9911796707
TMI Blog1999 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... Fertilizers Company Limited ("company" for short) filed its annual returns under section 206 of the Act for the financial Year 1995-96 on May 24, 1996. A survey was carried out at the premises of the assessee-company on July 19, 1996, by the Income-tax Officer (ITO) (TDS). As a result of the survey, the Income-tax Officer found that certain payments were made to the employees on which tax was not deducted at source though in accordance with the provisions of the Act, it was to be deducted. The employer, therefore, was liable to be dealt with under section 201 inasmuch as the assessee can be said to be a "deemed defaulter" as he had not deducted the tax at source. Details regarding payments which were made by the employer to the employees were as follows : -------------------------------------------------------------------------------- Period Particulars Rate Amount from Rs. -------------------------------------------------------------------------------- 1976 Vehicle allowance for Rs. 380 to 2,425 p.m. 2,47,90,929 vehicles of employees vehicle-wise 1-7-1986 Cash canteen assistance Rs. 550 per employee per 1,98,78,159 month 1976 Medical reimbursement Rs. 410 per fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. Prior to the assessment year 1974-75, deduction was given from salary to person who wanted a motor car, motor cycle, a moped or a cycle. As the Legislature treated the expenditure incurred on going from residence to office and back as expenditure in connection with the employment, such deduction was allowed. Administering these provisions prior to the assessment year 1973-74 was quite difficult and therefore with effect from the assessment year 1973-74, the Legislature introduced the concept of standard deduction in the cases involving assessment under the head 'Salary'. It is thus clear that the Legislature has provided deduction foregoing from residence to office and back in the form of standard deduction. Therefore, the argument that the expenditure was incurred on such travelling which was official is incorrect. Only expenditure in connection with the travelling for official purpose has to be allowed but it is the duty of the employer to ensure that reimbursement is limited only to expenses incurred wholly and exclusively for the purpose of employment. This responsibility has not been discharged by the employer. Further, the payment of such amount to each and every empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decisions of several High Courts. It was also contended that the Department also, all throughout, was of the view that such payments were not liable to tax. This was evident from the fact that though proceedings were initiated against the assessee in 1992-93, they were not pursued further. It was also argued that in respect of one employee-Kirit Ramniklal Raval, library book allowance of Rs. 2,200 which was added by the Income-tax Officer under section 143(1) was rectified by granting deduction and by holding that there was a mistake on the part of the Department as the allowance was not liable to be taxed. In the light of the facts and circumstances and relying upon various decisions, the Tribunal observed : "We are of the opinion that the Departmental authorities have not proved that the action of the assessee in not deducting the tax on the above payments was a mala fide one. On the other hand, in view of the fact that the proceedings initiated by the Assessing Officer for the assessment years 1992-93 and 1993-94 in respect of the alleged short deduction of TDS were not further pursued, we are of the opinion that the assessee under the bona fide belief, did not deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible. Counsel, therefore, submitted that the matter deserves consideration and it requires to be admitted. Mr. Shah, on the other hand, submitted that the provision must be read as a whole in its entirety with the object for which it has been enacted. He submitted that it cannot be disputed that liability to pay tax is not of the employer but of the employee. If it is so, the argument proceeded, it is incumbent on the part of the employer to consider the relevant provisions of law, decisions on statutory provisions by various High Courts as well as by the apex court and the fact as to whether the payment which has been made to the employees is otherwise taxable. If the payment is not taxable, obviously, there was no question of deduction of tax by the employer at source and the case would not fall within the mischief of section 201 if the employer does not deduct at source as, in accordance with law, he could not have deducted any amount of tax. Drawing our attention to the fact that even according to the Department, such payments were not subject to tax, he submitted that though proceedings were initiated against the assessee in the past no further action was taken. In this conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs had been finalised and they were not held to be income under the Act. According to Mr. Shah, the finding that the company acted bona fide and honestly, is a finding of fact and obviously such finding cannot be challenged under section 260A of the Act. In that case, it cannot be said that there was violation of section 201 by the employer. If the contention of the Revenue is accepted, not only does the court hold the employer a "deemed defaulter" within the meaning of section 201 of the Act, but it interferes with a finding of fact regarding bona fide and honest belief on the part of the employer, which is not permissible. In the facts and circumstances of the case, in our opinion, no substantial question of law can be said to have arisen in this case in respect of the order passed by the Income-tax Appellate Tribunal. Though our attention was invited by both learned counsel to several decisions of the Supreme Court, of this court as well as of other courts, in our view, it is not necessary to deal with them in the present case. It may be that the ambit and scope of the first part of section 201(1) and the proviso may be different. At the same time, however, it cannot be said th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
