TMI Blog2015 (12) TMI 1889X X X X Extracts X X X X X X X X Extracts X X X X ..... LD THAT:- The assessee has acted fairly and honestly in computing its TDS liability qua salary and other allowances paid to its employees u/s. 192 - Nor it is the Revenue s case that it has not acted in the above stated bonafide manner or that quantum of medical allowance question appears to be payment of salary in garb thereof. The case file does not reveal that these very sums stand assessed in individual employees hands. Revenue fails in controverting all of the above stated findings. We accordingly reverse lower authorities action and accept assessee s first substantive ground challenging section 201(1) and (1A) demand in question. This first substantive ground relating to medical reimbursement issue succeeds. - ITA No. 09/Ahd/2012, ITA No. 321/Ahd/2012, ITA Nos. 461 & 462/Ahd/2012 - - - Dated:- 17-12-2015 - Shri Anil Chaturvedi, Accountant Member and Shri S. S. Godara, Judicial Member For the Revenue : Shri Albinus Tirkey, Sr. D.R. For the Assessee : Shri Sunil Talati, A.R. ORDER PER : S. S. GODARA, JUDICIAL MEMBER:- This is a set of four appeals. The first assessment year 2008- 09 involves three of them. The assessee and Revenue have filed c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings of the above stated coordinate bench decision to decide assessee s first and third substantive ground against it and the second one of section 80IA deduction in its favour. Assessee s appeal ITA 09/Ahd/2012 partly succeeds. 4. We come to Revenue s appeal now. It raises two substantive grounds in challenging the CIT(A) s order deleting addition of Rs. 33,58,000/- (wrongly pleaded as Rs. 13, 53,98,760/-) on account of corporate debt restructuring treated as capital expenditure and that of another disallowance of Rs. 13,53,98,760/- made on account of replacement of re-membraning cells. The Assessing Officer treated both these claims capital expenditure. A perusal of the necessary chart forming part of the case file reads that the first issue of corporate debt restructuring has been decided by a learned coordinate bench in assessee s favour in assessment year 2004-05 (supra) thereby holding the same to be revenue expenditure in nature. This is subject to a rider that it shall be proportionately allowable as computed by the Assessing Officer. Necessary remand directions have also been issued to assessing authority. We draw support therefrom and follow principle of consistency. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to be in default u/s. 201(1) (1A) to the tune of Rs. 31,77,780/- and Rs. 9,69,224/-; respectively. 7. The assessee preferred appeal. The CIT(A) upholds Assessing Officer s action as under:- A(viii). The order u/s 201(1) and 201(1A) of the ACIT(TDS), Baroda as well as above submission of the appellant have been considered. The appellant in its above submission has stated that it was paying medical reimbursement of Rs. 1250/- to the officers and Rs. 965/- and Rs. 865/- to the staff members (i.e. other than the officers) as per the grades. It is submitted by the appellant that it is debiting the amounts to Medical reimbursement to employees in the books of accounts. The appellant has referred to provisions of Section 17(2)(viii) of the I.T. Act. As per the appellant reimbursement is treated as non-taxable amount to the employees u/s 17(2) to a limit of Rs. 15000/- per annum against self declaration of the employees regarding expenditure incurred in full towards medical treatment of self and dependent members of family. The appellant has also attached a form with regard to self declaration of the employee alongwith his above submission dtd. 19.12.2011. But this entire su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al allowances are required to be reimbursed by the employer to the employee on the basis of expenses actually incurred where as in the case of appellant medical allowances are given to the employees only on the basis of declaration. In view of this I fully agree with the view of the A.O that the fixed medical allowances are a taxable item and, therefore, the appellant was required to deduct the tax at source on payments of such medical allowances at applicable rates. At this place it can be mentioned that the appellant has not been able to produce evidences of having actually incurred the expenditure by the employees either during the course of post survey proceedings before the ACIT(TDS), Baroda or during the course of appellant proceedings before the undersigned. The only basis for making payments for medical allowances is the submission of indemnity bond as made by the employees or on the basis of their self declaration. There is no actual verification of the expenses as made by the employer as claimed by the employees for getting their medical allowances. A(ix). Considering these facts, I hold that the appellant was liable to deduct the tax at source on the payments made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorrect, this fact alone without anything more does not lead to an adverse inference. Relevant findings of the co-ordinate bench read as under:- 3. The only grievance raised in all the three appeals is that the CIT (A) erred in upholding demand raised on the assessee under section 201 read with section 192 in respect of conveyance allowance paid to the employees. 4. The undisputed material facts are like this. The assessee employer has paid conveyance allowance to a number of employees to meet the cost of travelling from residence to place of work, and vice versa The assessing officer (TDS), while scrutinizing the TDS return filed by the assessee, noticed these payments but he was of the view that these payments are taxable in the hands of the assessee, and, accordingly, the assessee employer should have deducted tax at source in respect of the same. it was in this backdrop that the assessing officer (TDS) raised a demand under section 201 read with section 192 in respect of the said conveyance allowance. Aggrieved by the action of the assessing officer, the assessee carried the matter in appeal before the CIT (A) but without any success. Still aggrieved, the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inference that the employer has not acted honestly and fairly. Unless that inference can be reasonably raised against an employer, no fault can be found with him. It cannot be held that he has not deducted tax on the estimated income of the employee. Therefore, all that we are required to adjudicate is whether the assessee's action of not including the conveyance allowance in employee's estimated income is bona fide or not. 7. Various benches of this Tribunal have taken the view that the assessee employer is not liable to deduct tax at source from conveyance allowance unless the quantum of allowance is such that it appears to be payment of salary in the garb of allowance. One of the Mumbai Benches, in the case of ICICI Ltd. v. Fourth ITO (1993) 47 TTJ (Bom.) 401 has observed. 6. We have heard the parties to the dispute and, in our view, the conveyance allowance paid by the assessee to its employees cannot be regarded as part of, the salary paid to them. There is considerable force in the submission of the assessee that this payment has been made to meet mostly the expenditure incurred by the employees for commuting between between the residence and off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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