9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (2) TMI 303 - AT - Income TaxNon deduction of TDS from cost of uniform items, stitching charges, washing expenses etc., reimbursed to the employees - demand raised by u/s. 201(1) & 201(1A) - default u/s 194-I, 194J etc. - assessee contested of paying FBT on the same - Held that - FBT is payable on any expenditure incurred on employees welfare excluding those expenditures which are incurred to fulfill any statutory obligation or to mitigate occupational hazards etc. This is not in dispute that FBT was paid by assessee-company on this expenditure and this is also admitted position that this expenditure is in the nature of employees welfare. As per sub-section 2 of section 115WB, it is provided that fringe benefit shall be deemed to have been provided by the employer to its employee if the employer has in the course of business incurred any expenditure on or made any payment for various purpose which includes employees welfare. As per clause-E of this sub-section, it does not come out that it has to be enquired and looked into whether the employee has incurred the amount given to him by the employer for the same purpose for which it was given to the employee. Thus for this reason the employer has paid FBT on a particular expenditure, it is considered as payment of income tax only on deemed income of the employee out of various expenditures incurred by the employer and hence, this is not relevant as to whether the employee has actually incurred those expenditures as intended by the employer in view of this fact that FBT was actually paid by the assessee-company on the impugned expenditure on uniform, washing allowance etc., the same cannot be considered as perquisites in the hands of the employees and therefore, there is no liability of the assessee-company to deduct TDS therefrom. See R & B Falcon (A) Pty Ltd. Versus Commissioner of Income Tax 2008 (5) TMI 2 - SUPREME COURT - in favour of assessee. Non deduction of TDS on conveyance, maintenance, reimbursement expenditure (CMRE) to its employees every month based on their status, designation - Held that - Employer is paying fringe benefit tax on CMRE cannot be ignored. Regarding this expenditure also this could not be shown or established by Revenue that FBT is not payable on this expenditure. This expenditure is also not incurred to fulfill any statutory obligation or to mitigate occupational hazards or fall in any other exclusion as specified in Explanation to clause-E of sub-section-2 of section 115WB. This also is an admitted fact that FBT was paid by the assesseecompany on this expenditure also there is no liability of the assessee-company to deduct TDS therefrom - in favour of assessee. Whether TDS was required to be deducted from hiring charges of CMRE u/s 194C @ 2% or u/s 194I @ 10% - CIT (A) has directed the AO to re-compute the liability after the assessee provides the required details regarding charges paid for CMRE - Held that - As the assessee has submitted that the A O may be directed to decide this entire issue afresh after necessary details are filed by the assessee before him and after providing reasonable opportunity of being heard to the assessee, in the interest of justice, the AO may be directed to do so and hence, order of CIT(A) on this issue is set aside and restore this entire matter back to the file of AO for fresh decision - in favour of assessee for statistical purposes. Payment for hiring of equipments i.e., xerox machine and hiring of car jeeps - TDS u/s 194C or 194I - Held that - This issue is squarely covered in favour of assessee by two judgments of rendered in the case of Swayam Shipping Services P. Ltd. (2011 (1) TMI 797 - GUJARAT HIGH COURT ) and CIT v. Shree Mahalaxmi Transport Co. (2011 (1) TMI 1104 - GUJARAT HIGH COURT ) wherein held that the TDS will be charged u/s 194C. Seismic job service and short hole and hire of plant and equipments - assessee invoking explanation-2 to Section 9(1)(viii) that the impugned payment cannot be considered as fees for technical services - Held that - As clearly noted by the CIT(A) that mining and exploration was business activity of the assessee and the parties to whom the payments has been made for rendering technical services are not in the business of mining but they are in business of providing technical services for pre-mining / preparing for mining i.e. conducting seismic survey and rendering connected services. Hence, the impugned payment is not covered under exception carved out in Explanation- 2 to Section 9(1)(vii). As per CBDT instruction No. 1862 dated 22-10-1990 also, it is opined by Attorney General of India that Explanation-2 to Section 9(1) (vii) covers rendering of services like in parking of training and carrying out drilling operations for exploration or exploitation of oil and natural gas. In the present case, it is not the case of the assessee that impugned payment was made for imparting of training. In the present case project of exploration of oil and natural gas is undertaken by the assessee and not by the recipient. The recipient has only provided technical services and therefore even after considering CBDT instruction No. 1862 dated 22-10-1990, the impugned payment is not covered by Explanation-2 to Section 9(1)(vii) - Thus no case could be made out by assessee that impugned payment is not for fees for technical services or that it falls within the Exclusionary clause as per Explanation-2 to Section 9(1)(vii) - no reason to interfere in the order of CIT(A) and this issue is decided against the assessee.
Issues Involved:
1. Non-deduction of TDS on uniform items, stitching charges, and washing expenses reimbursed to employees. 2. Non-deduction of TDS on conveyance, maintenance, and reimbursement expenditure (CMRE) paid to employees. 3. Classification of payments for hiring equipment and vehicles under sections 194C, 194I, and 194J of the Income Tax Act. Issue-wise Analysis: 1. Non-deduction of TDS on Uniform Items, Stitching Charges, and Washing Expenses: The primary issue was whether the assessee was liable to deduct TDS on payments made to employees for uniform items, stitching charges, and washing expenses. The Assessing Officer (AO) treated these payments as part of salary, requiring TDS under section 201(1) and interest under section 201(1A) of the Income Tax Act. The assessee argued that these were reimbursements for expenses incurred by employees and were subject to Fringe Benefits Tax (FBT), not TDS. The Tribunal held that since FBT was paid on these expenses, they could not be considered perquisites under section 17(2)(vi) and thus, no TDS was required. The Tribunal relied on the provisions of sections 17(2)(vi) and 115WB, and judgments such as R & B Falcon (A) Pty. Ltd. v. CIT. Consequently, the Tribunal allowed the assessee's appeal and directed the deletion of the TDS demand. 2. Non-deduction of TDS on Conveyance, Maintenance, and Reimbursement Expenditure (CMRE): The AO treated CMRE payments as salary, requiring TDS deduction. The assessee contended that these payments were reimbursements for actual expenses incurred by employees and were subject to FBT, not TDS. The Tribunal agreed with the assessee, noting that FBT was paid on these expenses and they did not qualify as perquisites under section 17(2)(vi). The Tribunal upheld the CIT(A)'s decision, which found that CMRE payments were reimbursements and not part of salary, thereby not attracting TDS. The Tribunal dismissed the Revenue's appeal on this issue. 3. Classification of Payments for Hiring Equipment and Vehicles: The AO reclassified certain payments made by the assessee under sections 194C, 194I, and 194J, resulting in a higher TDS liability. The Tribunal examined various payments, including those for seismic job services, AMC contracts, and vehicle hire charges. The Tribunal held that: - Payments for seismic job services and short holes were for technical services and required TDS under section 194J. - Payments for AMC contracts were covered under section 194C, following the Tribunal's decision in Kandla Port Trust v. DCIT. - Payments for vehicle hire charges were covered under section 194C, supported by judgments from the jurisdictional High Court in CIT v. Shree Mahalaxmi Transport Co. and CIT (TDS) v. Swayam Shipping Services P. Ltd. The Tribunal partly allowed the Revenue's appeal concerning seismic job services and short holes, but upheld the CIT(A)'s decision for AMC contracts and vehicle hire charges. Conclusion: The Tribunal allowed the assessee's appeals concerning non-deduction of TDS on uniform items, stitching charges, washing expenses, and CMRE payments. It dismissed the Revenue's appeals on these issues. For the classification of payments for hiring equipment and vehicles, the Tribunal partly allowed the Revenue's appeal, requiring TDS on technical services but upheld the CIT(A)'s decision for AMC contracts and vehicle hire charges. The Tribunal directed the AO to re-compute the liability afresh after providing the assessee an opportunity to furnish necessary details.
|
