COMMISSIONER OF INCOME TAX Vs. TADASHI MURAKAMI

JUDGEMENT

(1.) THE assessee herein was an employee of M/s Hongo India (P) Ltd. He was paid salary in Indian currency as well as in foreign currency. Tax in the sum of Rs. 1,68,104 was also paid by his employer.

(2.) WHILE framing the assessment the AO added the aforesaid amount of Rs. 1,68,104 treating it to be a monetary perk. In this manner, the figure of gross total income was arrived at Rs. 51,56,849 and after giving standard deduction of Rs. 20,000 the total income was arrived at Rs. 51,36,849. On this, tax was calculated at Rs. 15,15,055. After doing this exercise, the AO also grossed up tax liability, applying the provisions of s. 195A to Rs. 22,61,276. No basis of this grossing up of the tax liability is stated in the order of the AO.

(3.) IN the appeal filed by the assessee herein before the CIT(A) the submission was that the AO has erred in grossing up. While making this submission, the assessee mentioned that it was on the basis of advance tax paid and grossing up could not have been done, since the advance tax was paid by the assessee himself. Recording the finding that assessee had paid advance tax of Rs. 12,50,686, the addition on account of the grossing up was deleted. CIT(A) also deleted addition of Rs. 1,68,104 holding that this was a non -monetary perk.