TMI Blog1997 (9) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... alternatively if it constituted income, it was exempt under the provisions of s. 10(14) of the IT Act, 1961. The ITO, TDS-1, Surat, was, however, of the opinion that the assessee failed in its duty by not deducting tax on reimbursements made under CMRE Scheme. While passing the order, she did not serve any notice on any employee posted at Hazira of her intention of treating him as the principal officer of the assessee-company as required in s. 2(35)(b) of the Act. 2. The CIT(A), however, agreed with the opinion of the AO and confirmed the order under s. 201 of the Act. The assessee is in appeal before us. 3. We have heard the assessee's counsel and the Departmental Representative. The counsel for the assessee mainly repeated the argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce while being liable to deduct, or failing to make due payment after having deducted tax, is liable to pay interest at 15 per cent per annum on the amount of such tax from the date on which such tax was deductible to the date when such tax is actually paid. The two consequences are without prejudice to each other and both will operate simultaneously even against persons who, being liable, have failed to make the deduction of tax at source. Sec. 201(2) creates a statutory charge upon all the assets of the defaulter for the amount of tax deducted and not paid plus the amount of interest leviable under s. 201(1A). The liability that is cast upon the persons concerned under s. 201 is not because of any notice of demand, but because of the oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in a position to help us in this regard. A perusal of s. 192 makes it clear that the liability of an employer is to deduct tax on the estimated income of the assessee-employee. While making such estimate, an employer is expected to act honestly and fairly but if it is found that the estimate made by the employer is incorrect, this fact alone, without anything more, would not inevitably lead to the inference that the employer has not acted honestly and fairly. Unless that inference can be reasonably raised against an employer, no fault can be found with him. It cannot be held that he has not deducted tax on the estimated income of the employee. In such a case an employer cannot be made liable to pay interest under s. 201(1A) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet expenses which are wholly, necessarily and exclusively incurred in the performance of duties of an office or employment of profit; (iii) Thirdly, such an allowance or benefit stands notified by Central Government in the Official Gazette; (iv) Fourthly, the option is available only to the extent to which such expenses are actually incurred for that purpose. There is no dispute that condition No. (i) and condition No. (ii) have been satisfied. While going through the Circular No. 690, dt. 1st Sept., 1994, on this subject reported in (1994) 120 CTR (St) 37 : (1994) 209 ITR (St) 96, the condition No. (iii) is satisfied in view of Govt.'s notification No. GSR 606(E) dt. 9th June, 1989. Para 3 of the Circular dt. 1st Sept., 1994, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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