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TMI Blog2013 (11) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... the employees was not prescribed as fringe benefit for the purpose of section 17(2)(iv) of the Act and the same was not taxed as perquisite in the employees' hands and wherever not actual and fully utilised, the same would constitute taxable salary. However, for the assessment years 2008-09 and 2009-10, the 'holiday home scheme' could not be considered as perquisite under section 17(2)(iv) of the Act in the hands of the employees, was held rightly acceptable. This was essentially on account of the introduction of rule 3(7)(ii) of the Income-tax (Fourteenth Amendment) Rules, 2007, with effect from April 1, 2008, in respect of those employers who were not liable to pay FBT under Chapter XII-H of the Act. Payment in question towards the 'holiday home scheme' if not utilised actually, the same can be held to be taxable salary of the employees. In these appeals, concerned essentially is the taxable receipts and not the payment of tax by the employer. Moreover, till the FBT regime was in existence, the respondent-assessee has already paid the FBT under section 115WB of the Act. Therefore, rightly no default was considered on the part of the respondent-assessee under section 201(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed by the Assessing Officer that the scheme named "holiday homes" floated for the benefit of employees, was also in vogue. The employees were entitled to holidays anywhere in India as well as at abroad for a maximum period of 10 days in a block of two years or every year for maximum of five days. They were granted reimbursement at the rate of full daily allowance, as also the paying guest charges as admissible, regardless of the fact they stayed at hotel or made their own arrangement. This was held to be nonofficial and private visit and, therefore, was considered to be in the nature of salary of the employees taxable under section 17(1)(iv) of the Act. It was also held to be exempt under section 10(14) of the Act and, accordingly, the Assessing Officer held that non-deduction of TDS would attract the proceedings under section 201(1) and section 201(1A) of the Act and the demand of huge amount was raised for the respective years. 3.3 Aggrieved by such order of the Assessing Officer, the respondentassessee preferred an appeal before the Commissioner of Income-tax (Appeals), Vadodara, and the Commissioner of Income-tax (Appeals) on November 16, 2011, decided both the issues in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an identical error in stamping the order of the Commissioner of Income-tax (Appeals) without independently opining on the subject and, therefore, this is a clear case where this court needs to intervene. He also urged that the issue is larger, where this court also needs to consider that in the event the FBT is paid by the respondent-assessee as an employer, can the respondentassessee be absolved from its onus from deducting the TDS, if otherwise these amounts are a part of the salary paid to the employees. Per contra, Mr. S. N. Soparkar, learned senior counsel appearing with the learned advocate, Mr. B. S. Soparkar, for the respondent-assessee, fervently argued and urged that as far as the first question is concerned, it is covered by the decision of this court in the case of CIT v. Oil and Natural Gas Corporation Ltd. reported in [2002] 254 ITR 121 (Guj), whereby it is held that the FBT is an additional angle which would not preclude this court from considering the fact that the issue is already covered by the decision of this court. He has also urged that the only question this court needs to examine is whether they are taxable receipts as it is not the question of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E0/S1 and E1/SII Level employees drawing Basic Pay from Rs. 12,000 to Rs. 14,249 4,455 E-2 level executives, S-III and S-IV employees, E-1 and S-II level drawing Basic pay of Rs. 14,250 and above. 6,845 E-3/ E-4 8,275 E-5/ E-6 9,475 E-7 to E-9 18,330* * This includes reimbursement of Rs. 6,000 p.m. towards subsidy, subject to self clarification by the concerned officer that he was not availing the facility of staff car. 2. In addition to the above rates of CMRE, employees (executives/ non-executives) shall be paid transport allowance as provided in Office Order (11/2006) No. 18(7)/2005-CMRE/CP, dated February 13, 2006, at the following rates, as is being paid at present : Category of employees Rate of transport allowance Employees entitled for AMRE for car Rs. 800 p.m. Employees entitled for CMRE for Scooter/ Motor Cycle/ Moped Rs. 500 3. Other terms and conditions of conveyance maintenance reimbursement expenditure (CMRE), scheme shall remain unchanged. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as introduced in the ONGC to reimburse to employees the expenditure incurred by them on maintenance and use of their own vehicles in the performance of official duties and thereby reduce pressure on ONGC vehicles and maintenance cost thereof thus saving a portion of expenditure, which otherwise could have been borne by the appellant. The CMRE is not blanket payment, but the reimbursement is for the actual amount incurred in maintaining and running the vehicle restricted to maximum amounts per month fixed by the ONGC, taking various parameters into account. Each employee is required to submit his claim on monthly basis for reimbursable running and maintenance expenditure incurred in the preceding month, in the prescribed form. The claims are submitted by the employee on line by making necessary entries in the appellant's computerized system. It is also not true that all the employees automatically become eligible for receiving CMRE payments. Rather, CMRE is allowed only to those employees in respect of whom permission is granted by a competent authority to do so after applications are made by the employee's controlling officers, on a thorough scrutiny. In addition, the employees are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al purposes fully exempt under section 10(14) regardless of the fact that the exemption is allowed only to the extent that 'the expenses which are wholly, necessarily and exclusively incurred in the performance of duties of an office' ? 2. Whether, on the facts and in the circumstances of the case, there was any material before the Tribunal to hold that the assessee had an impression that such allowance is exempt under section 10(14) of the Income-tax Act, 1961, even though it is not fully utilised for official purposes ?" 6.6 This very CMRE scheme was in operation and was challenged in the aforementioned tax appeal. After examining both the above quoted questions, the court held that no question of law referable to the court arises as the answer was evident. It would be profitable to reproduce the relevant part of the said decision as under (page 124) : "The tax at source in the case of an employee in receipt of salaries is deducted on the basis of estimate of income under the head 'Salary' emanating from the employer. That estimate also include a fair estimate by the employer whether any amount paid by him is not likely to be subjected to tax under any provisions of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployees of the respondent-assessee at certain designated centres for recreation and rejuvenation. It provides for monetary subsidy to the employees and their family members. 7.1 Under the said scheme, the employee is entitled to visit any place in India or abroad for private/non-official holidays with his family members every year for five days or for 10 days in a block of two years. The employee is required to inform the respondent-assessee his intention to avail of such holiday and on return, the reimbursement is made, where the daily allowance of four persons along with the paying guest charges is also made, as admissible under the scheme. According to the Assessing Officer, such payment is made purely for private purposes and, therefore, even the payment of FBT by the respondent-assessee would have no relevance. Such payment amounts to remuneration in addition to the salary and is taxable under section 17(1)(iv) of the Act. The Assessing Officer also went to an explanation of holding that the payment made is identifiable to each individual and the monetary amount is also specific. Therefore, there would not be any difficulty in evaluation of the payment, which can be claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and lodging facilities, etc., on a holiday availed of by self or family member. If in any employee's case, it is found that the payment in question was actually and/or fully not utilized towards the holiday home scheme. It would constitute the concerned employee's taxable salary. As far as the appellant is concerned, due to payment of FBT and due to holiday home reimbursement being not a prescribed 'fringe benefit' for the purpose of section 17(2)(iv) from the assessment years 2006-07 to 2009-10, the appellant is not to be treated as the assessee in default under section 201(1) in this regard. For the assessment year 2010-11 also, the appellant is not to be treated as the assessee in default subject to verification by the Assistant Commissioner of Income-tax (TDS) that tax at source has already been deducted from the holiday home reimbursements." 7.3 The Revenue carried the said order of the Commissioner of Income-tax (Appeals) to the Tribunal and after quoting the order of the Commissioner of Income-tax (Appeals), the Tribunal held that FBT was paid by the respondent-assessee on such expenditure and, therefore, on the same reasons as given by it for CMRE, the issue raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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