TMI Blog2012 (8) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... has to decide the said question and record a finding as to whether there is 'concession' and the case is covered by section 17(2)(ii). Only thereafter the authority may proceed to calculate the liability of the assessee under the Rules, therefore, in spite of the legal position that Rule 3 is intra vires, valid and is not inconsistent with the provisions of the parent Act under section 17(2)(ii), it is still open to the assessee to contend that there is no 'concession' in the matter of accommodation provided by the employer to the employee and hence the case did not fall within the mischief of section 17(2)(ii) of the Act As AO has nowhere held in the impugned order that any concession was given by the employer to its employees and they have provided the accommodation on a concessional rates and AO straightway applied Rule 3 without first establishing the case that the appellants have provided any concession in the shape of accommodation to its employees - no default under sec. 201(1) and 201(1A)- in favour of assessee. - IT APPEAL NOS. 4804 to 4806, 4812 to 4819 and 4826 to 4832 (DELHI) OF 2011 - - - Dated:- 27-7-2012 - G.D. AGARWAL, AND RAJPAL YADAV, JJ. ORDER Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Assessing Officer thereafter reproduced the table appended with Rule 3 and recorded a finding how to compute the perquisite. According to the Assessing Officer, as per sub-rule (1)(a)(iii), 7.5% of the salary is to be treated as perquisite value of the accommodation provided by the employer to its employees and the DDO ought to have deducted the TDS on such perquisite's value. In the opinion of the Assessing Officer, the appellants have failed to deduct the TDS while making payments of salary to the employees. Assessing Officer computed the perquisite value, tax payable on such amount and the interest for non-payment of such amount in government's account within the due date in the annexure annexed with each order. In the case of Principal Campus School, learned Assessing Officer has worked out the tax at Rs.16,562 interest under sec. 201(1A) at Rs.5588 and raised a demand of Rs.22,150 under sec. 201(1) and 201(1A) of the Act. Similar demands have been raised in the cases of other appellants. 4. Dissatisfied with the demands, the appellants filed appeals before the learned first appellate authority. They have contended that the learned ITO(TDS) has erred in treating the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment but that does not mean that it is a state and its employees are government employees. 5. Learned DR relied upon the orders of ITO(TDS), as well as the order of the Learned CIT(Appeals). He pointed out that employees of the University cannot be treated at par with the State Government employees and they are rightly being treated in the category of others. Sub-rule (3) of Income-tax Rules provides the mechanism of valuation of perquisite and Assessing Officer has rightly valued it and has rightly treated the assessee in default. 6. We have heard the rival contentions and gone through the record carefully. Before adverting to the contentions raised by the assessee before the learned first appellate authority as well as reasons assigned by the learned revenue authorities below. It may be appropriate if we refer to the relevant provisions of the act, the rules and the important decisions on the points. Section 17 of the Act defines "salary", "perquisite" and "profits" in lieu of "salary". For the purpose of the controversy in hand, the relevant part of the section 17 reads as under: "17. For the purposes of sections 15 and 16 and of this section,- (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding television sets, radio sets, refrigerators, other household appliances and air-conditioning plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable therefor; Provided that- (1) where the fair rental value of the 'accommodation is in excess of 20 per cent of the assessee's salary, the value of perquisite shall be taken to be 10 per cent of the salary increased by a sum equal to the amount by which the fair rental value exceeds 20 per cent of the salary; so, however, that the Assessing Officer may, having regard to the nature of the accommodation, determine the sum by which 10 per cent of the salary is to be increased, as a percentage (not exceeding 100 per cent) of the amount by which the fair rental value exceeds 20 per cent of the salary; (2) where the assessee claims, and the Assessing Officer is satisfied that the sum arrived at on the basis provided above exceeds the fair rental value of the accommodation, the value of the perquisite to the assessee shall be limited to such fair rental value; ( b ) The value of residential accommodation provided at a concessional rent shall be determined as the sum by which the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. ( iii ) 7.5% of salary in other areas, in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee. ( b ) where the accommodation is taken on lease or rent by the employer. Actual amount of lease rental paid or payable by the employer or 15% of salary whichever is lower as reduced by the rent, if any, actually paid by the employee. The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has relied upon the orders of the ITAT in ITA No. 4676/Del/2005 in the case of Financial Officer, Maharishi Dayanand University, Rohtak v. ITO , Ward 2, Rohtak. The Maharishi Dayanand University is an university situated within the Haryana State and its employees are at par with that of the employees of Chaudhary Charan Singh Hisar Agriculture University, Hisar. The ITAT in ITA No. 4676/Del/05 has observed that this issue was earlier decided by the ITAT in ITA No.4113/Del/2004 and ITA No. 4185/Del/04 in assessment year 2000-01. The ITAT in ITA No. 4113/Del/ has made reference to the decision of the ITAT, Chandigarh Bench in the case of a similar university, namely, Kurukshetra University v. ITO (TDS), Ambala , (ITA Nos. 64 65/Chd/1997). In this case, ITAT has made analysis of similar situation and the ITAT, Delhi has reproduced the analysis made by the ITAT, Chandigarh. The observations of the ITAT read as under: "We have carefully considered the rival submissions, perused the orders of tax authorities and gone through the citations given above. Section 15 charges any salary due or paid by an employer to income tax under the head 'salaries' Section 17 defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any concession. When all the employees are treated alike and the rent is being charged by the University in accordance with the rules framed, there cannot be any concession. Looking to the facts of the case, in our considered opinion, the case is fully covered by the ratio of the decision in the case of Officers Association. Bhilai Steel Plant ( supra ) where it was even pointed out that of rule 3 were to be construed as deeming the difference between the actual rent paid and 10 % of the salary as receipt of concession it will go beyond the rule making power u/s 295(2) and be invalid. Following the ratio of the said decision, we are of the firm view that no addition can be made by the A.O. TDS in income of the employees while scrutinizing Form 24 filed by the assessee for the purpose of TDS u/s 192. Our aforesaid view is supported by the decision in the case of Steel Executive Association v. Rashtriya Ispat Nigam Ltd. 241 ITR 20 (A.P). The orders passed by the A.O u/s 201(1)/201(1A) are, therefore, quashed" 9. The rules prior to 2001 were based on fair rental value of the accommodation and, therefore, Assessing Officer was required to determine the fair market value of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read as under: "78. From the above decisions, it is clear that existence of 'jurisdictional fact' is sine qua non for the exercise of power. If the jurisdictional fact exists, the authority can proceed with the case and take an appropriate decision in accordance with law. Once the authority has jurisdiction in the matter on existence of 'jurisdictional fact', it can decide the 'fact in issue' or 'adjudicatory fact'. A wrong decision on 'fact in issue' or on 'adjudicatory fact' would not make the decision of the authority without jurisdiction or vulnerable provided essential or fundamental fact as to existence of jurisdiction is present. 79. In our opinion, the submission of Mr. Salve is well founded and deserves to be accepted that "concession" under clause ( ii ) of subsection (2) of section 17 of the Act is a 'jurisdictional fact'. It is only when there is a 'concession' in the matter of rent respecting any accommodation provided by an employer to his employee that the mode, method or manner as to how such concession can be computed arises. In other words, concession is a 'jurisdictional fact'; method of fixation of amount is fact in issue' or 'adjudicatory fact'. If the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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