TMI Blog2008 (2) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... or may not have been correct, but the assessee had some basis on which the decision was taken not to deduct tax on the impugned amount of Rs. 1,000 per month per child. Therefore, unless it is shown that there was something more than mere reliance on the ready reckoner, the assessee cannot be held to be an assessee-in-default. Assessee has been providing free educational facilities to the children of the teachers and staff members. Notwithstanding these orders of the Tribunal in the case of Bal Bharti Public School [ 2007 (7) TMI 347 - ITAT DELHI-G] , it cannot wished away that there could have been doubts in the mind of the assessee as to whether in its case deduction of Rs. 1,000 per month per child should be allowed in valuing the perquisite of free educational facility. Therefore, its reliance on the ready reckoner was not completely misplaced and in any case such a reliance could not said to be not bona fide. Respectfully following the decision in the case of Nestle India Ltd. [ 2000 (1) TMI 35 - DELHI HIGH COURT] it is held that this case was not fit for passing an order under section 201(1) and consequently, under section 201(1A). Thus, the appeals of the revenue are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial years. The cumulative amount was calculated at Rs. 17,63,592. Thus, the assessee was treated as an assessee in default in respect of this amount. Interest of Rs. 7,08,480 was found payable under section 201(1A). Thus, a total demand of Rs. 24,72,072 was raised against the assessee. 3. The matter was agitated in appeal before the CIT (Appeals)-XXX, New Delhi. It was represented that the assessee had made the calculations about the value of the perquisite by relying upon the aforesaid ready reckoner and, thus, the assessee could not be faulted in this matter. It was further represented that what had to be calculated for arriving at the value of the perquisite was the cost incurred and the fees paid by other students could not be a valid measure of the perquisite. In calculating the cost, only direct and not indirect cost ought to have been taken into account. On the basis of this argument, it was pointed out that the cost for financial year 2000-01 was Rs. 950 per month, for financial year 2001-02 it would be Rs. 1,130 per month, for financial year 2002-03, it would be Rs. 1,168 per month, for financial year 2003-04 it would be Rs. 1,182 per month and for financial year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the learned CIT(A) suffered from infirmity in this behalf also. In this connection, reliance was placed on the order of Hon'ble ITAT, Delhi Bench H , New Delhi, in the case of ITO v. Director, Delhi Public School [2007] 18 SOT 453. The decision of the Tribunal in that case was that where the value of free education was less than Rs. 1,000 per month per child, nothing could be taken as perquisite in the hands of the teachers or staff members. However, if it exceeded Rs. 1,000 per child, then, the whole of the amount would become chargeable as perquisite in the hands of the teachers and staff members. It was further held that for working out the cost for the purpose of valuing the perquisite, all expenses in running the school, whether direct or indirect, will have to be taken into account, but the depreciation had to be excluded. It was also held that where any amount was recovered from the teachers or the staff members, the same would be deducted in arriving at the cost. 4.1 In reply, the learned counsel for the assessee made submissions under three broad heads, namely, that - (i) the assessee had estimated the value of perquisite in a bona fide manner and, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty on an employer to form an opinion about the tax liability of his employees in respect of salary income. The employer is expected to estimate the liability in a fair and honest manner. When the estimate is found to be incorrect, this fact alone without anything more, would not always lead to an inference that the employer did not act honestly and fairly. In that case, the ITO examined the annual returns filed by the employer in respect of tax deduction at source under section 192. He made some controversial addition and thereafter came to the conclusion that the tax was not properly deducted. The additions were made in respect of rent-free accommodation, furniture, exemption of leave travel concession and reduction in the standard deduction. He raised the demand against the assessee under section 201(1) and also levied interest under section 201(1A) on the assessee. The Hon'ble Court pointed out that neither the ITO nor the Tribunal found it as a matter of fact that the estimate of the assessee was not honest and fair. The assessee had estimated the salaries of the employees, deducted tax thereon and paid the tax as required under section 200. Therefore, the employer could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that action could not have been taken against the employer under section 201(1) or 201(1A). He also relied on the decision of Hon'ble Gujarat High Court in the case of ITO v. Gujarat Narmada Valley Fertilizers Co. Ltd. [2001] 247 ITR 305. In that case, on examination of the TDS return, it was found that certain payments were made to the employees from which tax was not deducted at source. The amounts were in the nature of vehicle allowance, cash canteen assistance, medical reimbursement, professional book allowance, gardening allowance, birthday gifts and safari allowance. The ITO treated the assessee to be an assessee default and also levied interest under section 201 (1A). The Tribunal gave a finding that the assessee made an honest and bona fide estimate and its taxability regarding the allowance. The court was of the view that ultimately payment of tax was the liability of the employees. No question of law arose out of the finding of the Tribunal. Therefore, it was also held that the Tribunal did not commit any error of law and no substantial question arose from the order of the Tribunal. He also relied on the decision of Hon'ble Kerala High Court in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educt tax at the average rate at the time of its payment. Section 200 casts further obligation that any person deducting any sum shall pay within the prescribed time the sum so deducted to the credit of the Central Government. Section 206 casts obligation on the aforesaid person to file the return of tax deducted at source in the prescribed format. The assessee had been deducting tax at source, depositing the same with the Central Government and filing the annual return for deduction of tax at source. The question is whether, the assessee fulfilled its obligation under section 192 regarding estimation of income and deducting tax thereon at the applicable rates. The case of the learned counsel was that the issue regarding computation of perquisite was decided on the basis of the aforesaid ready reckoner, which pointed out that from the cost of free education a sum of Rs. 1,000 per month per child may be deducted to arrive at the perquisite value of the free education supplied to the ward of the teacher or the staff member. Therefore, it could not be said that he failed to discharge his obligation regarding estimation of income and deduction of tax thereon at the applicable rates. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the assessee was held to be an assessee-in-default on the basis of the income computed in the hands of the employees. The court pointed out that once the tax has been recovered from the employees, there was no reason to take recourse to the employer to collect the same tax again. Thus, we are of the view that the facts of our case are covered by the decision of the jurisdictional High Court in the case of Nestle India Ltd. Before parting, it may also be mentioned that the Tribunal has taken somewhat different view in the matter. In the case of Director, Delhi Public School, it was held that if the cost of the free educational facility to the employer exceeds Rs. 1,000 per month per child, then, the whole of the cost to the employer will be perquisite in the hands of the employee and, therefore, the tax had to be deducted accordingly. Such was also the decision of the Tribunal in the case of Birla Vidya Niketan [ITA Nos. 2272 to 2281(Delhi)/2006 dated 23-3-2007], a copy of which was placed before us by the revenue. The assessee had also filed the order of the Tribunal in the case of Bal Bharti Public School [ITA Nos. 2286 and 2287 (Delhi) of 2006 dated 13-7-2007]. The decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
