2004 (8) TMI 626

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... hese appeals involve a common issue. As a matter of convenience, therefore, all three appeals are being disposed of by way of this consolidated order. 3. The only grievance raised in all the three appeals is that the CIT(A) erred in upholding demand raised on the assessee under section 201 read with section 192 in respect of conveyance allowance paid to the employees. 4. The undisputed material facts are like this. The assessee employer has paid conveyance allowance to a number of employees to meet the cost of travelling from residence to place of work, and vice versa . The Assessing Officer (TDS), while scrutinizing the TDS return filed by the assessee, noticed these payments but he was of the view that these payments are taxable .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... here. It is not in dispute that the assessee is assessed to tax for the last many years. Deduction out of the salary paid has to be made as per the provisions contained in section 192 of the Income-tax Act. The said section requires and employer to make deduction from the salary of an employee on the basis of the estimated income. If an employer has made a fair and honest estimate of the taxable salary and deducted and paid tax thereon, he cannot be treated as an assessee in default under section 201(1) of the Act even if the Assessing Officer ultimately assessed the salary at a higher figure. For this proposition, we derive strength from the following observations of the Madhya Pradesh High Court in the case Gwalior Rayon Silk Co. Ltd. v .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ssee to its employees cannot be regarded as part of the salary paid to them. There is considerable force in the submission of the assessee that this payment has been made to meet mostly the expenditure incurred by the employees for commuting between the residence and office or a regular place of work and back. . . . The ITO or for that matter the Commissioner (Appeals) who heard the first appeal have nowhere established that the scale at which conveyance allowance is paid to the employees is excessive or unreasonable. This is having regard to the escalating cost of travel by any mode of transport. The ITO would have been justified in treating part of the conveyance allowance as part of the salary of an employee only where the same was fou .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X