Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1373 - AT - Income TaxTDS u/s 192 - Default u/s 201(1) and 201(1A) - TDS liability on the payments made to employee on the Death cum Retirement Gratuity (DCRG), Commutation of Pension and leave salary after allowing exemption provided u/s. 10(10)(iii), 10(10A)(ii) and 10(10AA)(ii) - assessee's plea of bonafide belief - AO rejected the arguments of the assessee that the assessee is covered under the definition of “State” - Assessee submitted that the provisions of section 201(1) and 201(1A) not attracted in the present case because non-deduction of tax at source by the university is based on a bonafide estimate of the tax liability of its employees HELD THAT:- In Part II if the Mahatma Gandhi University statutes 1997, the employees belonging to Classes I and II shall have the status of Gazetted Officers of the Kerala Government Service and accordingly, the pay of the employees of the university is fixed and also revised in accordance with and at par with pay revision of the state government employees. The employees of this university are also governed by the Kerala Government Pension Rules. These Rules are the same as the Central Civil Services (Pension) Rules 1972 {CCS Pension Rules 1972). The salary, pension and retirement benefits are paid from the consolidated fund of the state government and the grant for payment of salary and retirement benefits are provided by the Legislature through the budget of the State. The amount is specifically provided under the head 'salaries' in the state budget which was placed on record. Thus, there exists an employer employee relationship between the 'payer' and 'payee' i.e. the government and the employee. In our opinion, the employees of the assessee are found to be holding civil posts under the State Government, therefore, the provisions of section 10(10)(i), 10(10A) and 10(10AA) are fully attracted. Once the assessee falls under the above provisions of the Act, the same cannot be subject to TDS. We, therefore hold that payments made by the assessee to its employees towards death cum retirement gratuity, commutation of pension or leave salary shall not be liable for TDS to the extent permitted under the provisions of section 10(10)(i), 10(10A) and 10(10AA) Facts and circumstances of the present case are identical to the case of Indian Institute of Science vs. DCIT [2015 (2) TMI 1272 - ITAT BANGALORE] wherein held reliance placed by the AO on the expression "actually incurred" found in Sec. 10(5) and proviso (iv) to Sec. 17(2), in our view cannot be sustained. In any event, the interpretation of the word "actually paid" is not relevant while ascertaining the Quantum of tax that has to be deducted at source u/s.192. As far as the Assessee is concerned, his obligation is only to make an "estimate" of the income under the head "salaries" and such estimate has to be a bonafide estimate. In the present case, as pointed out by the Ld. AR, there has been no observation by the Assessing Officer with regard to estimate of salary made by the assessee. Further, the assessee has deducted tax on the basis of bona fide estimate of the salary to its employees. The various case laws cited by the assessee also supports the contentions of the assessee - if tax is deducted based on a bonafide estimate or if there is no observation that the estimate is not honest or fair, the deductor cannot be held to be assessee in default u/s. 201(1). Thus, in our opinion, deduction of tax at source by an employer is always a tentative deduction of income-tax subject to regular assessment in the hands of the payee/recipient. Accordingly, the Cross Objections filed by the assessee are allowed.
|