S.S.N. Ravi v. Asstt. CIT

INCOME TAX ACT, 1961

--Salary--PerquisiteSign-on-bonus received--Refunded later on--Where assessee received certain amount as sign-on-bonus from N Bank in assessment year 2007-08 and refunded that amount to that bank because of joining some other bank in breach of terms and conditions in assessment year 2008-09 then the assessee could not reduce the amount so refunded from his total income in assessment year 2008-09.--AO found that assessee's salary was Rs. 68.55 lakhs (Approx), whereas assessee had offered salary of Rs. 43.55 lakhs (Approx). Assessee submitted that earlier on 20-11-2006, it had joined B. Bank and the Bank had paid a taxable sign-on-bonus of Rs. 25 lakhs with conditional rider that if employee left the company within a period of one year from date of joining, he shall refund the same. Since assessee left B Bank and joined D Bank, it refunded Rs. 25 lakhs as acknowledged by B Bank on 6-11-2007. Since the assessee had refunded an amount of Rs. 25,00,000 on 6-11-2007 which fell in the financial year 2007-08 relevant to assessment year 2008-09, he had reduced Rs. 25 lakhs from his gross salary and filed return of income. The AO considered the facts of the assessee on change in employment and was of opinion that there was no provision in the Act where such reduction of salary income was permissible. The AO had added Rs. 25 lakhs to the income of the current assessment year. Held:On the perusal of provisions of section 17(1), there were no explanation where assessee should reduce refund of sign-on-bonus. Considering the apparent facts, terms of employment, characteristic of sign-on-bonus and the service certificate of B Bank where assessee had voluntarily left the service the sign-on-bonus received by assessee was taxable.