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TMI Blog2012 (8) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember, 2008. The Office of Superintendent C/o Registrar was surveyed on 7th October, 2009. The Office of Superintendent (DDO) University Library was surveyed on 05.011.2009. According to the ITO(TDS), Hisar, the survey team has verified the TDS record and directed the appellants to submit these TDS records for scrutiny. The record was produced before the ITO. On an analysis of the record, he formed an opinion that university has provided accommodation to its employees for which it charges license fees but did not deduct the TDS on the value of perquisite of the rent free accommodation as per the procedure provided in Rule 3 of the Income-tax Rules, 1962. We find that almost verbatim finding has been recorded by the Assessing Officer except variation in the dates and quantum, in the impugned order in all these appeals. For the facility of reference, the finding recorded in the case of principles campus school is being noted here. It reads as under: "5. From the perusal of TDS records supplied by the PR/DDO, it is noticed that the DDO has not added the value of perquisites on account of residential accommodation provided to the employees as mentioned in Annexure-A. But as per sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1214/Del/1996 in the case of CIT, Panchkula v. Different Colleges of CCS HAU. Hisar. Similarly, in the case of Financial Officer, Maharishi Dayanand University, Rohtak v. ITO, Rohtak in ITA No.4676/Del/2005. The ITAT has considered an identical issue in ITA No.4676/Del/2005 and held that the assessee could not be treated as an assessee in default in terms of section 201 and 201(1A) of the Act. Learned first appellate authority has gone through the contentions of the assessee, however, did not concur with the submissions of the assessee. According to the learned first appellate authority, assessee failed to place on record complete text of the ITAT's order in the case of Maharishi Dayanand University. As far as status of the assessee being of a state under article 12 of the Constitution of India is concerned, Learned CIT(Appeals) has observed that expression "state" mentioned in Part III of the Constitution of India under the fundamental rights is with regard to nation as a state and it is for the purpose of fundamental rights. It has no relevance to the tax matters as specified in the Income-tax Act, 1961. Thus, according to the Learned CIT(Appeals), The employees of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le prior to amendment effected in 2001. Therefore, we deem it appropriate to take cognizance of the amended rules as well as the Rule 3 prior to amendment in 2001. It reads as under: "3. Valuation of perquisites.- For the purpose of computing the income chargeable under the head 'Salaries' the value of the perquisites (not provided for by way of monetary payment to the assessee) mentioned below shall be determined in accordance with the following clauses, namely:- (a) The value of rent-free residential accommodation shall be determined on the basis provided hereunder, namely:- (i) where the accommodation is provided- (A) by Government to a person holding an office or post in connection with the affairs of the Union or of a State; (B) by a body or undertaking under the control of Government to any officer of Government whose services have been lent to that body or undertaking (the accommodation itself having been allotted to it by Government), an amount equal to- (1) if the accommodation is unfurnished, the rent which has been or would have been determined as payable by such person or officer in accordance with the rules framed by Government for allotment of residenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) (1) Where the accommodation is provided by the Central Government or any State Government to the employees either holding office or post in connection with the affairs of the Union or of such State. License fee determined by the Central Government or any State Government in respect of accommodation in accordance with the rules framed by such Government as reduced by the rent 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 if such furniture is hired from a third party, 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. (2) Where the accommodation is provided by any other employer and- (i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census; (a) where the accommodation is owned by the employer, or (ii) 10% of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality or a cantonment board; or (ii) which is located in a remote area: Provided further that where on account of his transfer from one place to another, the employee is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value with reference to the Table above for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table. Explanation.-For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,- (i) the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and (ii) the value of perquisite of such an accommodation shall be the amount calculated in accordance with Sl. No. (2)(a) of Table I, as if the accommodation is owned by the employer". 8. The assessee has relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the value at the rent free accommodation both being standard rents. In the case of other employees rent free, accommodation is being taken at 10% A.O. presumed that that difference rent paid and 10% of salary is the value of perquisite enjoyed by employee. Sub rule (b0 is applicable when the accommodation is provided as a concessional rent. Therefore, the A.O should have first established that the accommodation has been provided by the assessee to its employees at a concessional rent. Only then the difference between actual rent recovered and 10% of salary can be added. From the order passed by the A.O, it is clear that there is no material before him that rent of the accommodation allotted was more than rent recovered. The employer who is a non profit institution University when allotted accommodation to its employees, it is very difficult to say that any concession has been given to the employees in providing accommodation. The employees were put in University campus so that they can conveniently be available. Only if an employee pay less than what the other employees would have paid for similar accommodation. In our view, there can be any concession. When all the employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med, and Assessing Officer was satisfied that there was no concession given by the employer which can be termed as a perquisite then assessee was not liable to pay tax. It was pointed out that the amended rule has taken away the right of the assessee to claim that there was no concession as envisaged by section 17(2)(ii) of the Act and hence Rule 3 had no application. According to the applicants, this amended rule took away the power of the Assessing Officer to held that there was no concession even if he is satisfied about the absence of concession. On these premises, it was contended that this rule is discriminatory, arbitrary and ultra-vires of Article 14 of the Constitution. Hon'ble Supreme Court has upheld the validity of the Rule but observed that computation of perquisite value as per Rule 3 would come in picture once it is held that there is a concession in the matter of rent in respect of any accommodation provided by an employer to his employer. Hon'ble Supreme Court has laid down the implication of the rules and the observations of the Hon'ble Supreme Court available on page 121 of the journal are worth to note. They read as under: "78. From the above decisions, it is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the form of 'perquisite' in the payment of rent. An employer may provide residential accommodation to his employees for several reasons. It is also possible that for making available staff quarters colonies accommodations, State Governments or Central Government may provide land to Public Sector Undertakings/ Companies/Corporations at a concessional rate imposing appropriate conditions including amount of rent, if any, to be recovered by the employer. Mr. Salve also invited our attention to certain decisions wherein it had been held that residential facility provided by the employer to the employee was not held 'perquisite' within the meaning of Income Tax Laws." 10. If we read the findings of the ITAT in the case of Financial Officer, Maharishi Dayanand University, Rohtak, extracted supra, along with the finding of the Assessing Officer in the light of the law propounded by the Hon'ble Supreme Court, supra, then, it would reveal that Assessing Officer 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. Assessing Officer straightway applied Rule 3 without first es ..... X X X X Extracts X X X X X X X X Extracts X X X X
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