2015 (11) TMI 1212 - HC - Income Tax

Short deduction of TDS - TDS on perquisite - free Inter Airline tickets provided to the employees of the Assessee airline by other airlines in view of arrangements between the airlines - ITAT deleted the addition - Held that - The Revenue has been unable to explain how the free inter-airline tickets provided to the employees of the Assessee by some other airlines can be a perquisite provided by the Assessee. In the circumstances, the Court finds that no error has been committed by the ITAT in deciding the issue in favour of the Assessee, thereby deleting the addition made by the AO. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of the term "perquisite" under the Income Tax Act, 1961 in relation to free inter-airline tickets provided to employees.

Analysis:
The case involved an appeal by the Revenue against an order passed by the Income Tax Appellate Tribunal regarding the treatment of free/concessional airline tickets given to employees of the Assessee airline by other airlines. The Assessing Officer considered these tickets as a perquisite and added the value to the Assessee's income, resulting in a tax deduction shortfall. The Assessee contended that since the tickets were received from other airlines, they should not be considered a benefit from the Assessee. The CIT (A) accepted this argument and deleted the additions. Subsequently, the ITAT also ruled in favor of the Assessee, stating that the benefit from the free air tickets could not be classified as a perquisite provided by the Assessee.

The key question framed for consideration was whether the ITAT was correct in holding that the free inter-airline tickets were not a perquisite, thus absolving the Assessee from liability to deduct tax at source. The Court found that the Revenue failed to establish how these tickets provided by other airlines could be considered a perquisite from the Assessee. Consequently, the Court upheld the decision of the ITAT, ruling in favor of the Assessee and dismissing the appeal by the Revenue.

In conclusion, the Court affirmed that the free inter-airline tickets received by the employees of the Assessee from other airlines did not constitute a perquisite from the Assessee, leading to the deletion of the addition made by the Assessing Officer. The judgment highlights the importance of correctly interpreting the term "perquisite" under the Income Tax Act and the need for a clear nexus between the benefit received and the employer to establish tax liability.