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TMI Blog2012 (9) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Assessees cannot be treated in default without factually establishing that they have extended any concession to their employees. Revenue authorities have also not looked into the dispute with this angle. In view of the above discussion, it is held that assesse is not in default u/s 201(1) and 201(1A) - Decided in favor of assessee - ITA Nos. 4816 to 4819/Del/2011, ITA Nos. 4826 to 4829/Del/2011, ITA Nos. 4804 to 4806/Del/2011, ITA Nos. 4812 to 4815/Del/2011 and ITA Nos. 4829 to 4832/Del/2011 - - - Dated:- 27-7-2012 - SHRI G.D. AGARWAL AND SHRI RAJPAL YADAV, JJ. Respondent by: Shri BRR Kumar, Senior DR ORDER PER BENCH: This is a bunch of nineteen appeals filed at the instance of the assessees against the common order of the Ld.CIT(Appeals) dated 24.08.2011 passed for assessment years 2006-07 to 2009-10. In response to the notice of hearing, no one has come present on behalf of the assessee. With the assistance of learned DR, we have gone through the record carefully and proceed to decide the appeals ex parte. 2. The facts on all vital points are common in the case of all the assessees. For the facility of reference, we are taking up the facts fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perquisite value, tax payable on such amount and the interest for non-payment of such amount in government s account within the due date in the annexure annexed with each order. In the case of Principal Campus School, learned Assessing Officer has worked out the tax at Rs.16,562 interest under sec. 201(1A) at Rs.5588 and raised a demand of Rs.22,150 under sec. 201(1) and 201(1A) of the Act. Similar demands have been raised in the cases of other appellants. 4. Dissatisfied with the demands, the appellants filed appeals before the learned first appellate authority. They have contended that the learned ITO(TDS) has erred in treating the university employees in the category of others instead of treating them as a State Government employees. According to the appellants, there is no violation of provisions of sec. 17(2) of the Income-tax Act, 1961, in the instant case, as the university employees are State Government servants and cannot be classified under the category of others . It was also contended that university falls within the ambit of state as per article 12 of the Constitution of India. It is established under an Act of Parliament and its employees got salaries from out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard the rival contentions and gone through the record carefully. Before adverting to the contentions raised by the assessee before the learned first appellate authority as well as reasons assigned by the learned revenue authorities below. It may be appropriate if we refer to the relevant provisions of the act, the rules and the important decisions on the points. Section 17 of the Act defines salary , perquisite and profits in lieu of salary . For the purpose of the controversy in hand, the relevant part of the section 17 reads as under: 17. For the purposes of sections 15 and 16 and of this section,- (1) (2) perquisite includes8 (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 ; Explanation:- (1) For the purpose of this sub-clause, concession in the matter of rent shall deem to have been provided if:- (a) x x x x x x x (1) The accommodation is owned by the employer, the value of the accommodation determined at the specified rate in respect of the period during which the said accommodation was occupi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcentage (not exceeding 100 per cent) of the amount by which the fair rental value exceeds 20 per cent of the salary; (2) where the assessee claims, and the Assessing Officer is satisfied that the sum arrived at on the basis provided above exceeds the fair rental value of the accommodation, the value of the perquisite to the assessee shall be limited to such fair rental value; (b)The value of residential accommodation provided at a concessional rent shall be determined as the sum by which the value computed in accordance with clause (a), as if the accommodation were provided free of rent, exceeds the rent actually payable by the assessee for the period of his occupation during the relevant previous year." 28. By the Income-tax (Twenty-second Amendment) Rules, 2001, Rule 3 was amended and the relevant part reads thus- [Valuation of perquisites 3. For the purpose of computing the income chargeable under the head "Salaries", the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rent, if any, actually paid by the employee. The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, airconditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. (3) Where the accommodation is provided by the employer specified in serial number (1) or (2) in a hotel (except where the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another). Not applicable 24% of salary paid or payable for the previous year or the actual charges paid or payable to such hotel, which is lower, for the period during which such accommodation is provided as reduced by the rent, if any, actually paid or payable by the employee: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have carefully considered the rival submissions, perused the orders of tax authorities and gone through the citations given above. Section 15 charges any salary due or paid by an employer to income tax under the head salaries Section 17 defines salary to include perquisite. As per section 17(2), perquisite is to include (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer. Rule 3 provide for valuation of perquisites. According to sub rule (a), the value of the unfurnished accommodation provided to a Government employee is taken as the rent which would be payable by the Government employees in accordance with the rules framed by the Government. In case of others, it is taken as 10 % of the salary. Sub rule (b) states the value of residential accommodation provided at a concessional rent shall be determined as the sum by which the value computed in accordance with clause (1), as if the accommodation provided free of rent exceeds the rent actually payable by the assessee for the period his occupation during the relevant previous year. From perusal of these rules, it is clear that these indicate the differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders passed by the A.O u/s 201(1)/201(1A) are, therefore, quashed 9. The rules prior to 2001 were based on fair rental value of the accommodation and, therefore, Assessing Officer was required to determine the fair market value of accommodation before arriving at a conclusion that the employer has given any perquisite to the employees. This concept of fair rental value of the accommodation has been given the goby, in view of practical difficulties realized by the revenue and the new set off of amended rules 2001 has been provided in place of fair rental, market rent, standard rent and reasonable rent. The ITO(TDS) in the present case has applied Rule 3(1) Sr. No. 2(ii) of the table extracted supra. It came to our notice that vires this rule was challenged by the employees of TATA Iron Steel Co. Ltd. before the Hon'ble Jharkhand High Court at Ranchi and similarly Coal Mines Association of India has also challenged the constitution validity of this rule before the Hon'ble Calcutta High Court . The dispute ultimately traveled up to the Hon'ble Supreme Court in the case of Arun Kumar Vs. Union of India reported in 286 ITR 89. An apprehension was raised before the Hon'ble High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o his employee that the mode, method or manner as to how such concession can be computed arises. In other words, concession is a jurisdictional fact ; method of fixation of amount is fact in issue or adjudicatory fact . If the assessee contends that there is no concession , the authority has to decide the said question and record a finding as to whether there is concession and the case is covered by section 17(2)(ii) of the Act. Only thereafter the authority may proceed to calculate the liability of the assessee under the Rules. In our considered opinion, therefore, in spite of the legal position that Rule 3 is intra vires, valid and is not inconsistent with the provisions of the parent Act under section 17(2)(ii) of the Act, it is still open to the assessee to contend that there is no concession in the matter of accommodation provided by the employer to the employee and hence the case did not fall within the mischief of section 17(2)(ii) of the Act. 80. There is yet another aspect of the matter which is important and having a bearing on the question. We have extracted section 17(2)(ii) in the earlier part of the judgment. It does not contain any deeming clause that onc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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