If Income is under particular head can it be a deemed
Akhil
(Querist) 16 June 2009
This query is : Resolved
If income is falling under a particular head of the income for the purposes of income tax ,Can it be dragged as deemed income under some other head for benefit of the tax revenue by the department.
Please advise
Kalpesh
(Expert) 16 June 2009
It depends on the facts of the case.. eg receipt of income may be business income or other sources
A V Vishal
(Expert) 16 June 2009
Dear Akhil,
It is difficult to answer in absence of the full particulars/facts of the case. In case the income has been consistently being shown under that head of income, then the action of the A O can be challenged. Kindly furnish details.
Akhil
(Querist) 16 June 2009
Dear Kalpesh/Vishal
Actually an employee in our company has given a property on lease and enjoying rental income.The same employee is staying in the same accomodation geeting as perquisites by the company.While filing the return the employe is not showing the perquisites under the "SALARY" .
Now department has openeed the case for scrutiny and charging the tax considering peruisites as income separately. But the employee is saying that department can't take perquisite into consideration because already the company has deducted TDS on the rental income.So the employee is taking the stand that unnder the Income Tax act double taxation is not permissible as per the interpretaion of statute.
Please advise.
A V Vishal
(Expert) 16 June 2009
Dear Akhil
It is not double taxation in the first instant.
Definition of perquisite as per Section 17(2) of the Income-tax Act.
Section 17(2) of the Income-tax Act, 1961 gives an inclusive definition of perquisite. As per this Section perquisite includes.
1.The value of rent-free accommodation provided to the assessee by his employer.
The value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer.
2.The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases.
a)By a company to an employee, who is a director thereof.
b)By a company to an employee being a person who has a substantial interest in the company.
c)By any employer to an employee whose income under the head 'Salaries' exceeds Rs.24000 excluding the value of non monetary benefits or amenities.
d)Any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee.
e)Any sum payable by the employer whether directly or through a fund, other than a recognised provident fund or EPF, to effect an assurance on the life of the assessee or to effect a contract for an annuity.
The value of the accomadation provided by the employer is taxable since had the employer not provided the accomodation the assessee would had borne it, since the burden is shifted to the employer, it takes form of deemed income for the employee.
Secondly rental income is a separate head of account and even though the employee has leased his property there is no relation of employer and employee but a owner and a tenant. The TDS deducted is nominal @ 15% in all cases where rent exceeds 1.50 Lakhs, i.e a person having rental income of 1.21 lakhs is deducted @ 15% and a person having rental income of say 12 lakhs also is deducted at the same rate. TDS in a way is advance payment of tax on behalf of the assessee, hence the Department is right in taxing the perquisite on account of rent free accomodation to the employee-assessee as income. Further, the department will also initiate proceedings separately under S.271(1)(c) for concealment of income by the assessee and the minimum penalty is 100% of the tax evaded and the maximum penalty is 300% of tax evaded.
ANAND BABUNATH
(Expert) 16 June 2009
Dear Akhil
First of all the question of yours is not clear and vague. An income from a particular source can be clearly classified under the five broad categories of income as defied in the I.T Act. There can be differences in classifying any particular income depending upon the accounting treatment of the person who is assessed to tax. Investment in shares and income therefrom is Income from other sources / capital gains if it is treated as investment. However, if the person is trader in the shares and securities then it is a business income i.e. either a non-speculation (if delivery of the shares are taken) or speculation (if intra-day or futures / options are used).
Therefore you have to be clear with the situation to highlight the situation or reason for any change by the tax authorities.
More clarity is required from your end.
A V Vishal
(Expert) 16 June 2009
Dear Babunath,
Akhil has already submitted the facts of the case, kindly go through his second query posted by him today
Akhil
(Querist) 17 June 2009
Dear Vishal
Thank u. But please advise how to sort out the issue so that I can assist the employee.he is in trouble.
We are trying to take a stand of "interpretaion of double taxation" under the law of interpretation of statues.
A. A. JOSE
(Expert) 17 June 2009
In the facts of the case, the Department's view seems to be correct and compliance is the proper remedy please.
