ACIT v. Harashima Naoki Tashio
A.Y. : 2004-05. Dated : 8-2-2010
S. 17(2) – Employer’s contribution towards social security
scheme, made under a statutory provision, is not a perquisite —Even in ex-parte
cases the CIT(A) is required to decide appeal on merit after considering
material on record — For computing tax effect interest is not to be taken into
account.
Facts :
The assessee, not an ordinary resident in India, worked as a
General Manager with M/s. Mitsui & Co. India Pvt. Ltd. in the period relevant to
the assessment year under consideration. While assessing the total income of the
assessee the Assessing Officer (AO) made an addition of Rs.5,00,629 representing
contribution made by the assessee’s employer in Japan towards social security,
health insurance, etc. The assessee’s contention that the contribution was under
a statutory provision and only a contingent benefit which did not give any
vested right to the assessee, as the assessee may or may not get any benefit
depending upon happening or non-happening of an event which is beyond the
control of the appellant, was not accepted. Aggrieved, the assessee preferred an
appeal to the CIT(A).
The CIT(A) examined the scheme under which the payment was
made and following the decision of the Tribunal in the case of ACIT v. Eric
Matthew Gottesman, 15 SOT 301 (Del.) deleted the addition.
Aggrieved the Revenue preferred an appeal to the Tribunal.
Held :
The Tribunal noted that in the following cases, which are
binding on it, similar contribution to social security made by the employer in
the home country of the foreign national was held to be not taxable as a
perquisite :
1. ACIT v. Eric Matthew Gottesman, (2007) 15 SOT 301
(Del.)
2. ACIT, Circle 47(1) v. Hideki Ishihara in ITA No.
1906/Del./2008 dated 31-12-2008
3. ITO v. Lukas Fole, (2009) 124 TTJ 965 (Pune)
4. Gallotti Raoul v. ACIT, 61 ITD 453 (Bom.)
The objection on behalf of the Revenue that since none
appeared on behalf of the assessee before the CIT(A), the CIT(A) should have
decided the issue against the assessee the Tribunal held that even in ex-parte
cases the CIT(A) is required to decide appeal on merit after considering
material on record.
The Tribunal held that interest for computing tax
effect is not to be taken into account, but since how much interest has been
charged was not available on record, the contention on behalf of the
assessee that the tax effect is less than Rs.2 lakhs was rejected.
The Tribunal dismissed the appeal filed by the
Revenue.
