In a recent decision, the Allahabad High Court has held that an intimation under section 143(1) of the Income Tax Act can be considered as an ‘order’ for the purpose of section 264 of the Income Tax Act.
While quashing the revision order passed by the Commissioner of Income Tax, Justice Rajan Roy observed that the assessee has rightly filed a revision petition for claiming exemption under section 10(8) of the Act, which was omitted to claim in the return originally filed.
The assessee, Dr. Jyothi Vajpayee, was a Member of the U.P. Provincial Medical Services Cadre in the State of U.P.She worked with the AVSC as an associate trainee in connection with a project-grant-agreement between the President of India and the United State of America acting through the Agency for International Development (AID) for innovations in Family Planning Services, during the relevant assessment years. The assessee was paid remuneration by the AVSC from the grant received through AID meant for the project which was the subject matter of the aforesaid Cooperative Technical Agreement between the two Governments. Initially, the assessee, without knowing the fact that her salary from the said employment was exempted from income tax, filed returns. When she came to know about the exemption, she filed a revision petition which was rejected by the authorities on ground that there was no assignment of duties as such in terms of section 10(8) and that under the Agreement between the United States of America and the Indian government there was no specific exemption of salary from tax, therefore, as the prerequisites mentioned in section 10 (8) are not satisfied, the petitioner was held to be disentitled to the claim.
The bench noted that as per section 10(8)(a) provides that in computing the total income of a previous year of any person, the remuneration received in the case of an individual who is assigned to duties in India in connection with any Cooperative Technical Assistance Programmes and Projects in accordance with an agreement entered into by the Central Government and the Government of a foreign State (the terms whereof provide for the exemption given by this clause), directly or indirectly from the Government of that foreign State for such duties, shall not be included in his total income for the purposes of Taxation under the Act 1961.
After analyzing the provisions of the agreement, the bench pointed out that “the duties were assigned to the petitioner in relation to programmes and projects of Cooperative Assistance based on the agreement entered into between the Indian Government and the United States of America through AID, therefore, the connection of the assignment of duties to the petitioner in India in connection with the Cooperative Technical Assistance Programme and Project in accordance with an agreement as contemplated in section 10(8) of the Act of 1961 is clearly established and the fact that remuneration was paid to the petitioner in respect of such activities which obviously was from the grant received through USAID was also covered by Clause (a) of sub-section (8) of Section 10 which refers to remuneration received directly or indirectly from the Government of that foreign State for such duties, as being exempt from taxation.”
It was further noted that under the terms of the above agreement, the term ‘grant’ included all goods, services, training and contractor personnel provided by AID/ Washington in support of the project.
Rejecting the contention of the revenue that ‘remuneration’ does not mean salary, the bench said, “‘Remuneration’ is a word having wider meaning than ‘Salary’. It includes salary and other kinds of wages which may be paid as Quid Pro Quo for the services rendered. This is hardly an issue which requires any detailed elaboration, nevertheless, to set the matter at rest one may refer to the definition of “remuneration” as contained in the Law Lexicon by P. Ramanatha Ayyer, 1987 Edition, which says “remuneration” is wider than “salary”. “Remuneration”means “Quid Pro Quo”. Whatever consideration a person gets for giving his services is a ‘remuneration’ for them. As per Chamber’s 20th Century Dictionary, ‘remunerate’ means to recompense, to pay for services rendered. Remuneration; recompense; reward; pay.”
The Revenue had contended that the assessee cannot invoke revision petition when she does not opted to revise the return or claimed refund. It was also contended that an intimation under section 143(1) of the Act 1961 is not an order, therefore, not revisable under section 264. The Court, relying upon a catena of decisions, found that the contention is not maintainable.
The bench noticed the decision of the Delhi High Court in the case of Vijay Gupta, in which it was held that the intimation under Section 143(1) is regarded as an ‘order’ for the purposes of Section 264 of the Act.
Read the full text of the Judgment below.