company Middle

East Ltd., as representative assessee