TMI Blog2021 (2) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... - non deduction of TDS on bonafide belief - Under section 192(1), the assessee is expected to make an honest and fair estimate of income and deduct tax at source. For assessment year 2015-16 and 2016-17, clause (2D) was applicable, however in the absence of specific requirement under Rule 26C, assessee was not obliged to collect evidence/ proof from the employees for reimbursement of medical expenditure. The assessee has sought permission from CBDT vide letter dated 20/05/2002, regarding extending the exemption under Proviso(v) to Section 17(2) of the Act, based on satisfaction of the assessee. Assessee has been following this practice since the year 1991. Further the exemption at no time exceeded ₹ 15,000/- Stand of the assessee that the Cash medical benefit were only reimbursement of the expenditure incurred by the employees, and as such they could not form part of their income, could not be said to be without any basis. Therefore, the belief of the assessee on that point was bona fide. Since the estimate made by the assessee has been held to be honest and bona fide, the assessee could not be treated as assessee in default Therefore, the Ld.AO had no jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , employees get such benefit without furnishing any proof of having utilised the amount for medical treatment/expenditure either for the employee or any of the family members and therefore, fixed medical benefit paid to the employees are not against the expenditure, and not in the nature of reimbursement. Ld.AO also held that, there is no provision to allow the same under section 10 of the Act, and the amount received as fixed allowance is fully taxable in the hands of employee as perquisite. Ld.AO also noted that, the assessee discontinued the practice in financial year 2009-10. Ld.AO, thus in all appeals under consideration, held the assessee to be assessee in default and passed orders under section 201(1) of the Act for years under consideration. 2.2. At the outset, both sides admit that, common issues are involved in all 60 appeals. Ld.Counsel summarized the demand raised under section 201(1) and interest levied under section 201(1A) of the Act, by Ld.AO, branch wise, qua assessment year, in paper book at page 3-6 as under: Theerthahalli Branch Cash Medical Benefit u/s 192 Payment to Chinnu Graphics 194C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,176 2,339 1,380 9,418 4,512 86,068 2015-16 45,009 16,200 2,250 1,035 64,494 2016-17 1,51,475 36,336 2,167 630 10,299 2,03,255 Davangere: Cash Medical Benefit u/s 192 Payment to Chinnu Graphics u/ s 194C Payment to Sodexo SVC India Pvt Ltd u s 194C Total TDS deductible Interest 201(1A) TDS deductible Interest 201(1A) TDS deductible Interest u/s 201 (1A) 2011-12 9,645 8,064 - - - - 17,709 2012-13 9,300 6,696 1,207 864 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 43,690 31,392 75,082 2013-14 47 ,725 33,408 81,133 2014-15 58,881 28,244 87,125 2015-16 48,122 22,136 70,258 2016-17 2, 15,082 73,128 2,88,210 Aggrieved by demand raised under section 201(1) and levy of interest under section 201(1A) of the Act, assessee preferred appeal before Ld.CIT(A). 3. Ld.CIT(A) upheld the order of Ld.AO by way of a common order passed for all the branches, for all years under consideration, by observing as under: 6 . The submission of the appellant has been considered. Ground of appeal I is general in nature and not been addressed specifically. As regards ground of appeal 2, the appellant has not substantiated its claim that its request for more time was declined by the AO. Besides, the appellant has filed submission during the appeal proceedings and the AR s of the appellant attended the hearing and pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsement against the actual expenditure incurred. These facts remain uncontroverted and the appellant argues that medical allowance whether fixed component or not is allowable u/s17(2) if LIC (deductor) satisfies itself that expenditure is actually incurred or to be incurred by the employee in the year on his medical treatment or for treatment of member of his family. However, the above contention of the appellant is not in accordance with the provision of law. As mentioned earlier amount upto ₹ 15,000/- reimbursed by the employer in respect of expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family is exempt from being considered as perquisite. Therefore, as the fixed amount is being paid as cash medical benefit to the employees which is unconnected to the actual expenditure, if any, incurred by the employees, this expenditure cannot be considered as exempt from being taxed as perquisite. 6.3 The contention of the appellant as regards letter dated 20/05/2002 from CBDT has been considered. The said letter mentions that CBDT has no objection in extending benefit of exemption under proviso (V) of section T 7(2) 10 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B as exempt. u/s.10 of the Act. Therefore, the claim of the appellant to justify its action of non compliance with the TDS provision as an honest and bonafide estimate, is not maintainable. 6.5 In view of above, the amount of cash medical benefit (CMB) paid to its employees is held to be liable for TDS by the deductor. For the failure to .effect TDS by the deductor, the AO was right in invoking the provisions of section 201(1) and charging interest u/s.201(1A) of the Act. The relevant grounds of the appellant stand dismissed. 6. In ground of appeal 7, the appellant has submitted that the AO has raised demand u/s 201(1) and u/s 201(1A) for non deduction of tax in respect of payment to M/S Chinnu Graphics. The appellant has submitted that the said party has assured to file certificate from Charted Accountant to confirm that the amount received from LIC is included in computation income and has requested the CIT(A) to consider the certificate. if produced within a. week. However, it is observed that no such certificate has been filed by the appellant. 7.1 Rule 31 ACB of IT Rules provide that the certificate from an accountant in Form 26 Shall be furnished to the DGI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notice issued and the impugned order passed by Learned Income Tax Officer, T DS Ward, Davangere under Section 201 (1) [201 (IA) are bad and without jurisdiction 2011-12 2 2 2 2 2 2012-13 2 2 2 2 2 2013- 14 2 2 2 2 2 2014-15 2 2 2 2 2 2015-16 2 2 2 2 2 2016-17 2 2 2 2 2 The notice issued by the Learned Income Tax Officer, TDS Ward Davangere under Section 201 is bad being combined, vague and without application of mind. 2011-12 3 3 3 3 3 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - - - - The Lower Authorities have erred in treating the Appellant as 'assessee-indefault' under Section 201(1) of the IT Act by holding that the Appellant has failed to deduct tax under section 192 of the IT Act with respect to medical reimbursement provided to the employees. 2011-12 6.1 6.1 6.1 6.1 6.1 2012-13 6.1 6.1 6.1 6.1 6.1 2013-14 6.1 6.1 6.1 6.1 6.1 2014-15 6.1 6.1 6.1 6.1 6.1 2015-16 6.1 6.1 6.1 6.1 2016-17 5.1 5.1 5.1 5.1 5.1 The lower authorities have fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.4 2013-14 6.4 6.4 6.4 6.4 6.4 2014-15 6.4 6.4 6.4 6.4 6.4 2015-16 6.4 6.4 6.4 6.4 6.4 2016-17 5.4 5.4 5.4 5.4 5.4 The Lower Authorities have failed to appreciate that in the impugned financial year, the Appellant was not obliged to obtain evidence or proof of medical expenditure from the employees since Section 192(2D) which was inserted by the Finance Act, 2015 was applicable with effect from AY 2015-16 and even othemvise Section 192(2D) read with Rule 26C is not applicable to reimbursement of medical expenses. 2011-12 6.5 6.5 6.5 6.5 6.5 2012-13 6.5 6.5 6.5 6.5 6.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.7 5.7 The Lower Authorities have grossly erred in charging entire of amount medical reimbursement paid by the Appellant to its employees under the head salary and treating the Appellant as 'assessee-in-default' under Section 201(1) of the IT Act without even ascertaining the expenditure actually incurred by them on the medical treatment of the employee and their family members. 2011-12 6.8 6.8 6.8 6.8 6.8 2012-13 6.8 6.8 6.8 6.8 6.8 2013-14 6.8 6.8 6.8 6.8 6.8 2014-15 6.8 6.8 6.8 6.8 6.8 2015-16 6.8 6.8 6.8 6.8 6.8 2016-17 5.8 5.8 5.8 5.8 5.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.11 6.11 6.11 6.11 6.11 2012-13 6.11 6.11 6.11 6.11 6.11 2013-14 6.11 6.11 6.11 6.11 6.11 2014-15 6.11 6.11 6.11 6.11 6.11 2015-16 6.11 6.11 6.11 6.11 6.11 2016-17 5.11 5.11 5.11 5.11 5.11 As regards TDS on payment to Chinnu Graphics with respect to printing works The Lower Authorities have erred in treating the Appellant as 'assesseeindefault' under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.3 NA 7.3 NA NA 2014-15 7.3 NA NA NA NA 2015-16 6.3 NA 6.3 NA 6.3 As regards TDS on Payments to Kulkarni Services with respect to renting of Generators The Lower authorities have treated Appellant as assessee in default under section 201(1) of the IT Act by holding that the Appellant has failed to deduct tax under section 194C of the IT Act with respect to renting of Generators. 2011-12 8.1 NA NA NA NA 2012-13 8.1 NA NA NA NA 2013-14 8.1 NA NA NA NA 2014-15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NA NA NA 2014-15 NA NA 8.1 NA 8.1 2015-16 NA NA NA NA NA 2016-17 NA NA 7.1 NA 7.1 The Lower Authorities have failed to appreciate that the Appellant has deducted the tax at source at the rates specified in the certificate issued under Section 197 of IT Act 2011-12 NA NA NA NA NA 2012-13 NA NA 7.2 NA NA 2013-14 NA NA NA NA NA 2014-15 NA NA 8.2 NA NA 2015-16 NA NA NA NA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itradurga Branch and Davangere Branch are not pressed. Accordingly, following grounds that are not pressed: Ground No. 3, 5, 6.3 (for assessment years 2011-12 to 2015-16) and Ground no.5.3 (assessment year 2016-17); Ground No. 6.8 (for assessment year 2011-12 to 2015-16) and Ground No. 5.8 (for assessment year 2016-17); Ground No. 6.11 for assessment year 2011-12 to 2015-16) and Ground No. 5.11 (for assessment year 2016-17); Ground No. 7.1(for assessment years 2011-12 to 2015-16 pertaining to Theerathahalli, Chitradurga and Davengere) and Ground No.6.1(for assessment year 2016-17 pertaining to Theerathahalli, Chitradurga and Davengere); Ground No. 7.2(for assessment years 2011-12 to 2015-16 pertaining to Theerathahalli, Chitradurga and Davengere) and Ground No.6.2(for assessment year 2016-17 pertaining to Theerathahalli, Chitradurga and Davengere); Ground No.8.1(for assessment years 2011-12 to 2015-16 pertaining to Theerathahalli, Chitradurga and Davengere) and Ground No.7.1 (for assessment year 2016-17 pertaining to Theerathahalli); Ground No. 8.2(for assessment years 2011-12 to 2015-16 pertaining to Theerathahalli, Chitradurga and Davengere) and Ground No.7.2 (for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) to section 201 came into effect from 01/10/2014, it is not applicable for financial year 2012-13 and 2013-14, relevant to assessment year 2013-14 and 2014-15. Ld.Counsel submitted that amended time limit is not applicable to financial year 2014-15, relevant to assessment year 2015-16, since the financial year commenced by the time the amendment came into effect on 01/10/2014, by way of Finance (No.2) Act, 2014. Ld.Counsel placed reliance on written submissions on both the Issue at page 16-67 of paper book. 4.6.3. Issue III IV: Assessee has been treated to be, assessee in default for short deduction of TDS on payments made to employees towads Cash Medical Benefits and payments made to Sodexo SVC Ltd. 4.7. Cash Medical Benefits to employees: On merits, Ld.Counsel rebutted objections of authorites below by following submissions: Observations by Ld. AO/Ld. CIT (A) in impugned orders Rebuttals Wage revision has happened in the organisation of assessee and letter filed by assessee before CBDT is dated 28/08/2001. It has been submitted that there has not been any change in law or fact sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able as salary income. No bills are required to be submitted for taking this allowance that is what happened in the instant case. It has been submitted that application of assessee before CBDT dated 29/08/2001 and subsequent approval by CBDT dated 20/05/2002 clearly states that what was given was a fixed medical allowance. The CBDT approval also has been issued with the understanding that the allowance received by employees are in the nature of fixed medical allowance. Approval of CBDT only requires assessee to be satisfied about the claim which the assessee duly complied by obtaining declarations from its employees. It has been submitted that the declarations of the employees submitted before authorities below have not been doubted. Assessee has not produced any renewal letter of the exemption for relevant period for which the proceedings were pending before the authorities below. There is no requirement of annual renewal. This is clear from receipt in practice which is evident from approvals dated 02/01/1991, 17/03/1994 and 25/05/2002 as observed by Ld.CIT(A) in his order. LIC is not furnish any proof in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on following decision in support of this contention: CIT vs Asea Brown Boweri Ltd, in ITA No. 263/2002 (Karnataka High Court). SLP by revenue was dismissed in SLP (C ) No. 24259 of 2004, Reported in (statutes) 2005 volume 277 of Income Tax Reports Page 2. CIT vs Larsen and Toubro Ltd reported in (2009) 313 ITR 1 (SC); State Bank of India vs ADDL, CIT reported in 2020-TIOL-871-ITAT-BANG Hon ble Gujarat High Court in case of CIT vs Oil and Natural Gas Corporation Ltd., reported in 2020-TIOL-954-HC-AHM-IT KS Chowdhri and others vs LIC of India reported in (2018) 409 ITR 258 (Delhi) ACIT vs Infosys BPO Ltd reported in (2013) 37 Taxmann.com 53, ACIT (TDs) vs Oracle India Ltd reported in (2013) 37Taxmann.com327, Karnataka Power Transmission Corporation Ltd vs ITO (TDS) reported in (2019) 102 Taxmann.com 245, and ACIT(TDS) vs SAP Labs India(P.)Ltd reported in (2013) 36 Taxmann.com 200 Decision of Hon ble Karnataka High Court in case of CIT vs Symphony Marketing Solutions India Pvt.Ltd., reported in (2016) 388 ITR 457 He also submitted that assessee has been granting medical reimbursement from decades together, initially as per reimbursement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 of the Act were insened by the Finance Act 2009 w.e.f.01.04.2010. Sub section 3 was substituted w.e.f 01.10.2014 which reads as under: No order shall be made under subsection (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given. 3.1. In view of the above, for the A. Y .2010-11, the order could be passed before 31 03.2018. Since the order is passed on 23.03 2018, there is no delay in passing the order as contended by the appellant. 4. The following are submitted in respect of the merits of the case i.e. the applicability of TDS on Cash Medical Benefits (CMB) provided by the employer. The cash medical benefits is the fixed amount given by the employer to the employee to meet the medical expenditure which is not exempt from income tax u/s.10 of the Act as mentioned in Form 16 issued by the deductor. It IS exempt if the same is spent for a medical treatment, whereas in this case the employees are not supposed to file any declaration for having spent the CMB T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing details: Thirathahalli branch: Assessment year 2011-12: 1st quarter ended on 30th of June date of filing of quarterly returns not available with assessee. 2nd quarter ended on 30th September, date of filing of quarterly return not available with assessee. 3rd quarter ended on 31 December, date of filing of return not available with assessee. 4th quarter ended on 31 March and quarterly return was filed on 28/06/2011. Assessment year 2012-13: 1st quarter ended on 30th of June, date of filing of quarterly returns is 26/08/2011. 2nd quarter ended on 30th September, date of filing of quarterly return is 09/09/2011. 3rd quarter ended on 31 December, date of filing of quarterly return is 06/02/2012. 4th quarter ended on 31 March and date of filing of quarterly return is 15/05/2012. Davangere: Assessment year 2011-12: 1st quarter ended on 30th of June date of filing of quarterly returns not available with assessee. 2nd quarter ended on 30th September, date of filing of quarterly return not available with assessee. 3rd quarter ended on 31 December, date of filing of return not available with assessee. 4th quarter ended on 31 March dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is 21/07/2011. Assessment year 2012-13: 1st quarter ended on 30th of June, date of filing of quarterly return is 26/07/2011. 2nd quarter ended on 30th September, date of filing of quarterly return is 13/10/2011. 3rd quarter ended on 31st December, date of filing of quarterly return is 12/01/2012. 4th quarter ended on 31st March date of filing of quarterly return is 11/04/2012. 6.2.2. It is submitted by Ld.Counsel that, time limit to pass orders under section 201 for financial year 2010-11 (assessment year 2011-12) and 1st three quarters for financial year 2011-12 (assessment year 2012-13), expired on 31/03/2014 under unamended section 201 (3)(i) of the Act. It was submitted that, Clause (3) by way of insertion of to section 201 was inserted by way of Finance (No.2) Act, 2014 and therefore not applicable to these assessment year. 6.2.3. He submitted that, there is no dispute to the fact that, assessee filed TDS returns. Only apprehension is regarding the date of filing in respect of first three quarters for assessmet years 2011-12 and 2012-13, in respect of Davangere and Chitradurga Branches, which assessee is not able to ascertain. It was submitted that, date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the limitation period of two years remained unchanged. (emphasis supplied) 6.2.6. Aforesaid sub-section (3) of section 201 was again amended by Finance Act, 2014, w.e.f. 1st October 2014 by substituting the earlier provision as under:- (3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given. Thus, as could be seen from the aforesaid amended provision, a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. The issue before us is, whether the un-amended sub-section (3) which existed before introduction of amended subsection (3) by Finance Act, 2014, will apply to assessee's case for assessment years under consideration or not. 6.2.7. It is the case of the assessee that, since, clause (i) of sub-section (3) of section 201 is applicable to the assessee and limitation period of two years expired by the time provision was amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective effect. It was also observed, if a provision is not for the benefit of assessee, but, imposes some burden or liability, the presumption would be that, it will apply prospectively. The rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. 6.2.10. This view is supported by following decisions: Hon ble ITAT Mumbai in case of Sodexo SVC India Pvt.Ltd reported in (2018 92 Taxmann.com 260 ACIT vs.Acer India Pvt.Ltd in ITA No. 2570 to 2572/Bang/2017 for assessment year 2009-10 to 2011- 12 by order dated 14/09/2019. 6.2.11. Hon'ble Gujarat High Court, in case of Tata Teleservices vs.UOI reported in (2016) 385 ITR 497, on identical issue extensively dealt on the issue of retrospective applicability of the provisions by applying principles laid down by Hon'ble Supreme Court in number of cases. Hon ble Gujrat High Court held as under:- 15.00. Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, to the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years 2011-12 and 2012-13, the demand raised u/s.201(1) and interest levied under section201(1A), by Ld.AO for assessment years 2011-12 2012-13 stands deleted. Accordingly, appeals filed by assessee for assessment years 2011-12 and 2012-13 stands allowed on legal issue raised. 6.2.13. Now coming to assessment years 2013-14 and 2014-15, Ld.Counsel submitted that, financial year for these period ended before insertion of Clause (3) to Section 201 of the Act. In our understanding assessment year 2013-14 and 2014-15 would also stand covered by the unamended provision being 201(3)(i), based on our observation herein above. Accordingly Ground no.4 raised by assessee for assessment years 2013-14 and 2014-15 stands allowed. As we have quashed and set aside the assessment orders for assessment years 2013-14 and 2014-15, the demand raised u/s.201(1) and interest levied under section201(1A), by Ld.AO for assessment years by Ld.AO for these years stands deleted. Accordingly, appeals filed by assessee for assessment years 2013-14 and 2014-15 stands allowed on legal issue raised. 6.2.14. However same view cannot be applied for assessment year 2015-16 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee under this head for that financial year. 6.3.3. A perusal of section 192 of the Act, indicates that the person responsible for paying any income chargeable under the head Salaries shall be liable to deduct tax at source at the time of payment on an estimate basis. Items of income that are chargeable to tax under the head income from Salaries are laid down in section15 to 17 of the Act. 6.3.4. Section 15 of the Act provides that income described therein shall be chargeable to tax under the head Salaries , and income described therein consists of salary from the employer or former employer falling in three categories. Section16 of the Act contains deductions to be made from salaries. And, section 17 of the Act is inclusive definition of salary for purposes of Section 15, Section 16 and Section 17 of the Act which, along with other items, includes perquisite and these terms are also separately defined therein. Sec.17 of the Act, that defines Salary , perquisite and profits in lieu of salary as under: For the purposes of sections 15 and 16 and of this section -(1) Salary includes- .. (iv) any fees, commissions, pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. ACIT(TDS) vs. SAP Labs India Pvt.Ltd reported in (2013) 36 taxmann.com 200(Bang.Trib.) CIT v. Nicholas Piramal India Ltd., reported in (2008) 169 Taxman 233 (Bom.); CIT v. Semiconductor Complex Ltd.. reported in (2007) 160 Taxman 384 (Punj. Har.) CIT v. HCL Info System Ltd. (2005) 146 Taxman 227 (Delhi) CIT v. Oil and Natural Gas Corpn. Ltd. (2002) 254 ITR 121/125 Taxman 698 Guj) ITO v. Gujarat Narmada Valley Fertilizers Co. Ltd. (2000) 113 Taxman 586 (Guj.) CIT v. Nestle India Ltd. (2000) 109 Taxman 403 (Delhi) Gwalior Rayon Silk Co. Ltd. v. CIT (1983) 14 Taxman 99 (MP) ITO v G. D. Goenka Public School (No. 2) (2008) 23 SOT 77 (Delhi) Usha Martin Industries Ltd. v. Asstt. CIT (2004) 86 TTJ 574 (Kol.) Nestle India Ltd. v. Asstt. CIT (1997) 61 ITD 444 (Delhi) Indian Airlines Ltd. v Asstt. CIT (1996) 59 ITD 353 (Mum). 6.3.7. Further we note that, assessee relied on letter issued by CBDT dated 20/05/2002 granting exemption, placed at page 219 of paperbook. It is very clear from the letter that CBDT clearly understood the Cash Medical Benefit, to be in the nature of fixed medical allowance, and that, the fixed medical allowance is for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 89, empowered Ld.AO to grant relief, in cases where payment of salary and other dues was received by an employee in any one financial year, for more than twelve months. The said sub-section reads as follows : 89. Relief when salary, etc., is paid in arrears or in advance.-(1) Where, by reason of an assessee s salary being paid in arrears or in advance or by reason of his having received in any one financial year salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, his income is assessed at a rate higher than that at which it would otherwise have been assessed, the Income-tax Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed. 6.3.10. This sub-section required an employee to move an application before the ITO to grant such relief as may be prescribed while the prescription of the relief has been made under Rule 21A(2) of the Income-tax Rules, which came to be inserted by I.T. (Amendment) Rules, 1972 with effect from April 1, 1971. This situation created great hardship and harassment for the employees and entailed an unnecessary exercise. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Deduction at Source (TDS) statement containing the details of deduction of tax made during the quarter by the prescribed due date. Similarly, under Chapter XVII-BB of the Act, a person is required to collect tax on certain specified receipts at the specified rates. The person collecting tax ('the collector') also is required to file a quarterly Tax Collection at Source (TCS) statement containing the details of collection of tax made during the quarter by the prescribed due date. . Under section 192 of the Act, the person responsible for paying (DDO) income chargeable under the head salaries under the Act is authorised to allow certain deductions, exemptions or allowances or set-off of certain loss as per the provisions of the Act for the purposes of estimating income of the assessee or computing the amount of the tax deductible under the said section. The evidence/proof/particulars for some of the deductions/exemptions/allowances/set-off of loss claimed by the employee such as rent receipt for claiming exemption of HRA, evidence of interest payments for claiming loss from self occupied house property etc. is generally not available with the DDO. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of claims Evidence or particulars 1 House Rent Allowance Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previousyear exceeds rupees one lakh 2 Leave travel concession or assistance Evidence of expenditure 3 Deduction of interest under the head Income from house property . Name, address and permanent account number of the lender. 4 Deduction under Chapter VI-A. Evidence of investment or expenditure It was submitted by the Ld.Counsel that even after insertion of clause (2D) to section 192, in the absence of specific requirement under Rule 26C to collect evidence in respect of Medical expenses, the employer is not obliged to collect evidence/proof from the employee with respect to medical reimbursement that falls under clause (v) of Proviso to section 17(2). Reliance was placed on decision of Hon ble Supreme Court in case of CIT vs.ITI Ltd (supra) and ACIT vs L T Ltd(supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith effect from 01.04.2000, which was later on omitted by the Finance Act, 2000. The said Clause (iiia) as it was then is reproduced herein below: '(iiia) the value of any specified security allotted or transferred, directly or indirectly, by any person free of cost or at concessional rate, to an individual who is or has been in employment of that person: Provided that in a case where allotment or transfer of specified securities is made in pursuance of an option exercised by an individual, the value of the specified securities shall be taxable in the previous year in which such option is exercised by such individual. Explanation- For the purposes of this clause,- (a) cost' means the amount actually paid for acquiring specified securities and where no money has been paid, the cost shall be taken as nil; (b) specified securities means the securities as defined in clause(h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and includes employees' stock option and sweet equity shares; (c) sweat equity shares means equity shares issued by a company to its employees or directors at a discount or for conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued. Sec.192(3) of the Act permits the employer to increase or reduce the amount of TDS for any excess or deficiency. We have already noticed that the fact that bills/evidence to substantiate incurring of expenditure on medical treatment up to ₹ 15,000/- and the availing of the LTC by the employees and the fulfilment of the conditions contemplated by Sec.10(5) of the Act for availing exemption by the employees so availing LTC, have not been disputed by the AO. Even assuming the case of the AO, that at the time of payment the Assessee ought to have deducted tax at source, is sustainable; the Assessee on a review of the taxes deducted during the earlier months of the previous year is entitled to give effect to the deductions permissible under proviso (iv) to Sec.17(2) or exemption u/s.10(5) of the Act in the later months of the previous year. What has to be seen is the taxes to be deducted on income under the head 'salaries' as on the last date of the previous year. The case of the AO is that LTC and Medical reimbursement should be paid at the time the expenditure is incurred or after the expenditure is incurred by way of reimbursement and not at an earlier point of tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Silk Co. Ltd. v. CIT [1983] 140 ITR 832 (MP) ITO v G. D. Goenka Public School (No. 2) [2008] 306 ITR (AT) 78 (Del) Usha Martin Industries Ltd. V. ACIT (2004) 086 TTJ 0574 (KOL) Nestle India Ltd. v. ACIT (1997) 61 ITD 444 (Del) Indian Airlines Ltd. v ACIT (1996) 59 ITD 353 (Mum) 6.3.18. This Tribunal in case of KPTCL vs.ITO reported in (2018) 93 taxmann.com 89, following the above observations in ACIT vs.Infosys BPO Ltd.(supra), held as under:- 19. We have considered the rival submissions. In our view, the plea of the Assessee that it made a bona fide estimate of employee's salary by valuing the perquisites in the form of residential accommodation provided to the employees by valuing the same as if employees were employees of Central Govt. has to be accepted. In this regard, it is clear from the records that the position with regard to the assessee not being a Central govt. was brought to its notice by the department only in the proceedings initiated in 2013. Even thereafter, the Assessee has been taking a stand that its employees or employees of Central Govt. As held in several decision referred to by the ld. counsel for the Assessee, the ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is not open to the Revenue to call for details of expenditure incurred unless the per diem allowance paid is disproportionately high compared to the salary received or with regard to the duties performed by the employee. In the context, the learned Commissioner of Income-tax (Appeals) also examined the Circular No. Q/FD/695/1/90, dated November 11, 1996 and Circular No. Q/FD/695/2/2000, dated September 21, 2010 issued by Ministry of External Affairs, Government of India and came to the conclusion that the per diem allowance of $ 50 to $ 75 paid by the assessee to its employees on official trips to USA and Europe to be reasonable and that the same would be covered as exempt under section 10(14) of the Act. In the impugned order for the assessment year 2009-10 dated September 25, 2014, the last of the impugned orders to be passed, the learned Commissioner of Income-tax (Appeals) held as under at 3 to 5 as under : '3. I have carefully considered the facts, the appellant's submissions and perused the impugned order. I agree with the argument of learned authorised representative that the per diem allowance paid to its employees qualifies for exemption under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diem allowance is reasonable at $ 50 to $ 75 for the US and Europe, and would be covered under section 10(14). The appellant could not be said to be in default within the meaning of section 201(1) for not including such attempt allowance for the purpose of section 192. The Assessing Officer is directed to exclude such amounts of per diem allowances form the amounts liable to deduction of tax at source under section 192. Appellate Grounds of appeal (Nos. 1.1 to 1.4) on the issue are allowed. 4. The other ground (No. 2) of appeal raised is with regard to levying of interest under section 201(1A), amounting to ₹ 12,93,117 relating to default under section 201(1) read with section 192. Since, the assessee has been held to be not in default under section 201(1) with regard to the per diem allowances paid the interest under section 201(1A) is also held to be not chargeable, and hence deleted. 5. As a result, the appeal is allowed.' 4.3.3 Before us, except for raising the grounds of appeal and supporting the views of the Assessing Officer, which are not tenable in the light of the judicial pronouncements of the Tribunal and the Circulars of Ministry of External ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was confronted with the nature of the amount as to whether such amount is taxable or not, he submitted that as per section 10(14) if it is by way of reimbursement, such amount would not be taxable. But it is his submission, the payment made cannot be treated as reimbursement because it is paid without verification of the expenses already incurred by the employee concerned. 6. Section 10(14) of the Act reads as under : (14)(i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as may be prescribed, to the extent to which such expenses are actually incurred for that purpose ; (ii) any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, as may be prescribed and to the extent as may be prescribed : Provided that not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for non-deduction of tax from the reimbursement allowance on the basis of utilisation certificate of the employee. Their Lordships observed as under: 23. In terms of the above Circular No. 15 dated 8-5-1969, for the purpose of calculation of tax deductible at source under section 192, selfcertification on the part of the employee that the conveyance was owned by him and being used by him for the purposes of employment was adequate. The present case relates to uniform allowance, which as noticed earlier is exempt from tax under section 10(14)(i) of the Act read with rule 2BB(1)(f) of the rules to the extent to which such expenses are actually incurred for that purpose. Under the Act, the liability to the employer is to deduct tax at source to the extent of the taxable income of the employee. 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly dismissed with no order as to costs. Hon ble Court followed its coordinate bench decision in case of CIT v. Oil Natural Gas Corpn. Ltd., reported in [2002] 125 Taxman 698, wherein Hon ble Court held as under: 5. We are of the opinion that in the facts and circumstances found by the tribunal no question of law referable to this court arises as the answer is evident. The tax at source in the case of an employee in receipt of salaries is deducted on the basis of estimate of income under the head Salary emanating from the employer. That estimate also include a fair estimate by the employer whether any amount paid by him is not likely to be subjected to tax under any provisions of the Income-tax Act. As we have noticed above, the evidence regarding operation of the scheme clearly attracted the provisions of sec. 10(14) inasmuch as reimbursement is granted for use of one vehicle owned and possessed by the employee for expenses incurred in undertaking official journeys and the payment is 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Tribunal in various assessee s case(referred to herein above) upheld estimation of income under section 192(1) of the Act, which has also been approved by Hon ble Karnataka High Court in case of Infosys Technologies Ltd., reported in (2007) 293 ITR 146. This decision of Hon ble Karnataka High Court has been affirmed by Hon ble Supreme Court reported in (2008) 297 ITR 167. 6.3.25. Under section 192(1), the assessee is expected to make an honest and fair estimate of income and deduct tax at source. For assessment year 2015-16 and 2016-17, clause (2D) was applicable, however in the absence of specific requirement under Rule 26C, assessee was not obliged to collect evidence/ proof from the employees for reimbursement of medical expenditure. The assessee has sought permission from CBDT vide letter dated 20/05/2002, regarding extending the exemption under Proviso(v) to Section 17(2) of the Act, based on satisfaction of the assessee. Assessee has been following this practice since the year 1991. Further the exemption at no time exceeded ₹ 15,000/- 6.3.25. Based on above discussions we note that assesse was under a bonafide belief that; Section 192(1) requires asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have erred in treating the assessee as, assessee in default , by holding that the assessee deducted tax at a lower rate with respect to payment made to Sodexo SVC India Pvt.Ltd. 7.2. It has been submitted that authorities below have not looked into the evidences available on record like certificate furnished under section 197(1) of the Act. Ld.Counsel submitted that Ld.CIT(A) in the impugned order has not given any finding in respect of this issue. He thus submitted that the issue may be remanded to Ld.CIT(A). 8. We have perused the records placed before us. 8.1. For assessment year 2016-17, we note that evidence filed by the assessee has not been considered by authorities. The assessee is directed to furnish relevant details in support of the claim before the Ld.AO. We, therefore remand this issue to the Ld.AO to consider the ground in light of certificates furnished, in accordance with law. Needless to say the assessee may be granted proper opportunity of being heard in accordance with law. Accordingly these grounds raised stands allowed for statistical purposes. In the result, the appeals filed by the assessee stands allowed for assessment years 2011-12 to 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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