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TMI Blog2008 (7) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax liability of the employee as provided in s. 199 of the Act. Therefore in our opinion when the time prescribed for deduction had expired the employer cannot be asked to deduct tax and pay it to the Government. The term 'at source' also suggests that the deduction has be at that time, namely, when the payment is made or the perquisite is granted and if the source time had expired and at that time there was no liability to deduct tax, there cannot be a liability to deduct tax afterwards in absence of the source at which it was to be deducted. Retrospective amendment is to deem the value of perquisite and not to deduction of tax which was to be made at the time of payment or granting the perquisite. This liability in our opinion cannot relate back as one cannot go back in the matter of time nor the wheels of time can be retrieved. The observation of the CIT(A) that these cases are not applicable because they were dealing with a penal levy and not to the valuation of perquisite which was not penal in nature, has therefore little force. Also because, insofar as, the assessee was concerned, it could not have deducted tax, because under s. 192, it is required to be deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the employer to deduct tax at source on an amount which was in dispute as a perquisite by the employer. Even where there is a difference of opinion due to which tax has not been deducted, s. 201/201 (1A) cannot be invoked; it would apply with greater force where there is no perquisite on the date of deduction of TDS. Thus, even on this count, the order under appeal is bad in law, since the applicability of s. 17(2)(ii) of the Act in the present case was highly debatable and accordingly, the order passed by the AO treating the assessee-in-default for not deducting TDS on such alleged perquisite is not in accordance with the law. The fact that retrospective amendment was brought in s. 17(2) also fortifies the same. Hence, the principle laid down by the Andhra Pradesh High Court squarely applies to the present case. No liability is created on the employer to deduct tax at source by any retrospective legislation, like that of deeming perquisite. The deeming in valuation of perquisite was not there at the time the assessee was required to deduct tax and therefore, there was no liability to deduct tax on such deemed value of perquisite and consequently the assessee cannot be tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. Therefore so far the assessee as employer is concerned he is not hit by the retrospective insertion of Expln. 1 to s. 17(2) thereto in absence of any such extension of the retrospective effect either in s. 192 or s. 201 of the Act. In the result, the appeals are allowed. - Hon'ble Judges R.P. Garg, Vice President and Hemant Sausarkar, Judicial Member For the Assessees : S. K. Jaiswal and M. Mani For the Department : Santosh Kumar ORDER These 56 appeals are by the assessees against the orders of the CIT(A). Since common grounds are raised in all these appeals, the same are disposed of by this common order for the sake of convenience. 2. The Committee on Disputes (COD) has permitted the assessees public undertakings to pursue these appeals. Hence, these appeals are heard and are being disposed of. The five common grounds arose before us on the facts and in the circumstance of the case: (i) Was there any perquisite provided under s. 17(2)(ii) of the Act? (ii) Could there be a valuation under r. 3 in absence of any perquisite? (iii) Did the assessee fail to deduct tax under s. 192 of the Act? (iv) Would the assessee be an &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e r. 3 and the rent charged by the assessee in providing residential accommodation to its employees, is a concession in the matter of rent and therefore a perquisite, under s. 17(2) of the Act, and consequently, the assessee was required to deduct tax at source on this perquisite and since it did not, it is an assessee-in-default under s. 192 r/w s. 201 (1) and also liable to interest under s. 201 (1A) of the IT Act, 1961. 6. The assessees resisted and stated that just because the employee was paying a rent which is less than 10 per cent or 7.5 per cent of the salary, it could not be said that there was a 'concession in the matter of rent' and hence r. 3 had no application. They relied on Steel Executives Association vs. Rashtriya Ispat Nigam Ltd. (2000) 160 CTR (AP) 38 : (2000) 241 ITR 20 (AP) stating that where the employer constructs a large number of residential accommodation for its employees in a particular location suitable for its convenience, the fair market rent of such accommodation cannot be determined with reference to the rent of any other kind of accommodation available in the town even if it happens to be nearby. The regular residences in a town have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employee, there would be no concession and, accordingly, no question of valuing the concession will arise. In Canara Bank itself, there was a decision by the High Court, likewise. 8. The AO held that adoption of the concept of normal rent as the benchmark for determination of fair rent on the facts and in the circumstances of the cases on the basis of the r. 3 then in force was quite justifiable, but the new rule as introduced w.e.f. 1st April, 2001 is entirely different and has no nexus with the previous rule or the fair rent at all. 9. Therefore, according to him, in the present rule, only 2 classes of employees have been prescribed-Government employees and non-Government employees Referring to the CBDT Circular No. 6 of 2004, dt. 6th Dec., 2004 [(2005) 193 CTR (St) 18] he observed that, for non-Government employees the valuation of perquisites in respect of accommodation would be at prescribed rates i.e., 10 per cent of salary in cities having population exceeding 4 lacs as per 1991 census and 7.5 per cent of salary for other places as reduced by the rent paid by the employees. He, therefore held that now, there is no scope for determination of fair rental value, nor the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salary income under s. 17(2)(ii) of the Act. 2.24 The appellant has stated that it recovers a fixed license fee/rent from its employees and there is no concession in the matter of rent. The contention of the appellant is found to have no merit in it. It is pertinent to mention here that as per the amended r. 3 of IT Rules w.e.f. 1st April, 2001, there is no scope for determination of fair rental value as per old r. 3. Further, the value of concession in the new scheme has been provided explicitly in the rule itself. The matter as to what constitutes 'concession in the matter of rent' has also been clarified beyond doubt with the insertion of Explns. 1 to 4 to s. 17(2)(ii) with retrospective effect vide the Finance Act, 2007. The said Explanation clarifies that the concession in the matter of rent shall be deemed to have been provided where the value of accommodation determined at the specified rate exceeds the rent recoverable from, or payable, by the assessee in a case where an unfurnished accommodation is provided by any employer other than the Central Government or any State Government and the accommodation is owned by the employer. In the appellant's case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law which existed as on the date of filing the TDS return. In support of its contention, the appellant has quoted the case of CIT vs. Hindustan Electro Graphites Ltd. (2000) 160 CTR (SC) 8 : (2000) 243 ITR 48 (SC). Bharat Conductors (P) Ltd. vs. CIT (1999) 154 CTR (Kar) 535 : (1999) 238 ITR 89 (Kar), Deversons (P) Ltd. vs. Chairman, CBDT (2004) 192 CTR (Guj) 400 : (2005) 273 ITR 414 (Guj), Supdt. of Taxes, Dhubri Ors. vs. Onkarmal Nathmal Trust Ors. 1975 CTR (SC) 172 and Standard Chartered Bank vs. Directorate of Enforcement (2005) 195 CTR (SC) 465 : (2005) 275 ITR 81 (SC). After perusal of said case laws, I am of the view that the ratio of these judgments is not applicable to the facts and circumstances of the appellant's case. The present case is not a case where a law is amended retrospectively creating liability of tax, which would be a sufficient cause for not charging interest. The liability of tax was there in this case from day one. It is reiterated that prior to 1st April, 2001, the value of concession had to be worked out on the basis of fair rental value and was explicit in the r. 3 itself whereas in the new r. 3, the value of concession has been intrinsically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference between the rate of interest charged by the financial institutions and the rate of interest at which the house building loans were generally sanctioned by the employer was reimbursed to the employees. The Taxation Laws (Amendment) Act, 1984 introduced an amendment w.e.f. 1st April, 1985 inserting sub-cl. (vi) of cl. (2) of s. 17 to include as a perquisite, the amount of interest where the loan is given interest-free and the amount of difference between the interest charged and the notified rate where the loan is given at the rate less than the notified rate prescribed for Central Government house building advance. The same was subsequently deleted by the Finance Act 1985, with effect from the same date. However, action was already taken under s. 201 against the employers for failing to treat the interest subsidy as perquisite while deducting the tax at source. The employees challenged the issue by claiming the interest on the reimbursement is not a perquisite. The Court noted that the amendment inserted w.e.f. 1st April, 1985 was subsequently deleted by the Finance Act, 1985 with effect from the same date. The Court, therefore, gave direction to the respondents not to trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of appellant, it is an admitted fact that the residential accommodation has been provided to the employees and hence, the value of perquisites in the form of 'concession of rent' was required to be added in the income of the employee for taxation. This would be same as in the case of other perquisites, such as concession in matter of interest on loan etc. provided to its employees. The appellant has not estimated the salary bona fidely and honestly because it has not added the value of perquisites, on account of accommodation provided, in the income of the employees for taxation. Therefore, there is short deduction of tax and the provisions of section of s. 201(1) are invocable in this case. 2.31 In view of the above decision, I am of the considered View that the appellant had provided perquisites in the form of concession of rent to its employees which is chargeable to income-tax as per provisions of s. 17(2)(ii) r/w Explns. 1 to 4 of the Act. Therefore, in the given facts and circumstances, the appellant was statutorily required to make deduction of TDS in respect of the aforesaid perquisites as per relevant provisions of s. 192 of the Act. Considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isite under r. 3 r/w s. 17(2)(ii) would not arise. Referring to the Supreme Court decision, in the case of Arun Kumar Ors., it is submitted that accommodation at specified rent by the assessee was a compulsion for the employees and not a concession to them as held by the Revenue authorities. The AO has worked out perquisite by taking 10 per cent on a straightjacket formula and assumed that as the rent of the accommodation. That may not be true. It is further submitted that by retrospective amendment, at best, an employee could be charged and not the employer to deduct lax on such perquisite, which was not there as per the law, as it stood at the relevant time. The employer cannot be made liable to, deduct tax retrospectively. In this connection, the counsel referred to the decision of the Supreme Court in the case of Life Insurance Corporation of India vs. CIT (1996) 133 CTR (SC) 82 : (1996) 219 ITR 410 (SC) wherein it is held that the law does not contemplate or require the performance of an impossible act-lex non cogit ad impossibilia. 13. Reference is also invited to CIT vs. Hindustan Electro Graphites Ltd. (2000) 160 CTR (SC) 8 : (2000) 243 ITR 48 (SC) wherein it was obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot possibly perform. The Supreme Court in the case of Supdt. of Taxes, Dhubri Ors. vs. Onkarmal Nathmal Trust Ors. 1975 CTR (SC) 172 held that where the law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over there, the law will in general excuse him, and though impossibility of performance is in general no excuse for not performing an obligation with a party has expressly undertaken by contract, yet when the obligation is one implied by law, impossibility of performance is a good excuse. In accordance with the maxim of law, Lex non cogit ad impossibilia, if it appears that the performance 6f the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of god or the King's enemies, these circumstances will be taken as a valid excuse. It is therefore submitted that no amount can be deducted at source nor could there be any liability under s. 201(1) of the Act or interest under s. 201(1A) of the Act as the liability, if any, was created by virtue of retrospective amendment in s. 17(2) of the Act brought into by Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if amendment has been brought into with retrospective effect, the assessee cannot be treated as assessee-in-default retrospectively and interest under s. 201(1A) cannot be charged on a liability which came into existence by a retrospective amendment. The assessee has all along acted in a bona fide manner and in accordance with the law which existed as on the date of filing TDS return and merely because the law has been amended retrospectively, the assessee cannot be treated as assessee-in-default and charged interest which is penal in nature for no fault of its own. 21. Reliance was placed on the decision of Andhra Pradesh High Court in P.V. Rajagopal Ors. vs. Union of India (1999) 151 CTR (AP) 442 : (1998) 233 ITR 678 (AP) wherein it was held that the Department could not coerce the employer to deduct tax at source on an amount which was in dispute as a perquisite by the employer. Where there is a difference of opinion due to which tax has not been deducted, s. 201/201(1A) cannot be invoked which can be done only where there is non-deduction of TDS. Thus, even on this count, the order under appeal is bad in law since the applicability of s. 17(2)(ii) of the Act in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to mining and extraction of coal/functioning and operation of the mines and in view thereof no concession was given to the employees by providing accommodation. Accordingly, the provisions of s. 17(2)(ii) of the Act do not apply and consequently the provision of r. 3 cannot be applied; that neither the AO nor the CIT(A) have given a finding that there was any concession in the rent to the employees by way of providing accommodation. The AO merely relied on the provision of r. 3 of the IT Rules, 1962 and treated the assessee as an assessee-in-default for the purpose of s. 201 of the Act; that the present orders under s. 201(1)/201(1A) r/w s. 192 of the IT Act, treating the assessee as an 'assessee-in-default' are invalid and unsustainable in the eye of law. Four Explanations are added to s. 17(2) of the Act by the Finance Act, 2007 in order to over rule the decision of the Supreme Court in Arun Kumar Ors. 24. Learned Departmental Representative, on the other hand, submitted that High Court stay was vacated on 12th Sept., 2003, and therefore, assessee was required to deduct tax thereafter, as the matter was decided against assessee. Referring to the Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Revenue authorities are right in holding the assessee to be assessee-in-default within the meaning of s. 201(1) for failure to deduct tax at source, which was otherwise deductible. Therefore, their orders deserve to be upheld in law and all the appeals of the assessee should be dismissed. 27. We have heard parties and considered their rival submissions. Salary includes perquisite under s. 17(1)(iv). The term perquisite is defined in s. 17(2) and it includes- (i) The value of rent free accommodation provided to the assessee by his employer; (ii) The value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer; (iii) to vi) ........ 28. The method of valuation of the perquisites has been provided in r. 3 of the IT Rules, 1962. Originally the value of accommodation provided was determined in accordance with rules old r. 3 which read as under: For the purpose of computing the income chargeable under the head 'Salaries', the value of the perquisite (not provided for by way of monetary payment to the assessee) mentioned below shall be determined in accordance with the following clauses, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sum arrived at on the basis provided above exceeds the fare rental value of the accommodation, the value of perquisites to the assessee shall be limited to such fare rental value: (8) ......... Explanation 1: 'Salary' means......... Explanation 2: For the purpose of sub-cl. (iii), the fare rental value of-the accommodation, which is not furnished, shall be the rent which a similar accommodation would realise in the same locality or the municipal valuation in respect of the accommodation, whichever is higher. (b) the value of residential accommodation provided at a concessional rent shall be determined at the sum by which the value computed in accordance with cl. (a) as if the accommodation were provided free of rent, exceeds the rent payable by the assessee for the period of his occupation during the relevant previous year. 29. The said rule had been amended w.e.f. 1st April, 2001 vide CBDT's Notification No. S.O. 940(E), dt. 25th Sept., 2001. The new amended r. 3 reads as: (1) The value of residential accommodation provided by the employer during the previous year shall be determined on the basis provided in the table below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the rent, if any, actually paid by the employee . . . Provided that nothing contained in this sub-rule would be applicable to any accommodation located in a 'remote area' provided to an employee working at a mining site or an onshore oil exploration site. or a project execution site or an accommodation provided in an offshore site of similar nature:............... 30. This proviso was substituted by the IT (Thirteenth Amendment) Rules, 2004, w.e.f. 1st Oct., 2004 and it reads as under: Provided that nothing contained in this sub-rule shall apply to any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an offshore site which,- (i) being of a temporary nature and having plinth area not exceeding 800 sq. ft., is located not less than eight kilometres away from the local limits of any municipality or a cantonment board; or (ii) is located in a remote area. 31. Three Explanations numbering 1 to 3 are inserted to s. 17(2)(ii) by Finance Act, 2007 with retrospective effect from 1st April, 2002. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied rate' shall be- (i) fifteen per cent of salary in cities having population exceeding twenty five lakhs as per 2001 census; (ii) ten per cent of salary in cities having population exceeding ten lakhs but not exceeding twenty-five lakhs as per 2001 census; and (iii) seven and one-half per cent of salary in any other place. 34. Both the asses sees have provided their own accommodation to the employees located nearby the working place. In Western Coalfields, it was at Makardhokda sub-area and other areas. Both have recovered rent in relation thereto on same standard without any discrimination as per Government of India norms. In Western Coaldfields, the rent was recovered on floor area basis from the executive employees as fixed by the assessee as per Coal India circular based on the recommendation of 4th Pay Commission and from the non-executive employees as per assessee's own circular. It is an admitted fact that principle adopted in the matter of fixing the rent for accommodation provided was in no way dissimilar to those adopted by the Central Government. Licence fee is fixed for each type of accommodation allotted to the category of employees and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d standard rent as fixed by the appropriate authority was realized from the employee, then the question of perquisite did not arise and income-tax was not leviable on the notional perquisite value of the accommodation. 37. Bombay Tribunal in the case of State Bank of India vs. Asstt. CIT (2007) 109 TTJ (Mumbai) 750 : (2007) 106 ITD 589 (Mumbai) has held that no perquisite would arise under s. 17(2)(ii), if uniform standard rent is charged from employees similarly placed and that r. 3 can be applied only in situations where there is perquisite chargeable to tax under s. 17(2)(ii), and if there is no perquisite, the question of valuation under r. 3 will not arise. The Tribunal has relied on the decision of Calcutta High Court in the case of ITO vs. All India Vijaya Bank Officers' Association (1997) 141 CTR (Cal) 126 : (1997) 225 ITR 37 (Cal) wherein it has held that the rate charged for realization of rent by the bank concerned, from all the employees, who were similarly situated and was placed uniformly, and there was no discrimination, the recovery of tax was unjustified. 38. The Revenue's claim as canvassed by Shri Santosh Kumar, the learned Departmental Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt', 'reasonable rent', 'market rent' or 'standard rent'. When the rule is amended and the concept of 'fair rental value' has been done away with and the only method which has been adopted is to calculate the rent on the basis of population of the city in question, it cannot be successfully contended that the intention of the rule making authority was to afford an opportunity to the assessee to convince the AO that the rent recovered by the employer from his employee, was not in the nature of concession. Nor would a Court of law, by interpretative process, grant such opportunity to the assessee so as to enable him to convince the AO that the rent fixed was not covered by s. 17(2)(ii) of the Act and therefore was not a 'perquisite'. We are, therefore, unable to accept the arguments of Mr. Salve and allow import of the principles of natural justice in r. 3. 41. The submission of the Addl. Solicitor General was accepted by the Court by observing in para 69 as under: In our opinion, the submission of Mr. Parasaran, the learned Addl. Solicitor General deserves to be accepted that when the concept of 'fair rent', 'market r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed into service and before calculation of concession as per r. 3 is made, the authority exercising power must come to a positive conclusion that it is a concession, 'concession' in our judgment is, thus a foundational, fundamental or jurisdictional fact. 43. In the case of Arun Kumar Ors. the facts were that for the purpose of providing accommodation to its employees, TISCO had constructed several residential quarters in the township of Jamshedpur and around plants. Such residential quarters were allotted to TISCO's employees as also to other agencies including employees of the Central/State Governments (who were either transferred or posted in Jamshedpur). TISCO used to fix annual license fees for each such accommodation @ 5 per cent of the capital cost. No perquisite was being computed under s. 17(2)(ii). After r. 3 was amended, TISCO issued a letter informing its employees about amended r. 3 and consequent valuation of accommodation provided as perquisite under s. 17(2)(ii). Being aggrieved, the employees of TISCO challenged the same with the two-fold argument viz.: (1) Rule 3 conferred arbitrary and unfettered powers on the Revenue and thus is inconsistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act does not contain any 'deeming clause' that once it is established that an employee is paying rent less than 15 or 10 or 7.5 per cent of his salary (as applicable), it should be deemed to be a 'concession' within the meaning of the Act and such employee must be deemed to receive a 'concession' in the form of 'perquisite' in the payment of rent. An employer may provide residential accommodation to his employees for several reasons. It is also possible that for making available staff quarters, colonies or accommodations, State Governments or Central Government may provide land to public sector undertakings, companies or corporations at a concessional rate imposing appropriate conditions including amount of rent, if any, to be recovered by the employer. 45. The Supreme Court concluded the matter in paras 83 and 84 as under: In our opinion, the submission of Mr. Salve is well founded and deserves to be accepted that 'concession' under sub-cl. (ii) of cl. (2) of s. 17 of the Act is a Jurisdictional fact'. It is only when there is a 'concession' in the matter of rent respecting any accommodation provided by an employer to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es cannot be held arbitrary, discriminatory or ultra vires Art. 14 of the Constitution nor inconsistent with the parent Act [s. 17(2)(ii)], it is in the nature of a 'machinery provision' and applies only to the cases of 'concession' in the matter of rent respecting any accommodation provided by an employer to his employees. Whether or not Parliament could have in the exercise of legislative power created a 'deeming fiction' as to concession in the matter of rent in certain circumstances (for which we express no final opinion), no such deeming provision is found in the Act. It is, therefore, open to the assessee to contend that there is no 'concession' in the matter of accommodation provided by the employer to the employee and the case is not covered by s. 17(2)(ii) of the Act. 47. Even after amendment of r. 3 in 2001, the fundamental question of applicability of s. 17(2), as observed by the Supreme Court, still remains, and for that, there must be a concession in the matter of rent. The word concession has neither been defined in the Act nor in the Rule, and according to dictionary meaning it has to be 'a thing that is conceded'; ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing contained in this sub-rule would be applicable to any accommodation located in a 'remote area' provided' to an employee working at a mining site or an onshore oil exploration site, or a project execution site or an accommodation provided in an offshore site of similar nature; or in the amended proviso w.e.f. 1st Oct., 2004. Providing that nothing contained in this sub-rule shall apply to any accommodation provided to an employee working at a mining site or an onshore oil exploration site or a project execution site, or a dam site or a power generation site or an offshore site which, being of a temporary nature and having plinth area not exceeding 800 sq. ft., is located not less than eight kilometers away from the local limits of any municipality or a cantonment board; or is located in a remote area. 51. The learned Departmental Representative then attempted to also justify the action of the AO by the amendment with retrospective effect in s. 17(2) deeming the difference in amount at specified rate and rent charged from the employees as perquisite by inserting Expln. 1. The Explns. 1 and 4 to s. 17(2) are referred for contending the concession in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be paid on the whole or part of such income without making any deduction therefrom at the time when it was otherwise deductible under s. 192. Therefore, if there is a perquisite there is a responsibility to deduct tax of the employer. Secs. 192(1), 192(1A) and 192(1B) read as under,:- 192 (1) Any person responsible for paying any income chargeable under the head 'Salaries' shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made on the estimated income of the assessee under this head for that financial year. (1A) Without prejudice to the provisions contained in sub-s. (1), the person responsible for paying any income in the nature of a perquisite which is not provided for by way of monetary payment, referred to in cl. (2) of s. 17, may pay, at his option, tax on the whole or part of such income without making any deduction therefrom at the time when such tax was otherwise deductible under the provisions of sub-s. (1). (1B) For the purpose of paying tax under sub-s. (1A), tax shall be determined at the average of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the tax: Provided that no penalty shall be charged under s. 221 from such person. principal officer or company unless the AO is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax. (1A) Without prejudice to the provisions of sub-s.(1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid and such interest shall be paid before furnishing the quarterly statement for each quarter in accordance with the provisions of sub-s. (3) of s. 200. (2) Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub-s. (1A) shall be a charge upon all the assets of the person, or the company, as the case m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of the Jt. CIT- (a) in cases falling under sub-cl. (i), permit any person to pay the income-tax deducted from any income by way of interest, other than income by way of interest on securities or any income by way of insurance commission or any income by way of commission or brokerage referred to in s. 194H quarterly on 15th July, 15th October, 15th January and 15th April; and (b) in cases falling under sub-cl. (ii), permit an employer to pay income-tax deducted from any income chargeable under the head 'Salaries' quarterly on 15th June, 15th September, 15th December, and 15th March. (1A) All sums paid under sub-s. (1A) of s. 192 shall be paid to the credit of the Central Government- (a) in the case of payment on behalf of the Government, on the same day. (b) in all other Cases, within one week from the last day of the month on which the income-tax is due under sub-s. (1B) of s. 192. (2) The person responsible for making the deduction from any income chargeable under the head 'Salaries' or, the person who pays tax, referred to in sub-s. (1A) of s. 192 or in cases covered by sub-s. (5) of s. 192, the trustees shall pay the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the Government. The term 'at source' also suggests that the deduction has be at that time, namely, when the payment is made or the perquisite is granted and if the source time had expired and at that time there was no liability to deduct tax, there cannot be a liability to deduct tax afterwards in absence of the source at which it was to be deducted. Retrospective amendment is to deem the value of perquisite and not to deduction of tax which was to be made at the time of payment or granting the perquisite. This liability in our opinion cannot relate back as one cannot go back in the matter of time nor the wheels of time can be retrieved. 61. Saddling the liability on the assessee employer by retrospective amendment and treating him to be an 'assessee-in-default', would amount to be or akin to a penal liability, and consequently, a penal law cannot generally have retrospective operation. Article 20 of the Constitution imposes two limitations on the retrospective applicabi1ity of penal laws-first, the making of an act an offence for the first time and then making that law retrospective is prohibited; second, in the infliction of a penalty greater than that whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to, wholly. The section expressly makes the assessee liable under the amended provision to pay the tax within the period of 30 days from the date of the Presidential Assent to the Finance Bill, 2002. It is admitted that the Finance Bill, 2002 was assented to on 11th May, 2002 by the President. In the circumstances, the appellant was entitled to a period of thirty days thereafter to make payment of the tax. Needless to say, if it did not make payment within thirty days from 11th May, 2002, it would be liable to pay interest at the rate specified after that date. 64. Similarly the decision of the Hon'ble Karnataka High Court in the case of Bharat Conductors (P) Ltd. held on a similar issue relating to charging of interest, as follows: The law is amended retrospectively creating liability of tax then, in my opinion, it would be sufficient cause for not charging the interest under s. 139(8). In these circumstances, the interest levied in respect of income because of retrospective amendment for sale of import entitlement requires complete waiver. Interest under s. 217 on the same reasoning is also to be waived in respect of the income derived by the assessee on sale of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erform as held by the Supreme Court in the case of Supdt. of Taxes, Dhubri Ors. vs. Onkarmal Nathmal Trust Ors. The Supreme Court in the said case has held as follows: Where the law creates a duty or charge, and the party is disabled to perform it, without-any default in him, and has no remedy over, there the law within general excuse him, and though impossibility of performance is in general no excuse for not performing an obligation with a party has expressly undertaken by contract, yet when the obligation is one implied by law, impossibility of performance is a good excuse. Under certain circumstances compliance with the provisions of statutes which prescribe how something is to be done will be excused. Thus, in accordance with the maxim of law, lex non cogit ad impossibilia, if it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of god or the King's enemies, these circumstances will be taken as a valid excuse. 69. The Supreme Court also observed similarly in the case of Life Insurance Corporation of India vs. CIT that- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtended to others liability for deducting tax at source. No liability is created on the employer to deduct tax at source by any retrospective legislation, like that of deeming perquisite. The deeming in valuation of perquisite was not there at the time the assessee was required to deduct tax and therefore, there was no liability to deduct tax on such deemed value of perquisite and consequently the assessee cannot be treated in default retrospectively. 72. It is a deeming provision and a deeming provision is intended to enlarge/curtail the meaning of a particular word which includes or excludes matters which otherwise mayor may not fall within the provision; it should therefore, be extended to the consequence and incidence which, shall inevitably follow. The following off-quoted observations of Lord Asquith in East Dwelling Go. Ltd. vs. Finsburry Borough Council (1952) AC 109, may appropriately be referred to: If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t rent of the accommodation provided to the employees, it has to be assumed so. The fiction is to assume the position that the difference was a concession it has to be perquisite to an employee. It is because by virtue of deeming fiction one has to assume that there is a concession in the matter of rent and that, consequently it has to be a perquisite. The argument that specified rate is not the determining criterion for finding a concession in the matter of rent has the effect of and would amount to ignoring the fiction created in the provision and therefore has no force hence and cannot be accepted. 76. The legal fiction however is to be restricted to the field of definite purpose for which it is created. See CIT vs. Amarchand N. Shroff (1963) 48 ITR 59 (SC); CIT vs. Mother India Refrigeration Industries (P) Ltd. (1985) 48 CTR (SC) 176 : (1985) 155 ITR 711, 718 (SC). Again a retrospective amendment is not to apply to action which is barred by efflux of time within which it was to be carried out. It cannot have a greater retrospective operation than its language renders necessary. Retrospective operation is not given to a statute so as to impair the existing right or obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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