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TMI Blog1999 (5) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... c. with employees and business associates. This reply was found to be vague and as already stated rejected in the absence of evidence and the actual amount spent was treated as perquisite for inclusion in the salary income for purposes of TDS. It was also noted by the ITO that in the case of Mr. Deepak C. Shriram, Rs. 1000 p.m. was being paid towards electricity expenses and in respect of another employee i.e. Shri P.L. Dhingra, a reimbursement of Rs. 7,939 had been made on the same account for the financial year 1987-88. 3. On further appeals the CIT(A) upheld the view taken by the ITO primarily on the ground that there was no evidence to hold that any part of the expenditure on gas, electricity, and water could be attributed for official purposes vis-a-vis use of residential accommodation provided by the company for such purpose to some extent. 4. Before us theId.counsel for the assessee reiterated the arguments advanced before the tax authorities. He placed on record copy of the order of the Tribunal dated 23-12-91 for assessment year 82-83 in I.T.A. Nos. 3195 & 3196(Del)/88 in the case of Shri Deepak C. Shriram one of the employees and stated to be a "working director' in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas only a rum of Rs. 32,049 was remitted to Govt. A/c. On being asked it has been stated that in case of certain employees tax was excess deducted and deposited to the extent of Rs. 4,090 in the earlier months. Therefore, a sum of Rs. 4,090 out of Rs. 36,139 deducted from the employees in the month of March was refunded to employees in whose case tax was excess deducted in the earlier months and balance Rs. 32,049 was remitted to Govt. A/c. This action of the employer company is not permissible under the Act. In case where tax has been excess deducted is to be refunded by the assessing officer in the individual case. The employer company is not empowered to refund the amount of tax deducted from the Salaries. Accordingly, the employer company is treated in default to the extent of Rs. 4,090. After considering the facts stated above, taxable salary for the purpose of deducting tax at source is worked out as per Annexure-A forming part of this order." 8. For the financial year 88-89, the facts were identical i.e., in the month of Jan., 1989, tax deducted at source was Rs. 34,800 out of which Rs. 30,100 was deposited and the balance of Rs. 4,700 was paid to one Mr. A.K. Taneja in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the employees." 10. The ld. counsel for the assessee at the out set contended that provisions of section 192(3) of the Income-tax Act were required to be interpreted in this case. According to him the company had a work force of 1000 and odd employees out of which only 30 Senior Executives were liable for TDS. It was his argument that the adjustment at the end of each financial year could be an overall one taking into account the total deduction and total deposit of TDS rather than making an adjustment employee wise. As per ld. counsel, there was no reported decision on this issue as per his knowledge although he did cite one of the Hon'ble Andhra Pradesh High Court in the case of P. V. Rajgopal v. Union of India [1998] 233 ITR 678/99 Taxman 475 for the proposition that a shortfall in deduction is not hit by provisions of section 201 and which would apply only if there was no deduction at all or where after deducting the employer fails to remit it to the Government. In concluding his arguments ld. counsel urged that the appellant be not treated as an assessee in default for alleged 'shortfall' in tax deposited and alternatively no penalty or penal interest be levied even if bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year." Ld. counsel wants us to hold by reading the above that the shortfall/ excess can be adjusted on an overall basis i.e., the total deducted for all employees, total liability for all employees and the balance if shortfall to be recovered and if excess to be refunded. We are afraid that this interpretation is quite illogical as section 192(3) is not to be read in isolation with the other sub-sections of section 192 which we have discussed earlier. The crucial word used is "the assessee" i.e., the employee in these sub-sections and one cannot appreciate that when one comes to 192(3) 'the assessee' becomes a group of assessee i.e., all the employees taken together. In our opinion, the adjustment either of increasing or decreasing the TDS is to be made with reference to the estimated income of 'the assessee' i.e., an employee and not all of them taken together deducting from some and refunding to others. Section 192(3) starts with a reference to "the person responsible for making the payment referred to in sub-section (1) or sub-section (2) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y difference of opinion as to the taxability of any item the employer can be declared to be an assessee in default." Their Lordships have held that the expression "as required by or under this Act" refers only to the duty to pay the tax that is deducted and cannot refer to the duty to deduct the tax. In the present case, the company after deducting TDS from certain employees did not deposit the same in the Govt. account as provided by section 200 but refunded the same to certain other employees in whose cases there had been excess deduction in earlier months. As rightly argued by revenue the individual employees were required to claim refunds in their own assessments on the excess TDS. A situation apparently has emerged that the company has given TDS certificates to certain employees showing a particular amount deducted at source whereas a part of the same has not gone to the Govt. account but "refunded" to certain other employees. In the case of the refundees the TDS certificate would show the correct amount after adjusting the refunds although the deduction is more and which is adjusted in the cases of refunders. In other words, the company has assumed the role of the ITO and gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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