2014 (8) TMI 1147 - AT - Income Tax

TDS u/s 192 - Levy of tax u/s 201(1) and 201(1A) - assessee in default - Assessee while deducting tax at source from salaries, had not considered the perquisite value of the residential accommodation provided by it to its employees - Held that - In the light of the law on Rule 3 of the IT Rules, 1962 as understood by the Hon ble Supreme Court in the case of Arun Kumar (2006 (9) TMI 115 - SUPREME Court) the background in which Rule 3 was enacted w.e.f. 1-4-2001 as explained in the CBDT circular referred to earlier, we are of the view that the applicable rule in the case of the Assessee for the purpose of computing perquisite value would be Sl.No.2 of Table-1 of Rule 3 of the IT Rules, 1962. We uphold the order of the CIT(A) and dismiss the appeals by the Assessee.

Summary

Issues:
Levy of tax under section 201(1) treating assessee as default, levy of interest under section 201(1A) for respective assessment years.

Analysis:

1. The assessee contested the levy of tax under section 201(1) and interest under section 201(1A) for the assessment years, which were upheld by the CIT(A). The issue stemmed from the assessee not considering the perquisite value of residential accommodation provided to its employees while deducting tax at source from salaries. The co-ordinate bench had previously decided against the assessee in similar matters for other assessment years, as noted in the order dated 04-07-2014 in appeal number ITA 1607 to 1611/Bang/2013.

2. The learned counsel for the assessee referred to legal precedents, including the decision of the Hon'ble Supreme Court in the case of Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology, to support the assessee's position. However, the tribunal found that the reliance on the mentioned decision was not applicable to the present case. It was emphasized that public corporations, like the one in question, operate with financial and functional autonomy, and their employees cannot be equated with those holding office or posts under the Union or State.

3. In interpreting Rule 3 of the IT Rules, 1962, the tribunal considered the principles outlined by the eminent author Seervai regarding the status of employees of a statutory corporation. The tribunal upheld the order of the CIT(A) based on the understanding of Rule 3 and the background in which it was enacted. Consequently, the appeals by the assessee were dismissed for the impugned assessment years, and any stay petitions were deemed infructuous.

4. The tribunal's decision was pronounced on 27-08-2014, affirming the levy of tax and interest on the assessee for the respective assessment years. The judgment provided a detailed analysis of legal principles and precedents to support the dismissal of the assessee's appeals in light of the tax treatment related to the perquisite value of residential accommodation provided to employees.

This analysis provides a comprehensive overview of the legal judgment, highlighting the key issues, arguments presented, and the tribunal's decision based on legal interpretations and precedents cited during the proceedings.