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TMI Blog2014 (2) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses, etc. (hereinafter "uniform reimbursements"), made to its employees and was called upon to pay the tax allegedly short deduced from its employees u/s 201(1) and interest thereon u/s. 201(1A) of the Income- tax Act, 1961 (hereinafter "Act"). 2. The learned CIT (Appeals) has erred in law and in facts and circumstances of the case in not deleting the demand u/s. 201(1) of the Act for the tax allegedly short deducted from employees which was raised by the ACIT (TDS), Baroda. in respect of uniform reimbursements. 3. The learned CIT (Appeals) has erred in law and in facts and circumstances of the case in not deleting the demand for interest u/s, 201(1A) which was raised by the ACIT (TDS), Baroda, in respect of uniform reimbursements. 4. Without prejudice, the learned CIT (Appeals) has erred in law and in facts and circumstances of the case in upholding the ACIT (TDS), Baroda's action in raising demand for tax on uniform reimbursements and interest thereon ignoring the fact that the demand so raised by the ACIT (TDS), Baroda; included demand in respect of those employees from whom tax had already been deducted by the appellant itself." 3. The facts in respect of this ground ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees and not collectively, payments were cash and there was no difficulty in valuing the benefits being in money. ACIT(TDS) concluded that payment of FBT did not extinguish employer appellant's liability to deduct tax at source from such payments which were nothing but 'salary'. ACIT(TDS) held that uniform allowance was paid only with the purpose of additionally remunerating the employees and was thus their additional salary income. ACIT(TDS) held appellant to be assessee in default for not deducting tax at source from uniform allowance payments to employees due to the same constituting their salary income." 4. Before Ld. CIT(A) assessee made following submission as summarized by Ld. CIT(A):- "Uniform allowance was granted to employees in monetary terms on quarterly basis in advance. Thereafter, employees were required to submit certificate of actual expenses incurred in prescribed form at the end of the year. Uniform allowance was taxable in the hands of employees. However, the same was exempt in view of section 10(14)(i) read with Rule 2BB up to actual expenditure. Appellant could not be treated as assessee in default even if it was ultimately held that amount reimbursed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is identical or consistent without variations in details. Examples are uniform of police personnel, armed forces, canteen staff etc. Uniform may change as per rank and designation of group of employees concerned. If appellant's interpretation of 'uniform' were to be accepted, in every office, any dress worn by the employees' would qualify as 'uniform'. Appellant has not commented on the fact that prescribed uniform was done away in ONGC way back in 1995. There is no doubt that there was no 'uniform' prescribed in ONGC during the period under consideration and this fact was well within the knowledge of appellant. Conclusion drawn by the ACIT(TDS) that additional salary in the garb of 'uniform allowance' was being paid is therefore, on sound footing. Since the payment in question was not towards purchase or maintenance of "uniform', it cannot be covered under Rule 2BB(l)(f)read with section10(14)(i). Appellant's contention that tax at source was not deducted from payments in the nature of uniform allowance, due to the same being exempt u/s.10(14)(i) read with Rule 2BB based on declarations furnished by employees is not tenable since appellant was well aware that there was no "unif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as facts of the case in deleting the order passed u/s. 201(1) & interest charged u/s. 201(1A) of the IT Act of Rs. 3,77,75,528/- and Rs. 11,33,266/- respectively, for A.Y. 2010-11 by the Assessing Officer even through during the course of verification it was noticed that employees were received interest free advances to purchase house hold goods and furniture and amount of Rs. 1 lakh to Rs. 4 lakhs as per their choices and bills were raised in the name of employer i.e. ONGC. Therefore, such amount paid is taxable income in addition to the salary taxable u/s. 17(1) (iv) of the Income-tax Act." 8. Facts relating to ground No. 1 have been summarized by Ld. CIT(A) as under:- "ACIT(TDS) referred to the CMRE scheme as per ONGC order dated 24.10.2008 under which employees were paid CMRE for use of their private vehicles in official work. ACIT(TDS) observed that despite payment of CMRE to employees for official work, there was heavy expenditure by appellant in hiring taxis and buses. ACIT(TDS) referred to 254 ITR 121, i.e. decision in appellant's case for A.Y.1995- 96, wherein CMRE was claimed to be an allowance covered u/s. 10(14) and not reimbursement due to which it could not be, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was nothing but additional salary paid in form of salary, reflected in the salary slip." 9. Ld. CIT(A) after taking into consideration the submission of the assessee which has been reproduced in his order had given relief to the assessee by observing as under:- "CMRE was granted to the employees towards running and maintenance expenditure of their personal vehicles for using such vehicles for official work. CMRE was paid up to ceiling prescribed for different employee grades and on the basis of a declaration by the employee every month that he or she incurred expenditure stated in the declaration on running and maintenance of the vehicle for official work. Appellant paid CMRE at fixed rates on the basis of such declarations without any verification. CMRE was therefore not reimbursement of actual expenditure' on running of personal vehicles. There could be cases of employees claiming full CMRE without spending it entirely on running and maintenance of personal vehicles. CMRE would not constitute "fringe benefit' under clauses (F) & (H) of section 115WB(2) to the extent it was not incurred towards "conveyance' or 'repair, running, maintenance etc. of motor cars'. Payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 121, appellant cannot be treated as assessee in default u/s 201(1) even for AY 2010-11. As far as assessments of employees in A.Y. 2010-11 are concerned, tax liability is to be determined on case to case basis by applying Rule 2BB(l)(c), To sum up, it is held that appellant cannot be treated as assessee in default u/s.201(1) for non deduction of tax at source from CMRE payments for A.Y.s when FBT was in force, i.e. 2006-07 to 2009-10 as well as AY 2010-11, when FBT was not in force." 10. At the time of hearing both the parties agreed that the issue involved in this ground is covered by the order of Hob'ble Jurisdictional High Court dated 12th August, 2013 in assessee's own case in favour of assessee and against the revenue, therefore we are not inclined to interfere with the order passed by Ld CIT(A) and the same is hereby upheld. This ground taken by revenue in all these appeals is dismissed. 11. The facts in respect of ground No. 2 have been summarized by Ld. CIT(A) as under:- "Appellant's submission before the ACIT(TDS) was that the household goods and furniture etc, .covered under the Scheme was ONGC's property and advance paid to the employees for purchasing these movable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant company and not by the employees and the purchase cost did not represent income of the employees. As per appellant, had the legislature's intention been to tax advance paid for purchasing assets, there would have been no need to provide for specific rules to tax the perquisite for use of movable assets in the hands of employees. Employees were merely a conduit to route the money to purchase assets in the name of appellant company and merely routing the money through employees would not make the same as income in their hands. Had the employer directly purchased the movable assets rather than footing the same through advance payment to its employees, the same would not have been taxable at all as per Rule 3. Just because advance was paid to the employees in order to purchase assets of their choice, the same could not change nature of transaction, as ultimate ownership of assets belonged to employer itself. Regarding observation of ACIT(TDS) that interest free advances were given to employees to increase personal disposable Income, appellant submitted that the assets were purchased in the name of employer and thus, there was no interest free advance to the employees or increase i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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