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09-01-2019, Candor Business, Section 36(1)(ii), 37(1), Tribunal Bangalore

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2 months 1 week ago #8330 by amit
Section - 36(1)(ii), 37(1), 119, 115-O
Order Date - 09-01-2019
Favouring - Assessee
Court - Tribunal Bangalore
Appellant - Candor Business Solutions P. Ltd.
Respondent - ITO
Justice - CHANDRA POOJARI AM
Citation - 119Taxpundit126
Appeal No. - ITA No.2607/Bang/2018
Asstt. Year - 2013-14

Order

PER : CHANDRA POOJARI

This appeal by the assessee is against the order of the CIT(Appeals) dated 23.11.2016 for the assessment year 2013-14.

2. There is a delay of 571 days in filing this appeal. Originally application for condonation of delay along with affidavit has been filed wherein it was stated that there was a delay of 582 days. This was pointed out to the assessee’s counsel. Accordingly he revised the condonation petition explaining the reason for delay in filing this appeal as follows:-

I Smt. Umadevi S Y, aged 49 years, residing at Hampi Nagar, Bengaluru, do hereby swear on oath as under that

1. I am a Director of the Appellant Company, namely, Candor Business Solutions Private Limited and am well aware of the full facts of the case.

2. The Appellant Company filed its Return of Income under the provisions of Income Tax Act, 1961 (herein referred to as 'Act') for the Assessment Year 2013-14, Previous Year and Accounting Year being 2012-13, on 30-09-2013.

3. The above Return of Income was processed u/s 143(3) by the Income Tax Officer, Ward 2(1)(1), Bengaluru and passed an order vide order dated 30-06-2015.

4. In the above Assessment Order the Learned Income Tax Officer disallowed the expenditure claimed under the head salaries, which included bonus paid to Directors to the extent of Rs. 17,00,000/-, under section 36(1)(ii) of the Act.

5. The Appellant Company challenged the above disallowance before the Commissioner of Income Tax Appeals-2, Bengaluru who dismissed the Appeal vide order dated 23-11- 2016.

6. This has resulted in taxation of Rs. 17,00,000/- at 30% in the hands of the Company and by virtue of this, the refund available to the Company was reduced by Rs 5,25,368/-.

7. The Directors of the Company, on the other hand, had included the bonus amount of Rs. 17, 00,000/- in their respective Income Tax Returns during the Assessment Year 2014-15 and paid taxes @30%.

8. The above situation resulted in taxation of the bonus amount of Rs. 17, 00,000/- TWICE, once, in the hands of the Company by disallowance and secondly in the hands of the Directors, as bonus under the head salary.

9. At this stage, the Directors were guided that, an amount that has already been taxed in the hands of the Company, by disallowing that, an item, not an allowable expenditure, the same cannot be taxed in the hands of the Directors as 'Bonus'. It is a well settled proposition of law that an amount can be taxed, only, ONCE and not TWICE. The above view was supported by the following judgments:

• Mrs. Bakhtawar B Dubash v DCIT, Central Mumbai 2009- TIOL-288-ITAT-MUM.

• SSKI Investor Services Pvt Ltd v DCIT, Central Mumbai [2009] 34 SOT 412 (ITAT [MUM]).

10. In view of the above guidance the Directors of the Company decided that they should file Revised Return for the Assessment Year 2014-15 and claim the refund of tax what they have paid against the bonus amount of Rs. 17,00,000/-.

11. In view of the above decision, the Company decided, at that moment, that the Company will not file an appeal against the order of Commissioner of Income Tax Appeals-2 who had dismissed the appeal.

12. Accordingly, the Directors of the Company prepared Revised Return for the Assessment Year 2013-14. Since the Revised Return becomes a delayed Return and it can be accepted, only, by the condonation of delay by the Principal Commissioner of Income Tax-2, Bengaluru, the Delay Condonation Application was also prepared. The above documents were submitted before the respective Authorities.

13. The Principal Commissioner of Income Tax-2, Bengaluru, however, dismissed the Delay Condonation Application as it is not maintainable before him.

14. The above situation put the Company in a dead lock. This made the Company to review the matters, once again, to proceed further in the matter. In the review the Directors decided to file an appeal against the order of Commissioner of Income Tax, Appeals-2, Bengaluru challenging the disallowance of bonus u/s 36(1)(ii) of the Act before the Income Tax Appellate Tribunal.

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