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TMI Blog2005 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of deduction of tax from salary. Further according to the Revenue the company did not obtain any documentary evidence with regard to these two benefits given to the employees and which was obviously treated as expenses of the company. A specific query was raised for explaining the reason for not deducting tax on conveyance allowance as well as on LTA. The stand of the company was that the assessee was under a bona fide belief that conveyance allowance was not liable to tax and was thus not included in the estimated income of the employee. It was also stated that the assessee as an employer was not required to precisely compute the taxable income of the employees and the provisions of section 201(1) were not attracted in the facts and circumstances of the case. After perusing the record the Assessing Officer held that the demands had been made merely on the basis of declaration of employees certifying that the amount was spent and there were no supporting documents that actually the amount was incurred. The quantum of short deduction was estimated on the basis of the total amount of conveyance which was not taxed (Rs. 7,01,838, LTA not taxed (to the extent of 40 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees of having performed the journey and allowed them the leave travel allowance and considered the same to be exempt from taxation as per section 10(5) read with rule 2B of the Income-tax Rules. The employer has no reason to suspect or doubt that the declarations given by the employees are not correct, particularly when the Tax Department has not prescribed any specific details or format in which the declarations are to be submitted by the employees. Further it is for the Assessing Officer adjudicating in the individual assessment of the employee to examine this fact whether the claim of exemption under section 10(5) of the Income-tax Act has been made correctly or not. The employer cannot be given the responsibility of the adjudicating authority to sit in judgment over the claim of the employee which can only be done by the Assessing Officer. There is nothing on record to show that the conduct of the employer was mala fide and the payments have been made without deduction of tax at source with some ulterior motive. It may further be noted that no additions for wrong claim of leave travel allowance has been made by the Assessing Officer in the case of the individual employees mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred the LTA granted to them on their travel, we are of the view that there was no case to treat the assessee-company as an assessee in default in respect of the short deduction of any of the tax deducted at source from such salary income merely because the actual proof/evidence of having actually incurred the leave travel allowance on travel expenses was not verified by it. As such, considering all the facts and circumstances of the case as well as the legal position emanating from the various judicial pronouncements cited by learned counsel for the assessee, we are of the considered opinion that the assessee-company had complied with the requirements of section 192 and there was no case to treat it as an assessee in default under section 201(1) as well as to charge interest under section 201(1). In that view of the matter, we hold that the learned Commissioner of Income-tax (Appeals) was fully justified in cancelling the orders passed by the Assessing Officer under section 201(1)/201(1A) for the years under consideration and, upholding his impugned order, we dismiss the appeals filed by the Revenue." The Assessing Officer had proceeded on the basis that such a claim could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated income of its employees for the purpose of deduction of tax at source, is primarily a matter of fact. In the facts of the present case it is not even a mixed question of fact. A Division Bench of this court in the case of CIT v. S.R. Fragnances Ltd. [2004] 270 ITR 560 has clearly enunciated the principles as to what would be a substantial question so as to enable this court to exercise its powers under section 260A of the Income-tax Act. In fact, it has been held in different cases by different High Courts that reimbursement of expenditure for maintaining conveyance having been treated by the employer as an allowance not taxable and, therefore, not deducting tax at source does not raise any question of law but is primarily a question of fact. Reference in this regard can be made to the judgments of the Gujarat High Court in the cases of CIT v. Oil and Natural Gas Corporation Ltd. [2002] 254 ITR 121; ITO v. Gujarat Narmada Valley Fertilizers Co. Ltd. [2001] 247 ITR 305 and a judgment of this court in the case of CIT v. Nestle India Ltd. [2000] 243 ITR 435. In the case of Gujarat Narmada Valley Fertilizers Co. Ltd. [2001] 247 ITR 305 (Guj), the court had expressed the view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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