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2010 (10) TMI 1126 - HC - Income TaxDemand u/s 201 - TDS on the value of perquisites covered under Section 17(2)(ii) of the Act as amended by the Finance Act, 2007 - assessee is a Government of India Undertaking and is a subsidiary Company of Coal India Ltd. engaged in the business of mining - Although the assessee had deducted tax at source while paying salary to the employees, the assessee had not deducted tax on the perquisite value of the accommodation provided to the employees as according to the assessee, no concession in the matter of accommodation within the meaning of Section 17(2)(ii) was given to the employees. HELD THAT:- The Apex Court in Arun Kumar's case[2006 (9) TMI 115 - SUPREME COURT] while upholding the validity of Rule 3 has held that in the absence of any “deeming fiction” in the Act, it is open to the assessee to contend that there is no concession in the matter of accommodation provided by the employer to the employees and the case is not covered by Section 17(2)(ii) of the Act. Even after the substitution of Rule 3 with effect from 1/4/2001, in the absence of any specific provision under the Act, it was open to the assessee not to deduct tax at source relating to the accommodation given to the employees on the ground that no concession in rent has been given to the employees. This contention of the assessee has been in fact upheld by the Apex Court in the case of Arun Kumar (supra). To overcome the above decision, the law has been amended by Finance Act, 2007 with retrospective effect from 1/4/2002. The retrospective amendment merely takes away the above argument, which was available to the assessee. Once the salary is paid by the employer after deducting tax at source as per the law prevailing on the date of paying the salary, then any subsequent amendment in law brought about retrospectively cannot require the employer to deduct tax at source for the past period, because the salary for that period has already been paid. Consequently, the employer cannot be made liable for the consequences set out in Section 201 of the Act on account of the retrospective amendment to Section 17(2) of the Act. Moreover, as held by the Tribunal, the Legislature while retrospectively amending Section 17(2)(ii) of the Act has not chosen to amend Section 192 or Section 201 of the Act. Therefore, the employer assessee is not hit by the retrospective insertion of Explanation to Section 17(2) of the Act. Thus the decision of the Tribunal that the assessee was not obliged to deduct tax at source and accordingly not liable to the consequences set out in Section 201 of the Act does not suffer from any infirmity. Decided in favour of assessee.
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