Commissioner of Income-tax, Central-I v. P. J. Rao
[Citation -2014-LL-1121-32]

Citation 2014-LL-1121-32
Appellant Name Commissioner of Income-tax, Central-I
Respondent Name P. J. Rao
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 21/11/2014
Assessment Year 1997-98, 1998-99, 1999-00
Judgment View Judgment
Keyword Tags computation of income • tds certificate
Bot Summary: The Court :- This appeal under Section 260A of the Income Tax Act has been preferred by the Department against the order dated 5th May, 2005 passed by the learned Income Tax Appellate Tribunal A Bench, Kolkata in ITA Nos. The other questions relate to the issue whether salary paid to its director, the assessee and subsequently reduced by the employer company, the difference when not recovered in the relevant assessment years, should be taken to be part of the salary within the meaning of Section 15 of the Income Tax Act, 1961. Mr. Ghaffar, learned Advocate, submitted the resolution was duly taken under Section 198(4) of the Companies Act, 1956 and the portion of the salary paid but not recovered from the assessee was held by him in trust for the employer company under Section 309(5A)of the said Act. Md. Nizamuddin then submitted further that the stand taken by the assessee, if accepted would be to the effect the provisions of the Companies Act overriding the Income Tax Act. We do not find any conflict between the provisions of Sections 198 and 309 of the Companies Act, 1956 with Section 15 of the Income Tax Act, 1961. We accept the revised return of salary to be the salary within the meaning of Section 15 of the Income Tax Act. The amount recoverable held by the assessee is in trust for the company as permissible under Section 309.


ORDER SHEET ITA No. 422 of 2005 IN HIGH COURT AT CALCUTTA SPECIAL JURISDICTION (INCOME TAX) ORIGINAL SIDE Commissioner of Income Tax, Central-I Versus P. J. Rao BEFORE: Hon'ble JUSTICE SOUMITRA PAL Hon'ble JUSTICE ARINDAM SINHA Date : 21st November, 2014. Appearance: Mr. Farhan Ghaffar, Adv. Md. Nizamuddin, Adv. Court :- This appeal under Section 260A of Income Tax Act has been preferred by Department against order dated 5th May, 2005 passed by learned Income Tax Appellate Tribunal Bench, Kolkata in ITA Nos. 2455 to 2457 (Kol) of 2004 relating to Asessment Years 1997-98 to 1999-2000 on following questions:- Assessment Years 1997-98 and 1998-99 i) Whether on facts and in circumstances of case Tribunal was justified in allowing assesseee s claim of reduction of salary by employer company under section 198(4) and 309 of Companies Act, 1956 by ignoring and disregarding provision of section 15(b) of Income Tax Act, 1961? ii) Whether on facts and in circumstances of case Tribunal was justified in not considering that in matter of computation of Income Tax, Income Tax Law will prevail over any other law? iii) Whether on facts and in circumstances of case Tribunal erred in law in not considering that amount of salary received in particular year shall be taxed in 2 year of its receipt and if any part of such is subsequently recovered by employer, such recovery leading to reduction in quantum of salary of employee shall be considered in year of recovery? iv) Whether on factgs and idn circumstances of case order of Tribunal is perverse to extent it failed to take into consideration that no documentary evidences were furnished by assessee to substantiate claim that excess remuneration was actually recovered by his Employer/Shaw Wallace & Co. Ltd. Assessment Year 1999-2000 v) Whether on facts and in circumstances of case order of Tribunal is perverse to extent it failed to take into consideration that Rs.13,55,605/- was mentioned in assessee s salary certificate (Form No. 16) and Rs.11,47,479/- in TDS certificate and assessee failed to reconcile such difference? At outset Md. Nizamuddin, learned Advocate, submits issue arising out of question no. 5 stands remanded to Assessing Officer who was directed by C.I.T.(Appeals) to examine assessee s claim and grant credit for TDS subject to evidence. other questions relate to issue whether salary paid to its director, assessee and subsequently reduced by employer company, difference when not recovered in relevant assessment years, should be taken to be part of salary within meaning of Section 15 of Income Tax Act, 1961. Md. Nizamuddin also submitted that in absence of recovery amount paid to and in hands of assessee was salary and should, accordingly, be taxed. authorities below had gone wrong in accepting revised return of assessee showing reduced sum as salary 3 pursuant to subsequent resolution of his employer company taken to that effect on ground of reduced profits. Mr. Ghaffar, learned Advocate, submitted resolution was duly taken under Section 198(4) of Companies Act, 1956 and portion of salary paid but not recovered from assessee was held by him in trust for employer company under Section 309(5A)of said Act. Md. Nizamuddin then submitted further that stand taken by assessee, if accepted would be to effect provisions of Companies Act overriding Income Tax Act. He submitted such or even other considerations of equity were not possible by relying on decision of Hon ble Supreme Court in Commissioner of Income Tax Madras-Versus-Kasturi And Sons Limited; AIR 1999 SC 1275 and Madras High Court in Controller of Estate Duty-Versus- Sileshkumar R Mehta; 181 ITR page 10 (Madras). We do not find any conflict between provisions of Sections 198 and 309 of Companies Act, 1956 with Section 15 of Income Tax Act, 1961. We accept revised return of salary to be salary within meaning of Section 15 of Income Tax Act. amount recoverable held by assessee is in trust for company as permissible under Section 309 (5A). Hence, we find no substantial question of law arises. application and appeal are, accordingly, dismissed. Certified photocopy of this order, if applied for, be supplied to parties subject to compliance with all requisite formalities. (SOUMITRA PAL, J.) (ARINDAM SINHA, J.) cs. Commissioner of Income-tax, Central-I v. P. J. Rao
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