TMI Blog2020 (3) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... If any part of such income is exempt, there is no liability to deduct tax at source from such income. Since liability to pay tax under the Act is of the individual employee and the liability on the part of the employer is only to deduct tax at source, Circular No.15 dated 8.5.1969 provides that self certification on the part of the employee is sufficient for the disbursing officer for calculation of the tax deductible at source. While the said circular relates to conveyances, the underlying principle can well be applied even in the case of uniform allowance. Therefore, if an employee gives a certificate certifying that he had incurred certain expenditure towards uniforms and maintenance thereof, insofar as the disbursing officer is concerned, that would be adequate while calculating the tax deductible at source. If the Assessing Officer has any doubt about the claim made by any individual employee, he can always take upon the issue during the course of assessment proceedings of such employee, inasmuch as, as rightly submitted by the learned counsel for the respondent, self certification is good enough for the employer not to deduct tax at source, it does not grant any immunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 201(1) of the Income Tax Act, 1961, and consequential interest charged by the Assessing Officer in relation to the assessee s payments to its employees under the head of uniform allowance? 3. On 22.11.2010, a survey was conducted at the office premises of the assessee - Oil and Natural Gas Corporation Limited. During the course of the survey, it was noticed that the assessee had made payments under the head uniform allowance ; however, the deductor had neither included this allowance to the total salary payments nor had he deducted tax at source (TDS) on such income. On these issues, additions were made in the immediately preceding financial year 2009- 10 under section 201(1) read with section 201(1A) of the Act. The Assessing Officer noted that there was no provision for granting exemption on the basis of self certification. He further noticed that reimbursement of uniform allowance was not being treated as taxable for the assessment year and the assessee had disclosed in writing that out of around 790 to 800 employees at Hazira, 752 employees had taken this reimbursement on the basis of self-certification and thus, it has not been included in the gross salary chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t purpose. According to the Assessing Officer, such allowances firstly become part of the salary and exempt to the extent of spending, but the assessee had not included these allowances as part of the salary and had not examined the aspect of actual expenditure and instead had taken self certification at the beginning of the financial year from all employees without verification of the claim to ascertain whether such expenditure had actually been incurred for the purpose. He further noted that section 192 of the Act casts a responsibility on the employer to deduct proper TDS from the salary of the employee. Salary includes allowances/ reimbursements which are conditionally exempt. It is the responsibility of the employer to ascertain the correctness of the claim of exemption of any allowance before allowing it as exempt. If the employer finds the claim of the employee to be correct, he can consider such claim while computing the taxable income and tax thereon; whereas in this case, the employer has allowed the blanket exemption to its employees without any verification. None of the employees on his own has added the allowances received to his own income in his individual income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. 5. The revenue preferred an appeal before the Tribunal. Before the Tribunal, it was contended on behalf of the revenue that the specified allowances under section 10(14)(i) of the Act are exempt to the extent these are actually incurred for that purpose; that uniform allowance had been allowed ignoring the fact that such claim had been allowed without fulfilling the conditions as laid down under section 10(14)(i) of the Act. 5.1 The Tribunal, after considering the submissions advanced on behalf of the respective parties, observed that the uniform given to an employee for using the same during his duty hours is presumed to be used for the purpose of employment only. When there was a circular of CBDT enabling the assessee for non-deduction of tax from the reimbursement of allowances on the basis of utilisation certificate of the employee, there was no liability on the part of the assessee for deduction of tax from payments made to the employees as uniform allowance. The Tribunal was of the opinion that the conclusion drawn by the Commissioner (Appeals) is correct and accordingly dismissed the appeal. 6. Mr. M.R. Bhatt, Senior Advocate, learned counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not being prescribed and that the Tribunal has gone on the aspect of self-certification without going into the issue of nonprescription of uniform. 6.2 Reference was made to the above decision of this court in the case of Oil and Natural Gas Corporation Ltd. v. Assistant Commissioner of Income tax (TDS), 73 taxmann.com 273, wherein the court, in the context of section 10(14)(i) of the Act read with clause (f) of rule 2BB(1) of rules, had held that in the context of the statutory provisions, it was necessary to ascertain whether the employer had granted allowances to meet the expenditure incurred by the employer on the purchase or maintenance of uniform for wearing during performance of duties of an office or employment of profit. The court, in the facts of the said case, found that though previously uniform was prescribed by the ONGC, with effect from 16.11.1995, such prescription was done away with. On behalf of the assessee, reliance was placed upon the Circular dated 29.3.2010 which prescribed certain dress code to be followed by the employees. The court held that if for the sake of arguments it is accepted that the dress code as referred to in Circular dated 29.3.2010 or si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uniform not having been prescribed does not arise out of the impugned order. It was emphatically argued that therefore, the issue that is raised before this court is not coming out of the order of the Tribunal as it was not even the case of the department that there was no uniform. 7.2 Reliance was placed upon the decision of this court in Assistant Commissioner of Income Tax v. Ashima Syntax Ltd., (2001) 251 ITR 133 (Gujarat), wherein the court noted that in that case the revenue had contended that the assessee having capitalised the expenditure in the books of account of the company, the company cannot claim depreciation. However, this was not the issue raised before the Tribunal and there was no finding recorded by the Tribunal in this behalf. The court held that as the issue was not arising out of the order rendered by the Tribunal, it would not be open for the revenue to contend the said submission. 7.3 Reliance was also placed upon the decision of the Punjab and Haryana High Court in Echo Shella v. Commissioner of Income Tax-I Chandigarh, [2007] 293 ITR 234 (P H) wherein the court held thus: 5. The only submission made by the counsel for the appellant is that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction to decide the question so framed. In other words, there has to be a first finding recorded by the Tribunal on the question framed against the appellant in the impugned order. It is only then that the appellant becomes entitled to assail the finding in appeal under section 260A by getting the question framed on such adverse findings recorded by the Tribunal. In the absence of any such finding being recorded by the Tribunal, the appellant has no right to raise such plea. 7.6 It was submitted that in the light of the settled legal position as enunciated in the above decisions, the question as to whether or not uniform had been prescribed by the assessee being essentially a question of fact, which had not been raised before the Tribunal, does not arise out of the impugned order, and hence, it is not permissible for the revenue to raise such a plea. 7.7 As regards the applicability of Circular No.15 dated 8.5.1969, it was submitted that the circular is clear, namely that self certification is permissible. It was submitted that in case of an individual employee, the Assessing Officer of the concerned employee can examine the validity of the claim of exemption under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o uniform was prescribed by the employer and that, therefore, the payment of allowance under the head of uniform allowance would not fall within the exemption clause of section 10(14)(i) of the Act read with rule 2BB of the rules. The Assessing Officer had noted that during the survey operation, the employees were not wearing any uniform and in his statement, the Senior Finance and Accounts Officer of ONGC, had stated that though previously uniform was prescribed by ONGC, with effect from 16.11.1995, such prescription was done away with and that despite discontinuance of uniform at work place, ONGC continued to pay uniform allowance, which was later adjusted toward employees contribution to the pension fund. It was in the aforesaid factual backdrop that this court upheld the order of the Tribunal which had held that as no uniform was prescribed by the ONGC, payment made towards uniform allowance was not exempt under section 10(14)(i) of the Act . 10.1 Thus, in the facts of that case, it was the specific case of the revenue that as no uniform was prescribed by the ONGC, the uniform allowance granted by it was not exempt under section 10(14)(i) of the Act. 11. Section 10 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to hereinabove. A perusal thereof makes it evident that the sole issue raised by the Assessing Officer was that the assessee had claimed expenditure incurred towards uniform allowance as exempt section 10(14)(i) of the Act on the basis of self-certification by the concerned employees without calling for any proof in the nature of bills, vouchers etc. regarding such expenditure having been actually incurred and without due verification. No ground has been raised to the effect that as no uniform had been prescribed, no claim towards uniform allowance could have been allowed. 17. In the case of the respondent assessee itself, this court in Oil and Natural Gas Corporation Ltd. v. Assistant Commissioner of Income tax (TDS), 73 taxmann.com 273, has upheld the order passed by the Tribunal upholding the order of the Commissioner (Appeals) that as no uniform had been prescribed by the ONGC, which had merely prescribed a dress code, the payment of allowances under the heading of uniform allowances would not fall within the exemption clause contained in section 10(14)(i) of the Act. However, while in the facts of the present case, the assessee is the same and the assessment year is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact a perusal of the entire record of the case including the orders of the Assessing Officer as well as the Commissioner (Appeals) shows that nowhere has any issue been raised regarding uniform not having been prescribed by the assessee. The only question before the authorities was that the assessee had claimed exemption towards uniform allowance under section 10(14)(i) of the Act on the basis of self-certification given by the employees without verifying whether such expenditure had actually been incurred. Under the circumstances, the decision of this court in the case of Oil and Natural Gas Corporation Ltd. v. Assistant Commissioner of Income tax (TDS), 73 taxmann.com 273, would not be applicable to the facts of the present case, the same having been rendered in the context of totally different facts. In the absence of any factual foundation with regard to there being no prescription of uniform by the assessee having been laid in the present case, such question does not arise out of the impugned order of the Tribunal, and hence, it is not permissible for the appellant to raise such plea at this stage. 21. The order of the Tribunal may, therefore, be tested on the basis of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made on employee issuing a certificate that he has incurred more expenses than the amount which is being reimbursed to him at the end of the month. The fact that reimbursement upto a maximum limit and not more does not detract from the fact that expenses are being paid as far as employer is concerned towards reimbursing actual expenses incurred by the employee in undertaking official journeys upto the extent amount is actually reimbursed. Nor the fact that the employee, during the course of his assessment, is not found entitled to full benefit u/s 10(14), does in any way reflect on the estimate of income tax payable on income of the employee at the time when such amount is paid. Whether an employee actually incurs such amount for the official purposes is relevant for assessment of employee because exemption operates in his terms and conditions of availing such exemption that is to be fulfilled by him whether the employee is able to substantiate his claim to exemption has no bearing on estimate of income liable to tax to be made by the employer. 6. These findings do not give rise to any question of law. The fact that ultimately on the assessment of employees they have been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption operates in his terms and conditions of availing such exemption that is to be fulfilled by him. Whether the employee is able to substantiate his claim to exemption has no bearing on the estimate of income liable to tax to be made by the employer. Under the circumstances, there is no legal infirmity in the impugned order passed by the Tribunal in placing reliance upon the above circular for holding that self certification on the part of the employees was adequate for the assessee not to deduct tax from the reimbursement allowance towards expenditure incurred for uniforms. 24. In the light of the above discussion, this court is of the view that the impugned order passed by the Tribunal does not suffer from any legal infirmity warranting interference. The substantial question framed by this court while issuing notice is answered in the affirmative, that is, in favour of the assessee and against the revenue. The Income Tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income-tax (Appeals) deleting the additions made by the Assessing Officer under section 201(1) of the Income Tax Act, 1961, and consequential interest charged by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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