17 July 2014
Sir, I wish to know whether a person who is in receipt of stipend as articled clerk under a CA can claim it as exempt u/s 10(16) when the person is also showing income from business.
17 July 2014
the Income-tax Appellate Tribunal, Jaipur Bench has in the case of ‘Sudhirkumar Sharma vs. ITO’ 17 TTJ 226, also held that the stipend received by an Article Clerk from a Chartered Accountant is exempt, since it is not paid for rendering services by the Article Clerk, but is paid to him to meet the cost of books, coaching fee, examination fee, etc.
17 July 2014
we all know of this judgment and we see no reason to follow it. the judgment at best is fallacious.
There is no evidence that can be provided to exhibit that the stipend is for meeting the cost of education etc. This can be further negated on two grounds: 1. ICAI prescribes non-payment of stipend in case of excess leaves and during supplementary articleship. Had the purpose of stipend been to compensate cost of education, there wont have been this penal provision.
2. ICAI regulations at no point have linked cost of education with the stipend. And has just provided indicative minimum stipend.
All the firms paying stipend in excess of minimum taxable limit, deduct TDS under 192(b)
17 July 2014
:) well I forgot to mention a caveat...that you may still refer to the judgment to claim exemption as long as you are confident that you will be able to defend your position if the tax officer decides to reject your position.
Have a look at form 102. The wordings therein are 'employer' of the first part and 'articled assistant' on the other part which means the view expressed by Nikhil Ji holds good though I too supported the 1983 decision of Jaipur bench long back.
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