9911796707
TMI Blog2007 (6) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... f teachers, staff in respect of free/concessional educational facility provided to the wards, a deduction at the rate of Rs. 1,000 per month per child has been claimed. The Assessing Officer accordingly raised a query. In reply thereto, the assessee claimed that above deduction was claimed under rule 3(5) of the Income-tax Rules. The Assessing Officer did not agree with the contention of the assessee. He passed a detailed order holding that deduction claimed by the assessee was not permissible and, therefore, assessee was a defaulter in terms of section 201(1)/201(1A) of the Income-tax Act for not deducting proper tax from salary paid to teachers/staff. He, accordingly, held that there was shortfall in deduction of tax at source by the assessee @ Rs. 12,000 per annum per child from the salary subjected by the TDS under section 192 of the Income-tax Act. After holding the assessee to be a defaulter, demand under section 201(1)/201(1A) was raised in each of the assessment years as per Annex. 'B' of the order passed by the Assessing Officer. 3. The assessee impugned above levies in appeal before the CIT(A). In the course of appellate hearing, assessee relied upon decision of his col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. The Assessing Officer did not change the perquisite value provided by the assessee but disallowed and added back deduction of Rs. 1,000 per month, i.e., Rs. 12,000 per annum while calculating tax deductible at source for which action was taken under section 201(1)/201(1A). 5. Learned CIT(A) obtained comment of the Assessing Officer on the claim of the assessee under rule 3(5) on 'cost' of free education etc., and not cost of running an establishment providing education. Learned representative of the assessee further submitted that as per the working given by the assessee, average monthly cost per student worked out to Rs. 902.27. This being less than Rs. 1,000, no tax was deductible by the assessee. 6. Learned CIT(A) reproduced relevant rule 3(5) of the Income-tax Rules and agreed with his colleague CIT(A)-XIII, New Delhi that the basis of working out the value of perquisite free and concessional education given by the school has to be cost of education and not the fees charged by other schools as is adopted by the assessee and accepted by the Assessing Officer. He, however, did not agree that the perquisite value of facility of free education in the hands of the employee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r free education and deduct tax at source, he found number of students who were provided free educational facilities in different assessment years. The number is recorded in para A-6 of order for financial years 1998-99 to 2004-05 dated 3-6-2005. While calculating total value of perquisite at Rs. 4,84,993, the Assessing Officer accepted that above tax has been paid by the payees and was not recoverable. The Assessing Officer only imposed interest and penalties for not deducting above amount of tax on the assessee. 10. The assessees impugned above addition in appeal before the CIT(A), who, after considering the facts of the case in the light of rule 3(5) of IT Rules, held that the aforesaid rule was entitled to a liberal construction. He further held that the word "cost" in the said rule should be distinguished from word "price" and exemption of Rs. 1,000 per ward per month should also be allowed while computing the perquisite value in respect of free educational facilities. Accordingly, it was held that the Assessing Officer was in error in denying deduction/exemption of Rs. 1,000 per month per child. He further directed that recoveries made from employees/teachers, etc., should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In support of the claim that deduction of Rs. 1,000 per month per child is to be allowed in all cases, Shri Gupta placed reliance on Circular No. 15, dated 12-12-2001 [(2002) 172 CTR (St.) 65] issued by CBDT explaining and clarifying provisions of Finance Act, 2001. He argued that in respect of similar provisions relating to free meals, the circular has provided that deduction of perquisite for free meal is to be charged only where it exceeds Rs. 50. Likewise, in case of aggregate value of gifts, vouchers or token in lieu of gift to be taken as taxable perquisite, only where gifts beyond Rs. 5,000 would only be taxed as perquisite. He read out articles IX and X of sub-para (4) of para 5.1 of the circular. 16. We have given careful thought to the rival submissions of the parties. The assessee, in all the assessment years, claimed rebate of Rs. 12,000 per annum per child for calculation of salary paid to the staff, which was subjected to deduction of tax at source under section 192 of the IT Act. That was held to be wrongly claimed by the Assessing Officer and that was the issue which had emerged from the order of the Assessing Officer. Before the learned CIT(A), it was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racted and rule 3(5) shall not apply if the following conditions are fulfilled: (i) If the cost of such education "free or concessional educational facilities" does not exceed Rs. 1,000; (ii) The educational institution itself is owned by the employer where free educational facilities are provided to the children of the employee or such facilities are provided in any institution by reason of employment of that employee. 18. In support of claim for deduction of Rs. 1,000 per month per child for concessional treatment in all cases, reliance was placed on decision of Tribunal 'H' Bench, New Delhi in the case of Delhi Public School and also on Circular No. 15, dated 12-12-2001. After great deal of deliberation, we are of the view that neither the circular of the Board nor the decision of the Tribunal dated 23-3-2007 render any help to the assessees. Dealing first with the decision of the Tribunal, we find that in the cases before the Tribunal, perquisite value per child per month under rule 3(5) of IT Rules was found by the assessee at Rs. 902.27, the amount being less than Rs. 1,000, which is clearly exempt under proviso to rule 3(5). It was not the issue before the learned Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be." In the case of Keshavji Ravji Co. v. CIT [1990] 183 ITR 1 the Apex Court observed as under: "As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature." In the case of Guru Devdata VKSSS Maryadit v. State of Maharashtra AIR 2001 SC 1980, their Lordships of the Apex Court held as under: "It is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless there is something in the context or in the object of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute." 21. Now, turning to Circular No. 15, dated 12-12-2001 of CBDT, we have considered carefully articles IX and X of sub-para (4) of the Circular. We are unable to agree with the assessee that in respect of perquisite of free meals and gifts, universal exemption is granted up to Rs. 50 or up to Rs. 5,000 in all cases in the circular of CBDT. Such concession, in our considered opinion, is not really spelt out and argument of the learned counsel for the assessee is based on misreading of the circular. Even if the argument is accepted, it cannot be allowed, as provision relating to free or concessional educational facility is also explained in the same circular at article V o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We do not find any force in this contention. It is clear from the above that different methods of computing perquisite value of free or concessional educational facilities to staff are provided under the sub-rule. If the amount of expenditure actually incurred is available, then that amount is to be taken. If such actual expenditure incurred is not available, then perquisite value of cost in similar institution in or near the locality where educational institution in question is situated can be taken. Different computations are separated by the word 'or'. Therefore, the words 'cost' or 'value of perquisite' are used alternatively. The assessee can always insist that revenue should adopt the mode of computation, which would put least burden on the assessee (employer/employee). We direct accordingly. 24. The assessees have also challenged computation of cost of education made by the learned CIT(A). Total cost, both direct and indirect, have been taken into account to work the cost per child. The learned counsel for Delhi Public School has given us chart as to why indirect costs like financial expenses, transport expenses, repair and maintenance expenses, depreciation, etc. canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
