Where assessing officer rejected assessee's claim for 50% deduction under section 80R, however, Commissioner(Appeals) allowed full exemption under section 10(16), the same was justified.
Merely because the assessee claimed lesser benefit before the Income Tax Officer, he could not be precluded from claiming his legitimate right before the appellate authority. It is the duty of the revenue authorities to allow all benefits to the assessees which are due to them under the law whether claimed or not. The scholarship clearly fell under section 10(16) and, therefore, the Commissioner(Appeals) was right in allowing full exemption.
Exemption under s. 10(16)--SCHOLARSHIP--Received from a foreign institution.
Scholarship received from a foreign institution was meant to meet cost of education, therefore, same is fully exempt under section 10(16).
The certificate of the concerned foreign institute which gave the scholarship to the assessee, the certificate given by the concerned institute showed that the scholarship was meant to meet the cost of education, etc. It squarely fell within section 10(16) so fully exempt.
1. The assessee is an individual at present working as Director General, Indian Council of Medical Research. During the account year period relating to the assessment year before us, he received a scholarship of the value of 18,500 US dollars from the Department of Health, Education and Welfare, National Institute of Health, Maryland.
In terms of Indian money the value came to Rs. 1,55,400. At the time of filing of the return he claimed 50 per cent of the money so received as exempt under Section 80R of the Income-tax Act, 1961 ('the Act'). The ITO, however, without giving any relief added the full amount of Rs. 1,55,400 as the assessee's income.
2. The assessee went in appeal and contended that in view of the nature of scholarship and the purpose for which the same had been granted as per the certificate dated 17-12-1976 from the Institute in the USA, nothing was taxable in view of the judgments of their Lordships of the Karnataka High Court in S. Ranganatha Rao v. Accountant-General [1981] 129 ITR 130 and A. Ratnakar Rao v. Addl. CIT [1981] 128 ITR 527 (Kar.).
He had also filed a copy of the tax return, filed and assessed in USA.The Commissioner (Appeals) allowed his appeal as follows: I have perused the judgment (copy of which has been filed) and after careful consideration of the facts and circumstances of the instant case I am of the opinion that the ratio of the Karnataka High Court judgment is fully applicable to the appellant's case. In this view of the matter, I hold that a sum of Rs. 1,55,400 cannot be brought to tax as it qualifies for exemption under Section 10(16) of the Income-tax Act. The addition of Rs. 1,55,400 is, accordingly, deleted.
3. The department has come up in appeal. It is contended before us that the assessee having filed his return claiming only 50 per cent of the amount received as exempt should not have been allowed to enlarge his claim to the full amount by the Commissioner (Appeals) because for the balance of the amount not originally claimed, the assessee could not be taken to have any grievance. He' further contended that the documents which are filed before the Commissioner (Appeals) having not been filed before the ITO, if at all, the Commissioner (Appeals) should not have taken note of them but sent back the matter to the ITO. Reliance was placed on CIT v. Anand Prasad [1981] 128 ITR 388 (Delhi). The learned Counsel for the assessee, on the other hand, submitted that the Commissioner (Appeals)'s order being in accordance with law and as the assessee's case clearly falls under Section 10(16) of the Act, the same calls for no interference. As regards the argument of the departmental representative that the assessee should not be taken to have any grievance in view of his returning the income, it was contended that the claim being in accordance with law, the assessee could not be prevented from tendering it before any appellate authority. Thereafter, it was submitted that the assessee's case fell squarely within the meaning of Section 10(75).
4. After hearing both the parties we are of the view that in view of the certificate of the Institute, who gave the scholarship to the assessee, the assessee was within his right and competence to claim his right under the law before the first appellate authority. He wrongly claimed lesser benefit before the ITO. He could not be precluded from claiming his legitimate right before the appellate authorities. The denial of his legitimate claim or right on the view that as the assessee had himself claimed a lesser amount as exempt in the return under a different section of the Act and, therefore, should be shut out from claiming the full benefit under the relevant section, would amount to tripping up an unwary assessee which the law does not permit. While it is the duty of the revenue authorities to collect the legitimate tax, it is equally the duty of the authorities to allow all benefits to the assessees which are due to them under the law whether claimed or not. Claiming alone should not be a condition precedent for allowing.
The revenue authorities are supposed to know the income-tax law and administer the same in accordance with law and not collect the revenue on the ignorance of the assessees or because of the ignorance of the assessee. We, therefore, do not agree with the contention of the departmental representative as regards the first argument. Therefore, the judgment of their Lordships of the Delhi High Court do not help the revenue.
5. The second question that arises is whether the claim of the assessee falls within Section 10(16) or not. We would rather like the Act itself to speak than us: 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-- The certificate issued by the Institution speaks of the scholarship for meeting cost of education, etc., and, therefore, the same squarely falls within Section 10(76) and we hold it so. In that view of the matter, we hold that the Commissioner (Appeals) was justified in holding the amount of Rs. 1,55,400 as exempt from tax. In coming to this decision as we have done, we have sought active support from the judgment of their Lordships of the Karnataka High Court in A.Ratnakar's case (supra).