TMI Blog2005 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 - Judge(s) : SWATANTER KUMAR., MADAN B. LOKUR JUDGMENT The judgment of the court was delivered by Swatanter Kumar J.-By this order we would dispose of the above eight income-tax appeals preferred under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). M/s. HCL Info System Ltd., the assessee, deals with computer hardware. They are liable in law for proper tax deduction at source on the salary paid to its employees who are posted in various parts of the country in the offices of the assessee. For the purpose of verification notice under section 133(6) of the Act was issued to the assessee on September 25, 1998, in response to which the senior manager of the assessee attended the proceedings. According to the Assessing Officer a survey was conducted under section 133A of the Act on March 1, 1999, and it came to notice that employees were getting conveyance allowance and leave travel allowance which were not considered for 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or guidelines have been issued for obtaining the relevant details to verify that the journey has actually been performed by the employees. The hon'ble Andhra Pradesh High Court in the case of P. V. Rajagopal v. Union of India [1998] 233 ITR 678 had referred to the Central Board of Direct Taxes circular issued every year to provide guidance to the DDOs. The court had observed that the circulars advised the drawing and disbursing authority to satisfy itself that the computation of taxable salary income is in order with reference to deduction availing to the employee. This does not convert him into an Income-tax Officer or an adjudicating authority as many erroneously believe. All that it means is that the assessee must declare his claim so that with reference to section 201, proviso, he can say that he had good and sufficient reasons not to deduct tax at source in respect of any income to avoid imposition of penalty. The appellant had accepted the claim of the employees 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual expenditure by the concerned employees before treating the LTA as exempt under section 10(5) for the purpose of estimating the salary income and deducting tax therefrom. Having perused these declarations filed by the concerned employees as well as the Board's instructions issued in this regard to the DDOs, we find that there was sufficient material available on record for the assessee to entertain a bona fide belief that the LTA granted to its employees was exempt under section 10(5) and thus, the estimate of salary made by it for the purpose of deduction of tax at source for salary income as required by the provisions of section 192 based on such bona fide belief was certainly a fair and honest estimate. It, therefore, follows that the obligation cast on the assessee-company under section 192 was duly discharged by the assessee-company and there being brought nothing on record by the Revenue to show any instance of any of the employees having not actually incurred 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f computing total income. The restriction as imposed in the proviso to this sub-section is only that the amount to be exempted under the clause cannot exceed the amount of expenses actually incurred for the purpose of such travel. The provisions of section 192 of the Act are to be read in conjunction with the provisions of section 10(5) of the Act for their proper appreciation and application for computing total income liable to tax and consequential liability to deduct the tax at source. It is the case of the assessee before us that the estimated tax arrived at by the employer was bona fide and on the assumption that the benefit taken by the employee of travelling (LTA) in compliance with the policy of the company was not liable for deduction of tax at source. The bona fides of the assessee was accepted by the first appellate authority and was duly confirmed by the Appellate Tribunal. Whether in a given case the intention of the assessee was bona fide, at an estimated 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
