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TMI Blog2013 (11) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... as paying substantial amount in terms of money in the name of non-taxable allowances, which were not reflected in Form No. 16 nor was any value of the same reflected in Form No. 12BA (perquisite form) forming part of Form No. 16. It was noticed during the course of verification that the respondent-assessee paid uniform allowance and conveyance maintenance reimbursement expenditure (hereinafter referred to as "the CMRE") ; and while computing the tax deducted at source (TDS) from the payment of salary of its employees, the amount attributable to the payment of these allowances/perquisites was not considered. It was noticed by the Assessing Officer that the payment of CMRE was done on monthly basis along with the salary and the quantum of such CMRE ranged from Rs. 4,455 per month to Rs. 18,330 per month, based on the class of the employee. 3.1 This was treated as the additional salary in the form of allowance by the Assessing Officer within the meaning of the provision of section 17(1)(iv) of the Act and was held liable to be taxed as salary income. The respondent-assessee did not deduct TDS from the payment of this amount. The respondent-assessee was treated as an assessee in defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e holiday home scheme to the employees for non-official and private purpose is liable for fringe benefits tax (FBT) and also not a prescribed fringe benefit under section 17(2)(iv) and by holding so it overlooked the fact that such payment was nothing but additional salary paid in the form of scheme within the meaning of section 17(1)(iv) attracting the TDS provisions of section 192 of the Income-tax Act ?" We have heard Mr. M. R. Bhatt, learned senior counsel appearing with the learned advocate, Mrs. M. M. Bhatt, for the Revenue, who has fervently argued and urged that mere payment of fringe benefits tax (hereinafter referred to as "the FBT") by the respondent-assessee would not absolve the respondent-assessee of deducting the TDS, if the amount paid to the employees fall under section 17(1)(iv) of the Act. It is abundantly clear that the manner in which the scheme of CMRE is worked out, it is an additional amount which is a part of salary and not the perquisite. He further urged that the Tribunal has not discussed anything as to whether this would fall under the salary or a perquisite and straightway endorsed the decision of the Commissioner of Income-tax (Appeals), which is lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Upon thus hearing both the sides and on close examination of materials on record as also considering the case laws on the subject, for the reasons to follow hereinafter on each issue raised by the Revenue, we are of the opinion that the tax appeals deserve no entertainment : 6.1 As far as first issue of CMRE is concerned, the order dated October 24, 2008, of the respondent-ONGC in respect of the scheme of CMRE, concerning the amount of money payable to the employees, depending upon their status/designation is as follows : "Sub : Revision of rates of conveyance maintenance reimbursement expenditure (CMRE) In supersession to this office order of even No. dated September 18, 2008, the issue regarding revision of rates of conveyance maintenance reimbursement expenditure (CMRE) was further discussed in the 336th meeting held on October 22, 2008, at New Delhi. It has been decided with the approval by EC to revise the existing rates of conveyance maintenance reimbursement expenditure (CMRE) for E01/SI and E1/S11 level employees drawing basic pay from Rs. 12,000 to Rs. 14,249 and E-3/E-4 level executives as under : Mode of conveyance Level Amount (Rs.) Moped Class III and IV 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een paid. 6.4 The Tribunal also took into account the FBT under clauses (F) and (H) of section 115WB(2) of the Act and held that the decision of the Gujarat High Court rendered in the case of CIT v. ONGC (supra) would cover the issue in favour of the respondent-assessee. The Tribunal was of the opinion that the Commissioner of Income-tax (Appeals) correctly appreciated the issue. It has held thus (page 591 of 22 ITR (Trib)) : "18. We have considered the rival submissions and perused the material on record and gone through the orders of the authorities below. We find that this issue was decided by the learned Commissioner of Income-tax (Appeals) as per paragraph 3.3 of his order, which is reproduced : 3.3 I have considered the submission of the learned authorized representative, remand report of the learned Assistant Commissioner of Income-tax and reply of remand report of the authorized representative and further considering the arguments of both the appellant and the respondent and facts of the case. It is seen that the conveyance maintenance reimbursement (CMRE) scheme was introduced in the ONGC to reimburse to employees the expenditure incurred by them on maintenance and use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be ignored. Thus, taking the overall picture of the CMRE, there is no hesitation to hold such reimbursement to the employees coming under the scheme as not part of the salary and accordingly no TDS is attracted in the hands of the employer. Hence, I am of the view that the Assessing Officer was not justified by treating the assessee in default under section 201(1) and 201(1A) of the Act. Hence, the Assessing Officer is directed to delete the same, i.e., the levies under section 201(1) and 201(1A)." 6.5 If one looks at the aforementioned decision of this court in the case of CIT v. ONGC (supra), it directly covers the entire issue in question. The questions which arose before this court in the aforementioned case are as follows (pages 122 and 123) : "1. Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was justified in holding that the 'CMRE' (conveyance maintenance reimbursement of expenditure) paid to the employee on the condition of ownership and possession of a vehicle amounts to conveyance allowance for official purposes fully exempt under section 10(14) regardless of the fact that the exemption is allowed only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing on the estimate of income liable to tax to be made by the employer. These findings do not give rise to any question of law. The fact that ultimately on the assessment of the employees they have been found in not utilising the full amount received by them from the employer does not reflect in any manner on the estimate of the employer at the end of each month about the income of the employee receiving from his employer liable to tax as per the mark it bears." 6.7 The Tribunal has aptly approached the issue to hold that eventually for any shortcoming of employees, the employer cannot be found fault with. As this question concerns the respondent to a limited extent as to whether tax was to be deducted at source for being taxable receipts and the issue since is squarely covered by the decision of this court in the assessee's own case, the present tax appeals on this issue deserve no consideration. The second question pertains to the "holiday home scheme" floated by the respondent-assessee, whereby the respondent-assessee is to provide "holiday homes" to the employees of the respondent-assessee at certain designated centres for recreation and rejuvenation. It provides for mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployee or any member of his family was prescribed as a fringe benefit for the purpose of section 17(2)(iv) by rule 3(7)(ii), only in respect of those employers, who were not liable to pay fringe benefits tax under Chapter XII-H of the Act. Rule 3(7)(ii) was inserted as above through the Income-tax (Fourteenth Amendment) Rules, 2007, with effect from April 1, 2008. Thus, as far as the assessment years 2008-09 and 2009-10 are concerned, the appellant's contention that the holiday home scheme would not be considered as perquisite under section 17(2)(iv) in the hands of the employees is acceptable. For the assessment years 2006-07 and 2007-08, since the expenditure incurred by the employers for holiday availed of by the employees or their family members was not prescribed as a 'fringe benefit' for the purpose of section 17(2)(iv), it could not, therefore, be taxed as perquisite in employee's hands. However, the payment received under the holiday home scheme would be non-taxable in the employee's hands only if it was actually and fully utilized towards hotel, boarding and lodging facilities, etc., on a holiday availed of by self or family member. If in any employee's case, it is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for holidays enjoyed by the employees was not prescribed as fringe benefit for the purpose of section 17(2)(iv) of the Act and the same was not taxed as perquisite in the employees' hands and wherever not actual and fully utilised, the same would constitute taxable salary. However, for the assessment years 2008-09 and 2009-10, the 'holiday home scheme' could not be considered as perquisite under section 17(2)(iv) of the Act in the hands of the employees, was held rightly acceptable. This was essentially on account of the introduction of rule 3(7)(ii) of the Income-tax (Fourteenth Amendment) Rules, 2007, with effect from April 1, 2008, in respect of those employers who were not liable to pay FBT under Chapter XII-H of the Act. 7.6 Even otherwise when this very scheme was examined, it appears clearly that once the claim is made by the employee concerned, the same was to be scrutinised by the authority and on due examination when certified, the amount was being reimbursed. 7.7 We are also convinced that both the authorities have concurrently for all the assessment years considered justifiably the entire issue and concluded aptly that the payment in question towards the 'holiday home ..... X X X X Extracts X X X X X X X X Extracts X X X X
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