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TMI Blog2004 (6) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... t in respect of the short deduction, if any, of the tax deducted at source from such salary income merely because the actual proof/evidence of halving actually incurred the leave travel allowance on travel expenses was not verified by it. As such, we are of the considered opinion that the assessee-company had complied with the requirements of s. 192 and there was no case to treat it as an assessee in default u/s 201(1) as well as to charge interest u/s 201(1A). In that view of the matter, we hold that the learned CIT(A) was fully justified in cancelling the orders passed by the AO u/s 201(1)/201(1A) for the years under consideration and upholding his impugned order, we dismiss the appeals filed by the Revenue. In the result, the appeals of the Revenue are dismissed. - HON'BLE S.K. YADAV, J.M. AND P.M. JAGTAP, A.M. For the Appellant : B.L. Kardam, Adv. For the Respondent : Ajay Vohra, Adv. ORDER 1. These eight appeals filed by the Revenue against the consolidated order passed by the learned CIT(A)-XXV, New Delhi, dt. 17th Aug., 2000, for financial years 1989-90 to 1996-97 involve a common issue relating to alleged short deduction of TDS in respect of salary paid to the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... travelled and incurred expenses in respect thereof. The assessee-company also referred to the circulars issued by CBDT year after year regarding TDS from salaries and pointed out that the same did not contain any instructions for the DDOs to obtain evidence in the form of train/air tickets, etc., while treating the LTA as exempt under s. 10(5) for the purpose of computing estimated income on salaries and deducting tax at source thereon. The assessee-company, therefore, pleaded before the AO that it cannot be treated as a person in default under s. 201(1) in respect of alleged short deduction of tax, if any, on this count and consequently, no interest under s. 201(1A) could be charged. Reliance was placed on behalf of the assessee-company on the following case law in support of its case on this issue: (a) Gwalior Rayon Silk Co. Ltd. vs. CIT (1983) 37 CTR (MP) 351 : (1983) 140 ITR 832 (MP) (b) Orient Paper Industries Ltd. vs. CIT 68 Taxation 32 (MP) (c) Eicher Good Earth Ltd. vs. ITO (1998) 98 Taxman 229 (Del)(Mag) (d) Nestle India Ltd. vs. Asstt. CIT (1997) 61 ITD 444 (Del) (e) ONGC vs. ITO (1998) 60 TTJ (And) 408. 3. The AO, however, did not find the aforesaid explanation furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had referred to the CBDT circular issued every year to provide guidance to the DDOs. The Court had observed that the circulars advised the drawing and disbursing authority to satisfy itself that the computation of taxable salary income is in order with reference to deduction available to the employee. This does not convert him into an ITO or an adjudicating authority as many erroneously believe. All that it means is that the assessee must declare his claim so that with reference to s. 201, proviso, he can say that he had good and sufficient reasons not to deduct tax at source in respect of any income to avoid imposition of penalty. The appellant had accepted the claim of the employees of having performed journey and allowed them the leave travel allowance and considered the same to be exempt from taxation as per s. 10(5) r/w r. 2B of the IT Rules. The employer has no reason to suspect or doubt that the declarations given by the employees are not correct, particularly when the Tax Department has not prescribed any specific details or format in which the declarations are to be submitted by the employees. Further, it is for the AO adjudicating in the individual assessment of the empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treating the LTA as exempt for the purpose of TDS without actually verifying the incurring of such expenditure on evidence. He contended that this vital aspect, however, was not fully appreciated by the learned CIT(A) while allowing relief to the assessee by his impugned order and urged that the same is, therefore, liable to be set aside restoring back the order of the AO passed under s. 201(1)/201(1A). 6. The learned counsel for the assessee, on the other hand, reiterated all the arguments raised before the authorities below and further submitted that the leave travel allowance granted to employees in the years under consideration was treated as exempt by the assessee-company for the purpose of estimating their salary income and deducting tax thereon after satisfying itself that a leave of minimum five days had been taken by the concerned employees and declaration of having spent the amount of such allowance on the actual travel was furnished by them. He contended that the estimate of salary income thus was made by the assessee-company for the purpose of tax deduction at source on the basis of bona fide belief that the declarations filed by the concerned employees were correct and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed employees had availed leave of minimum five days for the purpose of their travel and declarations were obtained from them to the effect that the allowance so granted was actually spent by them on such travel. He has also filed copies of some of such declarations obtained from the concerned employees at pages Nos. 27 to 36 of his paper book which show that a categoric declaration was obtained from the concerned employees of having incurred the leave travel expenditure and in the said declaration the employees had also undertaken to produce the receipts/evidence in support of such expenditure as and when required. The learned counsel for the assessee has also invited our attention to the circulars issued by CBDT to the DDOs from time-to-time in connection with the tax deduction from salaries to show that they were not specifically required even by CBDT to verify the evidence regarding the incurring of actual expenditure by the concerned employees before treating the LTA as exempt under s. 10(5) for the purpose of estimating the salary income and deducting tax therefrom. Having perused these declarations filed by the concerned employees as well as the Board's instructions issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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