Salary deduction for not serving during notice period couldn’t be taxed: ITAT

Facts :

a) Assessee declared salary income after deducting amount for not serving during notice period with two of his employers.

b) During the course of reassessment proceedings, Assessing Officer (AO) added the salary amount deducted by the employers for not serving during notice period to the income of assessee.

c) On appeal, CIT(A) upheld order of AO that no such deduction is available under Section 16 of the Act and the salary income is taxable on due basis or on paid basis. Aggrieved-assessee filed the instant appeal before Tribunal.

Tribunal held in favour of assessee as under:-

1) Employers had made deduction from the salary which was paid to the assessee during the year under consideration because of leaving the services as per agreement made between the assessee and the respective employer.

2) This was a case of recovery of the salary which was already made to the assessee for which Section 16 of the Act couldn’t be referred to.

3) Assessee had actually received the salary from his previous employers after deducting the notice period amount as per the job agreement with them.

4) Therefore, salary received by the assessee could only be taxed in the hands of assessee. - [2017] 80 taxmann.com 297 (Ahmedabad - Trib.)