TMI Blog2012 (11) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... orking under Opposite party no.1 could be regarded as part of their income on which tax could be deducted at source under Section 192 of the I.T. Act from the salary paid to the Executives. - held that:- it is open to the members of the petitioner-Association to make an application as provided under sub-section (1) of Section 197 to the Assessing Officer and satisfy him that no tax is deductible from the salary on account of the accommodation provided by the employer to them. In such event, the Assessing Officer has to examine the case of the petitioner and if he is satisfied that the members of the petitioner-Association are entitled to be issued with certificate of “No deduction of Income Tax” he shall issue such certificate and on production of such certificate before opposite party No.1, opposite party No.1 is bound not to deduct tax until such certificate is cancelled. Thus, a statutory remedy is available to the petitioner under Section 197 of the Act. Section 197 is a complete provision so far as deduction of tax at source is concerned. - W.P. (C) No. 28343 of 2011 - - - Dated:- 8-10-2012 - SHRI V. GOPALA GOWDA AND SHRI JUSTICE B.N. MAHAPATRA JJ. For Petitioner : Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable. 4. Providing of quarters is a perquisite under the I.T. Act and each of the employees who enjoys the benefits is taxed under the head salary under the I.T. Act, 1961. Opp. Party nos. 2 and 3 as employers are obliged to deduct tax at source U/s. 192 of the I.T. Act and deposit it in time with the Central Government. For the Assessment Years 2008-09 and 2009-10 the opposite parties 2 and 3 deposited the tax, but did not make any deduction from the salary of non-executives and kept in abeyance till further orders. But the perquisites tax was sought to be deducted from the salary of executives. The petitioner-Association made representation to the Hon ble Minister of Coal, requesting him not to deduct the perquisite tax. Since no action was taken by the opposite parties, the petitioner filed writ petition bearing W.P.(C) No.1533 of 2011 and this Court by order dated 01.02.2011 directed that no recovery of perquisite tax on house allotted to the petitioner be made till the next date. In the said writ petition opposite party no.3 filed a counter inter alia relying upon the office order dated 12.5.2011 of the Board of Directors of opp. Party no.2 approved for payment of up-kee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art and parcel of the employees duty, is not perquisite and not an income. Placing reliance in the case of Hochstrasser v. Mayes, 1960 AC 376 (HL), it was submitted that the Court must be satisfied that the service agreement was the causa causans and not merely the causa sine qua non of the receipt of the profit. Mr. Mohanti further submitted that the object of Rule 3 is to extend relief to employees and keeping in view the said purpose, it has to be interpreted liberally. In support of his submission reliance was also placed on the decision of the Supreme Court in CIT, Bombay v. British Bank of Middle East MANU/SC/0510/2001. It is submitted that Rule 3 would apply to those cases where concession has been shown by an employer in favour of an employee in the matter of rent respecting accommodation. Charging provision is found in the Act of Parliament [Section 17(2)(ii)], machinery component is in the subordinate legislation (Rule 3). The latter will apply only after liability is created under the former. Unless the liability arises under Section 17(2)(ii) of the Act, Rule- 3 has no application and the method of valuation for calculating concessional benefits cannot be resorted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er income tax from the monthly salary of the employees and deposit the same in time with the Central Government. This is a statutory obligation and failure to comply with it attracts interest u/s.201 and penalty u/s.221 and 271 C of the Act. Salary includes perquisites under Section 17(1) and the value of rent free accommodation provided to an employee by his employer is a taxable perquisite. Therefore, for the calculation of recoverable amount of income tax from the salary of an employee, the value of the perquisite (rent-free accommodation in this case) also has to be considered. Valuation of rent-free accommodation is done according to Rule 3(1) of the Rules. 11. On the rival contentions of the parties, the questions that fall for consideration by this Court are: (i) Whether the impugned order passed under Annexure-1 by opposite party No.1 rejecting the claim of the petitioner that members of the executive and non-executive belong to same class, without affording opportunity of hearing to the petitioner, is valid in law? (ii) Whether accommodation provided to the Executives working under opposite party nos.1 and 2 could be regarded as part of their income on which tax coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, duration of wages revision of executives and non-executives. In the official revision pay scale order, it is provided that board level and below board level executives of Coal India Ltd. and its subsidiary companies w.e.f. 1.1.2007 are entitled to get 5% of basic pay towards house up-keep allowance per month for purchase of curtains, wall paintings, hangings, carpets, decorative materials, cutlery and other household appliances etc. 16. According to Mr. B. Mahanti, learned Senior Advocate, since no opportunity of hearing was provided to the petitioner before passing the impugned order under Annexure-1, which has civil consequence, the same is violative of the principles of natural justice and therefore, the same is not sustainable in law. 17. In Maneka Gandhi vs. Union of India, (1978) 1 SCC 248, the Hon ble Supreme Court held that the decision rendered in violation of audi altarem partem is null and void. In S.L. Kapoor vs. Jagmohan, (1980) 4 SCC 379, it was extended to orders passed by quasi-judicial authorities. In Mercury Energy Ltd. vs. Electricity Corporation, Newzealand, (1994) 1 WLR 521, the court declared an order of the Minister to be a nullity, if it was passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e they are reimbursing it to the non-executives by paying equivalent amount known as Up-keep Allowances . Further, both the members of executive and non-executive belong to same class, i.e., I.T. assessee. Therefore, opposite party No.1 before rejecting the petitioner s claim that the members of the executive and non-executives belong to the same class and the members of the petitioner-Association are not entitled to get Up-keep Allowance of 5% is required to give an opportunity of personal hearing to the members of the petitioner- Association in view of the settled position of law mentioned above. 20. In view of the above, the impugned order passed under Annexure-1 by opposite party No.1 rejecting the claim of the petitioner that members of the executive and non-executive belong to same class without affording opportunity of hearing to the petitioner is not valid in law. 21. Question No.(ii) is as to whether accommodation provided to the Executives working under Opposite party no.1 could be regarded as part of their income on which tax could be deducted at source under Section 192 of the I.T. Act from the salary paid to the Executives. 22. Petitioner s specific case is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be, the Assessing Officer shall, on an application made by the assessee in this behalf, give to him such certificate as may be appropriate. (2) Where any such certificate is given, the person responsible for paying the income shall, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be. (3) (2A) The Board may, having regard to the convenience of assesses and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (1) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith. 27. Therefore, in view of the above statutory provision, it is open to the members of the petitioner-Association to make an application as provided under sub-section (1) of Section 197 to the Assessing Officer and satisfy him that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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