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2012 (12) TMI 490 - AT - Income TaxTDS u/s 192 - Assessee in default - Perquisite u/s 17(2) - retrospective amendment - held that - the Legislature while retrospectively amending Section 17(2)(ii) of the Act has not chosen to amend Section 192 or Section 201 of the Act. Therefore, the employer assessee is not hit by the retrospective insertion of Explanation to Section 17(2) of the Act. Section 192 deals with the deduction of tax at source. Perquisite is actually not a payment of salary but a benefit not in terms of money, there was no provision initially to deduct tax at source. It is provided by section 192(1B) by the Finance Act, 2002 with effect from Ist June, 2002 and as to computation of income of perquisite, the provision in section 192(1A), also by the same Act with effect from the same date. This tax, at the option of the assessee, can be paid on the whole or part of such income without making any deduction therefrom at the time when it was otherwise deductible u/s 192. A duty is also cast upon the person deducting tax u/s 200. Rule 3 of IT Rules, 1962 provides for the time and mode of payment to the Government account of tax deducted at source. As per the provisions of section 200, the tax deducted at source is a mode of payment of tax on the income of the person on whose income it is deducted i.e. employees in this case. - Decided in favor of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Non-maintainability of the appeal due to delay. 3. Legality and jurisdiction of the ex-parte order passed by the TDS Officer. 4. Impact of the stay order by the Hon'ble Jurisdictional High Court on TDS liability. 5. Applicability of TDS provisions under Section 192 during the relevant Financial Years. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The assessee argued that the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in law and on facts by holding the appeals non-maintainable due to being filed beyond the statutory period and by declining the application for condonation of delay. The Tribunal noted that the CIT(A) should have considered the reasons for the delay and whether they constituted a sufficient cause for condonation. 2. Non-maintainability of the Appeal Due to Delay: The Tribunal observed that the CIT(A) not only held the appeals non-maintainable due to delay but also proceeded to decide the appeals on merits. This was found to be an error in law and on facts, as once the appeals were deemed non-maintainable, the CIT(A) should not have proceeded to decide them on merits. 3. Legality and Jurisdiction of the Ex-parte Order Passed by the TDS Officer: The assessee contended that the ex-parte order passed by the TDS Officer was illegal, void, and without jurisdiction. The Tribunal examined the facts and found that the TDS Officer had passed the order without appreciating the stay order from the Hon'ble Jurisdictional High Court, which was binding on both the Income Tax Department and the appellant. 4. Impact of the Stay Order by the Hon'ble Jurisdictional High Court on TDS Liability: The Tribunal noted that the Hon'ble High Court had issued an interim order directing that the salary to the members of AISBOC (employees) be paid without assessing the value of perquisites for TDS purposes. This stay order was in operation during the relevant period, and thus, the assessee could not be held liable for non-deduction of TDS under Sections 201 and 201(1A) of the Income Tax Act, 1961. 5. Applicability of TDS Provisions Under Section 192 During the Relevant Financial Years: The Tribunal analyzed the provisions of Section 192, which deals with the deduction of tax at source on salaries. It was highlighted that the retrospective amendment in Section 17(2) by the Finance Act, 2007, which introduced a deeming fiction regarding perquisites, did not retrospectively amend Section 192. The Tribunal relied on judicial precedents, including the decisions in the cases of Canara Bank, BSNL, and Western Coal Field, which supported the view that the employer could not be treated as an assessee in default for not deducting TDS retrospectively. The Tribunal concluded that the assessee was not liable to deduct TDS on the perquisites provided to its employees during the relevant assessment years due to the stay order from the Hon'ble High Court and the absence of a retrospective amendment in Section 192. Consequently, the appeals of the assessee were allowed.
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