TMI Blog2015 (1) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... h small payment. - no penalty - Decided against Revenue. - TAX APPEAL NO. 1288 of 2008 With TAX APPEAL NO. 1289 of 2008 - - - Dated:- 19-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. For the Appellant : MR M.R. BHATT SR. STANDING COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE For the Respondent : MR B S SOPARKAR WITH MRS SWATI SOPARKAR, ADVOCATE JUDGEMENT Per: K S Jhaveri: 1. Both these appeals arise out of the common judgment and order of the Income Tax Appellate Tribunal and involve common questions on law and facts and therefore, they are decided by this common judgment. 2. Briefly stated, the facts are that the respondent assessee is a Public Sector Undertaking, having its Registered Office at Vadodara, Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order passed by the CIT(A) and thereby cancelling the penalty of ₹ 1,25,58,513/levied u/s. 271C of the Act for short deduction of tax in respect of gift coupons issued by the assessee to its employees? 6. Mr. M.R. Bhatt learned Senior Advocate appearing for the Revenue submitted that the decision of the Tribunal was erroneous since the gift coupons were given to employees for performance of their duty and not as mementos. Therefore, they were perquisite in the hands of the employees. Hence, the provisions of Sections 17(2)(iii) and 17(2)(iv) were applicable on the payments made by the assessee. However, the Tribunal failed to appreciate the above aspect of the case and committed serious error in allowing the appeal filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elieved to be taxable perquisite. 9. The fact that the assessee was conferred various safety awards by international organizations has not been disputed. It was contended by the assessee that it held a bonafide belief that the payment made to its employees was not in the nature of salary. The fact that safety awards were conferred and gift coupons in question were linked to such safety awards and holding it as a bona fide belief on the part of the assessee cannot be called a farce. The Revenue has not controverted the fact of grant of gift awards and gift coupons being displayed by the assessee by way of hoardings, advertisement, celebration and company s resolution. Therefore, in our view, it cannot be said that the assessee had suppres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be fastened only on the person who does not have good and sufficient reason for not deducting tax at source. 11. Considering the aforesaid factual aspects and in view of the principle rendered in Commissioner of Income tax v. Eli Lilly and Co. (I) P. Ltd. case (supra), we are of the opinion that the assessee acted under the bona fide belief that the gift coupons, being in the nature of mementos to commemorate conferment of awards, were not in the nature of payment of salary. The salary of employees comes from the revenue of the PSU and when huge amount of TDS is made from regular salary, we see no reasons as to why, a Central Government PSU, will commit default to pay TDS on such small payment. 12. In view of the above, the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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