TMI Blog2004 (6) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted in the assessee's case, however, revealed that the assessee-company did not obtain any documentary evidence with regard to the LTA having been actually spent by the employees except the declarations made by them for incurring the travel expenses. Based on these findings of the survey, the AO was of the opinion that having regard to the assessee's failure to verify the incurring of actual expenditure on travel by its employees out of leave travel allowance, there was a short deduction of tax from salary inasmuch as the said allowance was treated as exempt under s. 10(5) without ascertaining as to whether the concerned employees were actually eligible for exemption. He, therefore, required the assessee-company to show cause why it should not be treated as person in default in respect of such short deduction and interest under s. 201(1A) should not be levied in respect of such amount. In reply, it was submitted on behalf of the assessee-company that the employer under s. 192(1) is liable to deduct tax only on the basis of estimated income and the Act does not cast an obligation on the employer to precisely compute the taxable income of the employees for the purpose of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Dr. Reddy Laboratories Ltd. vs. ITO (1996) 56 TTJ (Hyd) 38 : (1996) 58 ITD 104 (Hyd) and also charged interest under s. 201(1A) in respect of the amount of such short deduction quantified by him for the years under consideration. Aggrieved by the orders passed by the AO under s. 201(1)/201(1A), the assessee-company preferred appeals before the learned CIT(A) and the submissions made before the AO were reiterated on behalf of the assessee-company before the learned CIT(A) in support of its case. The learned CIT(A) found merits in the submissions so made on behalf of the assessee-company and proceeded to cancel the demand raised by the AO under s. 201(1) as well as the interest charged under s. 201(1A) for all the eight years under consideration for the following reasons given in para 15 of his impugned order: "15. I have considered the submissions of the appellant which are well founded. The employees are allowed LTA after availing 5 days leave by them and on submission of statement giving details of journey performed containing place visited, mode of travel, number of persons and fare, etc. Sometime, the amount sanctioned to the employee is less than the amount claimed and is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom have been filing their individual returns. Considering these facts and also keeping in view the decision of Hon'ble Andhra Pradesh High Court in P.V. Rajgopal's case as well as the various decisions of learned Tribunal, Delhi Bench, I am of the view that the learned AO was not justified in rejecting the claim of exemption of LTA under s. 10(5) of the Act and considering the same as a taxable income of the employee and determining short deduction of tax under s. 201(1) of the Act. The short deductions of tax determined by the learned AO for the respective years for LTA are, therefore, deleted." 4. Aggrieved by the aforesaid relief given by the learned CIT(A), the Revenue is in appeal before us. 5. The learned Departmental Representative submitted before us that the exemption under s. 10(5) in respect of leave travel allowance granted to the employees was available only if the allowance so granted was actually spent by the concerned employees on their travel. He submitted that for the purpose of treating the said allowance as exempt under s. 10(5) for the purpose of computing the estimated income from salary as well as tax deductible thereon, it was incumbent upon the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is that of the employee whereas the employer is fixed with the secondary liability of deducting tax from such salary income and for the purpose of discharging such liability, he is not expected to compute the salary income precisely but to estimate the same bona fidely and honestly as provided in s. 192 and as further clarified in the instructions issued by CBDT from time-to-time. He contended that the estimate so made by the assessee-company was bona fide and honest in the facts and circumstances of the case as already explained and the learned CIT(A), therefore, was fully justified in setting aside the order of the AO passed under s. 201(1)/201(1A). He, therefore, strongly supported the order of learned CIT(A) and urged that the same may be upheld. 7. We have considered the rival submissions and also perused relevant material on record. We have also gone through the various case law cited by the learned counsel for the assessee in support of the assessee's case. A resume of all these decisions indicates that if the estimate of salary income made by the employer for the purpose of deduction of tax at source is bona fide and honest, the requirements of s. 192 stand compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any instance of any of the employees having not actually incurred the LTA granted to them on their travel, we are of the view that there was no case to treat the assessee-company as an assessee in default in respect of the short deduction, if any, of the tax deducted at source from such salary income merely because the actual proof/evidence of halving actually incurred the leave travel allowance on travel expenses was not verified by it. As such, considering all the facts and circumstances of the case as well as the legal position emanating from the various judicial pronouncements cited by the learned counsel for the assessee, we are of the considered opinion that the assessee-company had complied with the requirements of s. 192 and there was no case to treat it as an assessee in default under s. 201(1) as well as to charge interest under s. 201(1A). In that view of the matter, we hold that the learned CIT(A) was fully justified in cancelling the orders passed by the AO under s. 201(1)/201(1A) for the years under consideration and upholding his impugned order, we dismiss the appeals filed by the Revenue. 8. In the result, the appeals of the Revenue are dismissed. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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