TMI Blog2018 (10) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... venue : Shri J.C. Kulhari (JCIT) ORDER PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 24.08.2017 of ld. CIT (A)-3, Jaipur arising from the order passed under section 201(1)/201(1A) of the IT Act for the assessment year 2015-16. The assessee has raised the following grounds :- 1. That on the facts and in the circumstances of the case and in law, ld. CIT-A erred in sustaining the action of ld. ACIT (TDS) Jaipur in treating assessee company as defaulter for alleged violation of section 192 of the Act on certain provisions made in books, dealing with tax deduction at source on income chargeable under the head salary in total non appreciation of condition precedent of payment which mandates actual payment having been made to an identified payee so as to trigger tax deduction obligation u/s 192, which is evident from pages 2, 3, 4, 5 and page 23 of the impugned order passed by ld. ACIT (TDS), Jaipur. 2. That on the f acts and in the circumstances of the case and in law, ld. CIT-A erred in sustaining the action of ld. ACIT (TDS), Jaipur in treating assessee company as defaulter for alleged violation of section 192 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he employees, the assessee is not liable to deduct tax as per the provisions of section 192 and consequently the AO cannot held the assessee liable for the same. The ld. A/R has also referred to the provisions of section 17(2) and submitted that all the perquisites are part of the salary and, therefore, no deduction of tax at source contemplated under section 192 in case where the payment towards salary has accrued but is not made. He has relied upon the decision of Hon ble Delhi High Court in the case of CIT vs. Tej Quebecor Printing Ltd., 281 ITR 170 (Delhi) and submitted that the Hon ble High Court has held that section 192 of the Act inter alia requires any person responsible for paying any income chargeable under the head Salaries to deduct income tax on the amount payable at the stipulated rate at the time of payment. The Hon ble High Court has observed that the expression payment shall have to be given its ordinary literal meaning and, therefore, the person making the payment can or is required to make a deduction towards tax at source only at the time of making such payment. It was specifically held that the accrual of payment and the actual act of making payment must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) 2014-15 Gratuity expenses Rs.4112694 Rs.1233808 0 Rs.1233808 222086 Total Rs.53,91,554 Rs.970480 Thus all these expenditures are in the nature of perquisites to the employees. We will deal with each nature of expenditure separately as under :- ESOP Expenses 5. The AO has not disputed the fact that the assessee has made provision of ₹ 1,09,84,200/- in the books on account of Employees Stock Option Plan. However, until and unless the said option was exercised by the employees, it will not be an income accrued to the employees. We find force in the contention of the ld. A/R that at the time of option vested with the employees, the provisions of section 192 are not attracted for deduction of TDS and only when the employees exercised this option and finally the shares are allotted in pursuant to the option exercised by the employees the liability to deduct tax at source would arise. The AO has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payment, it provided so and wherever deductions were intended to be made even if the payment is credited to the account of the payee it made a specific provision to that effect. The distinction between the two cannot be obliterated by interpreting the provisions of section 192 in a manner which would amount to re-writing the said provision so as to bring them at par with the provisions that require deductions at the time of payment or credit of the amount to the payee's account. The decision of the Andhra Pradesh High Court in Syndicate Bank's case (supra) takes a somewhat similar view. 8. In Standard Triumph Motor Co. Ltd.'s case (supra) relied upon by Mr. Jolly, the Supreme Court was dealing with a situation where a Non-resident Indian company was entitled to a royalty on all sales effected by it. The Indian company which was liable to make this payment credited the amount of royalty to the appellant in its account books. In the returns filed by the assessee-non-resident company it admitted the royalty but filed nil returns claiming that it was maintaining its accounts on cash basis and since no part of the royalty had been received by it, therefore, nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ett for discharging his income-tax liability in India. It further shows that this money was returnable by Mr. Garnett to the Canadian Company on receiving his salary from India. Accordingly, it is held that the revenue has not discharged its onus to prove that any payment of salary was made by the assessee to Mr. Garnett during the year under consideration. 11. In the light of, what we have said above, we see no error of law in the view taken by the Tribunal to warrant interference by this Court. The appeal, accordingly, fails and is hereby dismissed. Thus it was held that for attracting the provisions of section 192 the accrual of payment and actual act of making the payment must both exist. Though subsection (1)(a) curves an exception in the provisions of section 192 of the Act regarding the perquisites which is not provided for by way of monetary payment as referred in clause (2) of section 17, the tax on such perquisites is required to be otherwise deductible as per the provisions of section 192(1) of the Act. However, when the employees stock option was not finally exercised by the employees then the question of deduction of TDS as per section 192 does not arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng charges 1428358659 194C 1.13% 16140452 13557980 Foreign payments (WTC) 775791935 195 10% 77579193 62063354 TOTAL 2471402665 9739292 80296397 F.Y. 2006-07 Particulars Amount Section Percentage Amt to be deducted Interest Commission 8823629 194H 5.65% 498535 358945 Subcontracting 1334844862 194C 1.13% 15083746 10860297 Professional Consultancy 71477952 194J 5.65% 4038504 2907723 Advt Marketing 21641814 194C 1.13% 244552 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45097653 Other Expenses 469931105 194C 2.26% 10620442 6372265 TOTAL 2093130753 119384279 16730567 FY 2008-09 Particulars Amount Section Percentage Amt to be deducted Interest Professional fees 816228909 194J 11.33% 92478735 44389792 Contractors/subcontractors 243440622 194C 2.26% 5501758 2640843 Foreign payments 112899026 195 15% 169348804 81287425 Commission 234463891 194H 11.33% 26564759 12751084 Rent 273153222 194I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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