TMI Blog1997 (2) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... treating the conveyance reimbursement made by the appellant to the employees as salary liable to deduction of tax at source, the same being exempt under section 10(14) read with Explanation to section 17(2) of the Act." " 3. The CIT(A) has erred incorrectly invoking the machinery provisions of sections 192 and 201(1) of the Act for collection of tax to the facts and circumstances of the case." " 4. The learned CIT(A) has erred on facts and in the circumstances of the case in treating the bona fide belief of the appellant based on interpretation of legal provisions, precedents and circulars as mala fide and incorrectly applying the provisions of sections 192 and 201(1) of the Act. " Appeals under section 201(1A) of the Act : " 1. The learned CIT(A) has erred on facts and in the circumstances of the case in upholding the order of Assistant Commissioner of Income-tax, TDS Circle 22(1), New Delhi (ACIT) charging interest under section 201(1A) of the Income-tax Act, 1961 (Act). " " 2. The learned CIT(A) has erred on the facts and in the circumstances of the case in treating the conveyance reimbursement made by the appellant to the employees as salary liable to deduction of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en deducting tax at source. In any case, the provisions of sections 192,201 and other connected sections of the Income-tax Act, 1961 regarding the deduction of tax at source are only machinery provisions. The employer is to deduct tax for and on behalf of the employee and to pay the same to the treasury. To the extent that an employer has acted honestly and fairly in forming an opinion regarding the tax liability of his employees, the provisions of section 201(1) of the Act are not attracted. In support reliance was placed on the decision of ITAT Bombay in the case of Great Eastern Shipping Co. Ltd. v. Asstt. CIT [IT Appeal Nos. 6201 to 6203 (Bom.) of 1989]. Reliance was also placed on the decision of the Madhya Pradesh High Court in the case of Gwalior Rayon Silk Co. Ltd. v. CIT [1983] 140 ITR 832/14 Taxman 99 where it was held that the provisions of section 201 of the Act are attracted in the case of an employer only when that employer does not deduct or after deducting fails to pay the tax as required by the Act. Other decisions relied upon are -- CIT v. M. P. Agro Morarji Fertilizers Ltd. [1989] 176 ITR 282/[1988] 41 Taxman 115 (MP) CIT v. Life Insurance Corpn. [1987] 166 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Form under section 206(c) does not contain any specific column in regard to the conveyance allowance. In any case what is relevant to the assessee's case is whether the assessee's bona fide is established in not deducting tax at source in regard to the conveyance allowance or not. Relying on the various decisions specifically in the case of Indian Airlines LTD. v. Asstt. CIT [1996] 59 ITD 353 (Bom.), it was submitted that the provisions of section 201(1) of the Act could not be invoked in the case of the assessee. So would be the case for interest payable under section 201(1A) of the Act. 3. We have carefully considered the rival submissions and have also gone through the material to which our specific attention was drawn. As per information placed before us it is found that there is no provision for payment of conveyance allowance as per the copy of employment agreement (sample filed at pp. 23 and 24 of the Paper Book in the case of Mr. G. Ghosh). The employees have however been reimbursed expenses on declarations as given by them (specimen form of declaration available on p. 25 of the Paper Book). The payments made at fixed sums are stated to be on account of administrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnel, value of free passage, contribution to PF, etc. Column 10 contains particulars in regard to whether any conveyance has been provided by the employer free or at a concessional rate or where the employee is allowed the use of one or more motor cars owned or hired by the employers, estimated value of perquisite. For value of these perquisites rules have also been framed. Thus there is neither a separate column in regard to reimbursement of conveyance allowance nor any mention made in this respect in the information as sought by the prescribed Authority. The definition of salary under section 17 of the Act on the other hand is an inclusive one and includes amongst other items of income perquisites -- the concept of which has not been free from controversy. Whether a particular allowance is a part of salary or exempt under section 10(14) of the act has been a subject of judicial pronouncements and clarifications issued by way of Circulars of CBDT. As to the conveyance allowance as early as 1956 vide Circular No. 23(LVIII-8) dated 9th July, 1956, the Board clarified that trip between the residence and office or regular place of work to and fro would be regarded as being for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew such expenditure also ". On the other hand, the claim of the assessee in regard to exemption under section 10(14) of the Act is dependent on fulfilment of conditions, as prescribed in the section. The allowance would be exempt to the extent it is spent wholly, exclusively and necessarily in the performance of the duties of an office or employment of profit. This is, however, a matter of determination at the end of the Assessing Officer. 5. We further note that the provisions of sections 192 and 201 fall under Chapter XVII of the Income-tax Act which relate to collection and recovery of tax. Sections 192 to 199 of the Act relate to tax deduction at source. The provisions of tax deductible at source is not exclusive to salary alone but are applicable to other income, viz., interest other than interest on securities, dividends, winning from horse race and lotteries, payment to contractors, and sub-contractors, insurance agents, brokerage, etc. Comparing these provisions relating to different incomes, we find that the expression ' estimated income ' is only there in section 192 of the Act and not in other sections. The tax deductible at source is one of the modes of recovery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance alone. In this context, it may be stated that whether the particular allowance is taxable or not, would depend on the view adopted by the Assessing Officer while framing the assessment in the case of the employee at the time of deduction of tax at source. The employer is required to have a broad picture of the estimated income which is to be subjected to tax. The department could not successfully show that the assessee's conduct in not deducting tax at source was a mala fide one for which the penalty was leviable in its hand. In view of the various decisions of the Tribunal, namely, in (1) Industrial Credit Investment Corpn. of India Ltd.'s case ; Great Eastern Shipping Co. Ltd.'s case ; Indian Airlines v. Asstt. CIT [TDS Nos. 13 to 19 (Delhi) of 1995], Mahindra Mahindra LTD. v. 2nd ITO [IT Appeal Nos. 9869,9870 and 9871 (Bom.) of 1989] and Glaxo India Ltd. [IT Appeal Nos. 104 to 107 (Bom.) of 1990] and others as cited which are on the same point, we are of the view that penalty under section 201 of the Act is not leviable. 7. As regards decisions cited by the Revenue, these relate to interpretation of provisions of section 10(14) of the Act. We have already opined ..... X X X X Extracts X X X X X X X X Extracts X X X X
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