2018 (3) TMI 1851 - AT - Income Tax

TDS u/s 192 - Uniform allowance - addition made u/s.201 (1) and the interest charged u/s. 201(1A) - allowances u/s. 10(14)(i) - HELD THAT - AR could not controvert the fact that in the similar facts and circumstances on the similar issue in the case of Baroda division 2013 (2) TMI 303 - ITAT AHMEDABAD the Tribunal has taken a view that the claim is allowing on the basis of declaration furnished by the employee. Obviously, uniform given to an employee for using the same during his duty hours is presumed to be used for the purpose of employment only and when the view has been taken by the Tribunal on the similar issue in the case of Baroda Division of ONGC then, we are unable to see any reason to take a deviated or different view on the same issue. It is pertinent to note that the ld. DR has vehemently relied on the CBDT Circular No.8/12 dated 05.10.2012 which is pertaining to the LTC allowance and the same is not applicable to the facility of uniform to the employees during duty hours. When a circular of CBDT enabling the assessee for non deduction of tax from the reimbursement of allowances on the basis of utilization certificate of employee then the view which has already taken by the Tribunal in assessee s own case supports the contention of the assessee that there was no liability for deduction of tax from the payments made to the employees as uniform allowance. Therefore, in our considered opinion, conclusion drawn by the first appellate authority is correct and sustainable and hence, we are unable to see any reason to interfere with the same and consequently we uphold the same. Accordingly, grounds raised by the Revenue are dismissed.

Summary

Issues:
Appeal challenging CIT(A) order for AY 2010-11 - Deletion of addition u/s. 201(1) & interest u/s. 201(1A) - Allowances u/s. 10(14)(i) exempt - Uniform allowance claim under sec. 10(14)(i) - CBDT Circular No.15/1969 - Tribunal decision on uniform allowance - CBDT Circular No.8/12 - Tax deduction on uniform allowance.

Analysis:
The Revenue filed an appeal against the CIT(A) order for AY 2010-11, specifically challenging the deletion of addition under section 201(1) of the Income Tax Act and interest under section 201(1A). The crux of the issue was the treatment of specified allowances under section 10(14)(i) as exempt to the extent actually incurred for the specified purpose. Grounds raised by the Revenue primarily focused on errors in law and facts related to the allowance and interest charged. The Revenue argued that the CIT(A) erred in allowing the uniform allowance without ensuring it met the conditions specified in section 10(14)(i) of the Act.

During the proceedings, the Departmental Representative contended that the CIT(A) was incorrect in deleting the addition under section 201(1) and the interest charged under section 201(1A). The argument centered on the exemption of specified allowances under section 10(14)(i) only to the extent they were actually incurred for the designated purpose. The Departmental Representative also criticized the allowance of uniform allowance without verifying its compliance with section 10(14)(i) conditions. The Departmental Representative urged the Tribunal to set aside the CIT(A) order.

Conversely, the Senior Counsel representing the appellant supported the CIT(A) order, citing Circular No.15 dated 08.05.1969, which deemed an employee's declaration regarding the use of conveyance for employment as sufficient for tax deduction purposes under section 192. The Senior Counsel highlighted a favorable ITAT decision in the appellant's case regarding uniform allowance reimbursement based on employee declarations. This supported the CIT(A)'s decision to delete the addition made by the Assessing Officer.

After considering the arguments, the Tribunal noted the Tribunal's consistent view in similar cases, particularly the Baroda Division case, where the Tribunal allowed claims based on employee declarations. The Tribunal emphasized that uniforms provided to employees for duty use were presumed for employment purposes, aligning with the previous Tribunal decisions. The Tribunal differentiated the CBDT Circular No.8/12, applicable to LTC allowance, from the uniform facility during duty hours. Ultimately, the Tribunal upheld the CIT(A) decision, emphasizing the absence of tax liability on uniform allowance payments based on the CBDT circular and previous Tribunal rulings.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the correctness and sustainability of the CIT(A) decision. The Tribunal's decision was based on the enabling CBDT circular for non-deduction of tax from allowance reimbursements and the consistent Tribunal stance in the appellant's case. The Tribunal found no reason to interfere with the CIT(A) decision, thereby upholding it and dismissing the Revenue's grounds.