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2013 (2) TMI 303 - AT - Income TaxNon deduction of TDS from cost of uniform items, stitching charges, washing expenses etc., reimbursed to the employees - demand raised by u/s. 201(1) & 201(1A) - default u/s 194-I, 194J etc. - assessee contested of paying FBT on the same - Held that:- FBT is payable on any expenditure incurred on employees’ welfare excluding those expenditures which are incurred to fulfill any statutory obligation or to mitigate occupational hazards etc. This is not in dispute that FBT was paid by assessee-company on this expenditure and this is also admitted position that this expenditure is in the nature of employees’ welfare. As per sub-section 2 of section 115WB, it is provided that fringe benefit shall be deemed to have been provided by the employer to its employee if the employer has in the course of business incurred any expenditure on or made any payment for various purpose which includes employees’ welfare. As per clause-E of this sub-section, it does not come out that it has to be enquired and looked into whether the employee has incurred the amount given to him by the employer for the same purpose for which it was given to the employee. Thus for this reason the employer has paid FBT on a particular expenditure, it is considered as payment of income tax only on deemed income of the employee out of various expenditures incurred by the employer and hence, this is not relevant as to whether the employee has actually incurred those expenditures as intended by the employer in view of this fact that FBT was actually paid by the assessee-company on the impugned expenditure on uniform, washing allowance etc., the same cannot be considered as perquisites in the hands of the employees and therefore, there is no liability of the assessee-company to deduct TDS therefrom. See R & B Falcon (A) Pty Ltd. Versus Commissioner of Income Tax [2008 (5) TMI 2 - SUPREME COURT] - in favour of assessee. Non deduction of TDS on conveyance, maintenance, reimbursement expenditure (CMRE) to its employees every month based on their status, designation - Held that:- Employer is paying fringe benefit tax on CMRE cannot be ignored. Regarding this expenditure also this could not be shown or established by Revenue that FBT is not payable on this expenditure. This expenditure is also not incurred to fulfill any statutory obligation or to mitigate occupational hazards or fall in any other exclusion as specified in Explanation to clause-E of sub-section-2 of section 115WB. This also is an admitted fact that FBT was paid by the assesseecompany on this expenditure also there is no liability of the assessee-company to deduct TDS therefrom - in favour of assessee. Whether TDS was required to be deducted from hiring charges of CMRE u/s 194C @ 2% or u/s 194I @ 10% - CIT (A) has directed the AO to re-compute the liability after the assessee provides the required details regarding charges paid for CMRE - Held that:- As the assessee has submitted that the A O may be directed to decide this entire issue afresh after necessary details are filed by the assessee before him and after providing reasonable opportunity of being heard to the assessee, in the interest of justice, the AO may be directed to do so and hence, order of CIT(A) on this issue is set aside and restore this entire matter back to the file of AO for fresh decision - in favour of assessee for statistical purposes. Payment for hiring of equipments i.e., xerox machine and hiring of car jeeps - TDS u/s 194C or 194I - Held that:- This issue is squarely covered in favour of assessee by two judgments of rendered in the case of Swayam Shipping Services P. Ltd. (2011 (1) TMI 797 - GUJARAT HIGH COURT ) and CIT v. Shree Mahalaxmi Transport Co. (2011 (1) TMI 1104 - GUJARAT HIGH COURT ) wherein held that the TDS will be charged u/s 194C. Seismic job service and short hole and hire of plant and equipments - assessee invoking explanation-2 to Section 9(1)(viii) that the impugned payment cannot be considered as fees for technical services - Held that:- As clearly noted by the CIT(A) that mining and exploration was business activity of the assessee and the parties to whom the payments has been made for rendering technical services are not in the business of mining but they are in business of providing technical services for pre-mining / preparing for mining i.e. conducting seismic survey and rendering connected services. Hence, the impugned payment is not covered under exception carved out in Explanation- 2 to Section 9(1)(vii). As per CBDT instruction No. 1862 dated 22-10-1990 also, it is opined by Attorney General of India that Explanation-2 to Section 9(1) (vii) covers rendering of services like in parking of training and carrying out drilling operations for exploration or exploitation of oil and natural gas. In the present case, it is not the case of the assessee that impugned payment was made for imparting of training. In the present case project of exploration of oil and natural gas is undertaken by the assessee and not by the recipient. The recipient has only provided technical services and therefore even after considering CBDT instruction No. 1862 dated 22-10-1990, the impugned payment is not covered by Explanation-2 to Section 9(1)(vii) - Thus no case could be made out by assessee that impugned payment is not for fees for technical services or that it falls within the Exclusionary clause as per Explanation-2 to Section 9(1)(vii) - no reason to interfere in the order of CIT(A) and this issue is decided against the assessee.
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