2010 (6) TMI 826 - AT - Income Tax

Summary

Issues Involved:
1. Validity of order u/s 201 r.w.s. 192.
2. Applicability of Rule 3(5).
3. Relevance of employer's expenditure.
4. Applicability of proviso to Rule 3(5).
5. Inclusion of activity fees, refreshment charges, and sports fees.
6. Consideration of notional interest on differential security deposits.
7. Deduction of Rs. 1000 while calculating perquisite value.
8. Exemption u/s 10(16) for perquisites.
9. Tax deduction based on bonafide estimate.
10. Levy of interest u/s 201(1A).

Summary:

1. Validity of order u/s 201 r.w.s. 192:
The assessee argued that there was no default u/s 192, and thus, the provisions of section 201 were not applicable. The Tribunal upheld the Assessing Officer's decision, stating that the assessee was in default for non-deduction of tax at source on contributions made towards tuition fees of employees' wards.

2. Applicability of Rule 3(5):
The Tribunal agreed with the CIT(A) that the provisions of Rule 3(5) were applicable. The CIT(A) held that the benefit accrued to employees on concessional caution money payable to them, and the Assessing Officer rightly calculated the perquisite value.

3. Relevance of employer's expenditure:
The assessee contended that since no expenditure was incurred by the employer, the value of perquisites should be determined at Nil. The Tribunal found no evidence of cost incurred by way of interest on caution deposits and directed the exclusion of Rs. 10 per student from the perquisite value.

4. Applicability of proviso to Rule 3(5):
The Tribunal held that for Class KG to V, the perquisite value was below Rs. 1000 and should not be treated as a perquisite. For Class VI to X, the perquisite value was Rs. 1000, and for Class XI & XII, the perquisite value was Rs. 100 per month per student.

5. Inclusion of activity fees, refreshment charges, and sports fees:
The assessee argued that only educational activities fees should be considered. The Tribunal did not specifically address this issue but focused on the overall perquisite value.

6. Consideration of notional interest on differential security deposits:
The Tribunal excluded the notional interest on caution deposits, reducing the perquisite value for Class VI to X to Rs. 1000.

7. Deduction of Rs. 1000 while calculating perquisite value:
The Tribunal directed the Assessing Officer to rework the short deduction of tax, considering the perquisite value for Class XI & XII as Rs. 100 per month per student.

8. Exemption u/s 10(16) for perquisites:
The assessee claimed the concession should be treated as a scholarship and excluded from total income. The Tribunal did not specifically address this exemption.

9. Tax deduction based on bonafide estimate:
The assessee argued that tax was deducted on a bonafide estimate of salary. The Tribunal did not specifically address this argument but focused on the perquisite value and tax deduction.

10. Levy of interest u/s 201(1A):
The Tribunal upheld the levy of interest u/s 201(1A) for short deduction of tax.

Conclusion:
The Tribunal partly allowed the appeals, directing the Assessing Officer to rework the short deduction of tax based on the revised perquisite values. The Order was pronounced in the Court on 25.06.2010.