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2018 (5) TMI 583 - AT - Income TaxAssessee in default - non deduction of tds on payments made to retirement employees towards unutilized leave period where such payment was made in excess of ₹ 3 lacs - bonafide estimate of the salary - proceedings against the Assessee u/s.201(1) & 201(1A) - assessee's contention that its employees were employees of the State Government and therefore the entire payment to its employees towards unutilized leave period on retirement was exempt u/s.10(10AA)(i) Held that:- As decided in ACIT Vs. Infosys BPO Ltd. [2013 (9) TMI 205 - ITAT BANGALORE] held that the plea of the Assessee that it made a bona fide estimate of employee’s salary by valuing the perquisites in the form of residential accommodation provided to the employees by valuing the same as if employees were employees of Central Govt. has to be accepted. It is clear from the records that the position with regard to the assessee not being a Central govt. was brought to its notice by the department only in the proceedings initiated in 2013. Even thereafter, the Assessee has been taking a stand that its employees or employees of Central Govt. Obligation of the Assessee is only to make a bonafide estimate of the salary. Assessee has made such an estimate. The Assessee’s obligation u/s.192 is therefore properly discharged and hence proceedings u/s.201(1) & 201(1A) of the Act have to be quashed and are hereby quashed As in present case the circumstances explained by the KPTCL [assessee] regarding the manner of formation of KPTCL and the action of the revenue in not questioning KPTCL’s action in the past several years after its formation and the manner of exercise of control and affording protecting to employees of KPTCL by the State Government were definitely factors which weighed with KPTCL when it made estimate of its employees income under the head “Salaries”. There is no reason for them to think that its estimate of employee’s income under the head “Salaries” was incorrect as the belief it entertained was that its employees were to be regarded as employees of State Government and that its employees are entitled to exemption of the entire sum of unutilized leave encashment u/s.10(10AA)(i) of the Act. - Decided in favour of assessee
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