9911796707
TMI Blog2021 (2) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... ars under consideration at branch offices mentioned hereinabove. On verification, Ld.AO observed that, the assessee has not deducted TDS under section192, in respect of cash medical benefit paid to its employees, payment made to Chinnu Graphics, payment to Kulkarni Services, payments to Sodexo SVC India Pvt.Ltd., payment made to HP India Sales Pvt.Ltd., and EMDC Projects. Ld.AO also observed that the cash medical benefit paid to employees was considered as exempt under section 10 of the Act in respect of cash Medical Benefit. 2.1. Ld.AO after considering submissions of assessee, in respect of Cash Medical Benefit held that, under the Act, any allowance received by an employee is fully taxable, unless it is specifically exempted by provisions of the Act. Ld.AO held that the deductor(assessee) is giving fixed medical benefits to its employees to meet medical expenditure irrespective of actual expenditure incurred by the employee. He noted that, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18,067 2013-14 31,003 18,600 - - - - 49,603 2014-15 36,482 17,472 707 350 8,814 4,224 68,049 2015-16 40,020 14,400 1,460 588 - - 56,468 2016-17 1,30,588 31,320 666 156 9,116 2,275 1,74,121 Shivamogga: Cash Medical Benefit u/s 192 Payment to HP In la Sales Pvt. Ltd. an MDC Projects u s 194J# Total TDS deductible Interest u/ s 201(1A) TDS deductible Interest u/ s 201(1A) 201 1-12 2, 49,647 2,09,703 - - 4,59,350 2012-13 1,04,870 75,506 21,277 Refer Note # - 2,16,972 2013-14 1,24,514 85,915 - - 2, 10,429 2014-15 1,40,103 79,859 - - 2, 19,962 2015-16 1,33,322 59,995 - - 1,93,317 2016-17 3,70,886 1,22,392 - - 4,93,287 # Note : Issue with respect to Payment to HP India Sales Pvt. Ltd. and EMDC Projects u/s 194J for the AY 2012-13, appeal was allowed by the Ld. CIT(A). Haveri: Cash Medical Benefit u/ s 192 Total TDS deductible Interest u/ s 201 (IA) 2011-12 59,053 47,880 1,06,933 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount on medical treatment: ii) The amount should have been spent on his own or his family members ' treatment iii) Such amount should be reimbursed by the employer. iv) Amount reimbursed by the employer does not exceed Rs. 15000 in the financial year: 6.2 In case of the appellant, the AO has recorded finding that fixed cash medical benefit given to its employees irrespective of the actual expenditure incurred by the employee. The employee is not required to furnish any proof for having utilized the amount for the purpose of medical treatment/expenditure. Thus the fixed medical benefit is not paid to the employee as reimbursement 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 Rs. 15,000/- reimbursed by the employer in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual employees with regard to their tax liability in respect of income received by them. In absence of any evidence to conclude that the deductor(LIC) has based deduction of tax at source on the estimation provided by the employees, the claim of bonafide estimate by the appellant will not muster any credence. It is not the case of the appellant that employees have included cash equivalent of CMB as part of the income or provided the accountant's certificate to prove that this income has been offered for tax as mandated in the proviso to Sec.201. In fact the AO has noted that the employees have claimed the amount of CMB 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 3 3 3 3 3 2013- 14 3 3 3 3 3 2014-15 3 3 3 3 3 2015-16 3 3 3 3 3 2016-17 3 3 3 3 3 The impugned order passed under Section 201 is barred by the limitation. 2011-12 4 4 4 4 4 2012-13 4 4 4 4 4 2013-14 4 4 4 4 4 2014-15 4 4 4 4 4 2015-16 4 4 4 4 4 2016-17 NA NA NA NA NA The Learned Assessing Officer is not justified in passing the order under Section 201(1)/201(1A) without giving a sufficient opportunity of being heard to produce requisite documents. 2011-12 5 5 5 5 5 2012-13 5 5 5 5 5 2013-14 5 5 5 5 5 2014-15 5 5 5 5 5 2015-16 5 5 5 5 5 2016-17 4 4 4 4 4 - - - - - - As regards TDS on Cash Medical Benefit - - - - - - The Lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp;6.5 6.5 6.5 6.5 2016-17 5.5 5.5 5.5 5.5 5.5 The Lower Authorities are not justified in rejecting the contention of the appellant on surmises and conjectures and on mistaken fact that the appellant discontinued its practice in FY 2009-10 2011-12 6.6 6.6 6.6 6.6 6.6 2012-13 6.6 6.6 6.6 6.6 6.6 2013-14 6.6 6.6 6.6 6.6 6.6 2014-15 6.6 6.6 6.6 6.6 6.6 2015-16 6.6 6.6 6.6 6.6 6.6 2016-17 5.6 5.6 5.6 5.6 5.6 Without prejudice to the above, the Lower Authorities have failed to appreciate that the Appellant has not deducted TDS on the medical reimbursement based on the signed declarations by the employees. 2011-12 6.7 6.7 6.7 6.7 6.7 2012-13 6.7 6.7 6.7 6.7 6.7 2013-14 6.7 6.7 6.7 6.7 6.7 2014-15 6.7 6.7 6.7 6.7 6.7 2015-16 6.7 6.7 6.7 6.7 6.7 2016-17 5.7 5.7 5.7 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 medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appreciate that no order u/s 201(1) / 201(1A) of the IT Act can be passed against the Appellant since the payee has filed the return of income and offered the same to tax. 2011-12 7.2 NA 7.2 NA NA 2012-13 7.2 NA NA NA 7.2 2013-14 7.2 NA 7.2 NA NA 2014-15 7.2 NA 7.2 NA 7.2 2015-16 7.2 NA 7.2 NA 7.2 2016-17 6.2 NA 6.2 NA 6.2 The Learned CIT(Appeals) is not justified in failing to seek information with respect to return filed by the party by exercising powers under section 133(6) of the IT Act before treating the Appellant as assessee-in-default under section 201(1) of the IT Act 2011-12 7.3 NA 7.3 NA NA 2012-13 7.3 NA NA NA 7.3 2013-14 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NA 2012-13 NA NA 7.4 NA NA 2013-14 NA NA NA NA NA 2014-15 NA NA 8.4 NA 8.4 2015-16 NA NA NA NA NA 2016-17 NA NA 7.4 NA 7.4 4.1. Referring to the above table, Ld.Counsel submitted that Ground No.1 are general in nature and therefore do not require any adjudication. 4.2. Ld.Counsel further submitted that payments made to Chinnu Graphics in Theerathahalli Branch, Chitradurga 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 2016-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears from the end of the financial arrangements the statement under section 200 was filed. He submitted that the orders with respect to financial year 10-11 (assessment year 2011-12) and Q1 to Q3 financial year 2011-12 (assessment year 2012-13) is barred by limitation under unamended section and the same cannot be revived. * Ld.Counsel further submitted that as Clause(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of paper book filed before us. Medical allowance is a fixed component that employee receives as part of salary, that is taxable 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.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees. He placed reliance 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, initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 201 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 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... li 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 date of filing of return not available with assessee. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of filing of Q1 -Q3 TDS returns for Thirthahalli Branch is not ascertainable. Therefore, we have to proceed on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 amended by Finance Act, 2014, the extended period of limitation of seven years as per the amended provision will not apply. Whereas, it is the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 since the amendment was with effect from 01/06/2015. We therefore dismiss Ground 4 for assessment year 2015-16 Assessment year 2015-16 &2016-17 6.3. At the outset, the Ld.Counsel submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, perquisites or profits in lieu of or in addition to any salary or wages; ....... (2) "perquisite" includes- ........ (iv) any sum paid by the employer in respect of any obligation which but for such payment, would have been pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (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 the expenditure, which is both actually incurred or to be incurred. The letter also states that, as long as assessee is satisfied that the expenditure is actually incurred, CBDT do not have any objection in extending the exemption under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The Legislature, therefore, in its wisdom, inserted new sub-section (2A) in section 192 with effect from June 1, 1987 incorporating therein the relief permissible in section 89(1) to be granted by the employer. 6.3.11. Section 192(2A) permits the employer to gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 these circumstances, the DDO has to depend upon the evidence/particulars furnished, if any, by the employees in support of their claim of deductions, exemptions, etc. As the existing provisions of the Act do not contain any guidance regarding nature of evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure 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). Placing reliance on following observation of Hon'ble Supreme Court in case of ACIT vs. Bharat V.Patel reported in (2018) 92 taxmann.com 336, it was submitted that, in the absence of specific provision, assessee cannot be subjected to tax. "10. It is a matter of record that the Respondent was employed as the Chairman-cum-Managing Director of the (P&G) India Ltd. at the relevant time and the said company is the subsidiary of (P&G) USA through Richardson Vicks Inc. USA and that (P&G) USA owned controllin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called; and (d) "value" means the difference between the fair market value and the cost for acquiring specified securities;' 13. The intention behind the said amendment brought by the legislature was to bring the benefits transferred by the employer to the employees as in the instant case, within the ambit of the Income Tax Act, 1961. It was the first time when the legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 time. If it is so paid, then, even though the payment would not form part of taxable salary of an employee, the employer has to deduct tax at source treating it as part of salary, is contrary to the provisions of Sec.192(3) of the Act and cannot be sustained. The reliance placed by the AO on the expression "actually incurred" found in Sec.10(5) of the Act and proviso (iv) to Sec.17(2) of the Act, in our view cannot be sustained. In any event, the interpretation of the word "actually paid" is not relevant while ascertaining the quantum of tax that has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timate 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 obligation of the Assessee is only to make a bonafide estimate of the salary. In our view, in the facts and circumstance of the present case, assessee has made such an estimate. The Assessee's obligation u/s.192 is therefore properly discharged and hence proceedings u/s.201(1) & 201(1A) of the Act have to be quashed and are hereby quashed." 6.3.19. The above observation was in the context of treating the employees of KEB who became employees of KPTCL on its creation were equated with employees of the State Government and therefore the plea of bonafide belief while estimating income was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rips 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 10(14)(i) of the Act read with rule 2BB(1). Clause (b) of rule 2BB(1) refers to any allowance to meet the ordinary daily charges incurred by an employee on account of absence from normal place of duty. There is no monetary limit prescribed and hence unless such allowance is said to be fictitious or abnormally high or otherwise taxable in the hands of the employee, no liability could be fastened under section 192 on the employer to deduct tax on such allowance. Moreover, it is also not possible to collate bills for every minuscule expenses and mere non-collation of bills in support of amount expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Affairs, Government of India referred to above, the Revenue has not been able to controvert the findings in the impugned orders of the learned Commissioner of Income-tax (Appeals). Following the decision of the hon'ble Income-tax Appellate Tribunal, Kolkata Bench in the case of Saptarshi Ghosh (supra) wherein it has been held that there is no requirement for the assessee-employer to collect and verify the proof of journey, actual expenditure incurred in respect of per diem allowance and further that it is not open to the Revenue to call for details of expenditure unless the allowances are highly disproportionate or unreasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or residence ;" The aforesaid shows that if any allowance or benefit not being in the nature of perquisite is granted to meet the expenses wholly, necessarily or exclusively incurred in performance of duties, to the extent to which such expenses are actually incurred would fall in the said category. It is the case of the assessee that the payment was not made as an all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred 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 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / 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 Rs. 15,000/- 6.3.25. Based on above discussions we note that assesse was under a bonafide belief that; * Section 192(1) requires assessee to make payments to its employees on estimation; * Non deduction of TDS is based on letter dated 20/05/2002 by CBDT; * Incurring of actual expenditure by the employees was supported by self attested declaration from employees; * Payments in question for which the assessee has been treated as, "assessee in default" for non deduction of tax at source were not in the nature of income within the meaning of Section 17(v) of the act, and therefore there was no obligation on the part of assessee to deduct tax at source. * Though section 192(2D) was inserted by Finance Act 2015, Rule 26 does not specify requirement to deduct TDS in case of Cash Medical Benefit. In this situation, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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