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TMI Blog2014 (11) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... d responsible for deduction of TDS on the perquisite availed by the employees - In Commissioner of Income-Tax And Another Versus Chief Officer, State Bank of India [2005 (12) TMI 68 - UTTARANCHAL High Court] it has been held that no perquisite value could be added in the hands of the assessee - no interest would be charged u/s 201/201(1A) of the Act from the assessee on account of lesser deduction of tax - whatever rates of electricity charges are fixed, they were fixed by the UPERC and the assessee has no control thereon - The reasons for charging lesser rate of electricity were also explained - the assessee cannot be held to be in default for non-deduction of TDS on the value of perquisites as alleged to be availed by the employees on account of lesser rate of electricity charges – thus, the order of the CIT(A) is upheld - Decided against revenue. - ITA Nos. 702 to 706/LKW/2011 - - - Dated:- 12-11-2014 - Shri Sunil Kumar Yadav And Shri. A. K. Garodia,JJ. For the Appellant : Shri. Rajiv Jain, CIT (DR) For the Respondent : Shri. O. P. Shukla, Advocate ORDER Per Sunil Kumar Yadav: These appeals are preferred by the Revenue against the order of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rman of the company. The day-to-day functioning of the company is looked after by the Managing Director and chief Engineer who are appointed by the Govt. Out of the total share 59999300 share are held by UPPCL (holding Company) as fully paid up in pursuant to Uttar Pradesh Transfer of Kesa Zone Electricity Distribution scheme 2000 and 700 share are held by other share holders nominee of UP State Govt. The assessee-company is incorporated on 21.07.1999 for the purpose of transfer of business of electricity distribution done by ERST while KESA as unit of UP Electricity board. The company took over the assets and liability of KESA Zone of UPPCL w.e.f. 15.01.2000 vide UP Govt. Notification dated 15.01.2000. The tariff of electricity is determined by the U.P. Regulatory Authority Commission (UPREC) which is binding on holding company, M/s UPPCL as well as the subsidiaries i.e. Poorvanchaal Vidyut Vitran Nigam Limited, Madhyanchal Vidhyut Vitran Nigam Limited, Uttaranchal Vidyut Vitran Nigam Limited and Dakshinanchal Vidyut Vitran Nigam Limited. The rate of tariff of several type of consumers has already been determined and the assessee has no power to change the tariff as decided by UPR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. employees opted un-metered power supply, they shall be entitled to pay fixed charge as per prescribed rate of LMV 10. It was further explained to the ld. CIT(A) that none of the employees has opted the first category i.e. metered and all the employees and pensioners of the assessee-company have opted un-metered supply of electricity so that there is no meter in any premises of the employees where they reside. But the Assessing Officer as per form No.24Q has categorised the load wise connection minimum two to five KVA on the basis of the salary received by each of the employee as mentioned in para 4 and estimated unwanted load on the basis of salary received and estimated the rate as per LMV-1 of ₹ 240 per KVA on the basis that those meters are not in working condition. The assessee has also placed reliance upon various judicial pronouncements in support of its contention that since the rates are prescribed by the Regulatory authorities and assessee has no control over it, the supply of electricity at reduced rates cannot be termed as perquisites in the hands of the assessee. The ld. CIT(A) re-examined the claim of the assessee in the light of various judicial pronouncem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed through transparent process of bidding' in accordance with the guideline issued by the Central Government. 'It is observed that the Regulatory Authority Commission is a Supreme body of the Government to determine tariff and it is binding on each and every type of consumer. It also provides that the appropriate Commission may in case of shortage of supply of electricity, fix the maximum and minimum ceiling of tariff for sale and purchase of electricity 'in pursuance of an agreement interred into between a generating company and a licensee or between licensees of a period not exceeding one year to ensure the reasonable price of electricity. I find the justification in the submission of the assessee that, the Regulatory Authority Commission has Fixed tariff as per schedule LMV-1 to LMV-10, IDF, Un-metered, non-industrial sector, large and heavy power sector, railway traction, Lift irrigation work, departmental employees lice service employees, pensioner, family pensioner for own use of light, fan and power for domestic appliances. The rate and charge indicated in the schedule as per electricity Act, for the different categories are strictly in adherence to the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of power the energy department of government of U.P. has agreed to provide tariff to its employees and the tariff determined by UPERC has been fixed only for a year until the term and condition of tariff are specified u/s 61 of Electricity Reform Act, 2003. In the light of the submission of the assessee, I find that, the Assessing Officer himself took the view that the perquisites value determined on estimate basis by adopting and classifying the employees of the company on the basis of the salary into four categories and are being estimated on the fixed rate of tariff determined during the year. The assessee's company can not to be treated in default for non-deducting tax at source u/s 192/17(2)(iii) r.w. section 201(1) of the Income Tax Act, 1961. Reliance is placed on Hon'ble Supreme Court in case of CIT Vs. L.W. Russell (1964) 53 ITR 91 wherein it is held that the employees must have a vested right to perquisites. One can not be said to allow a perquisites to an employee if the employee has no right to the same, it can not apply to contingent to which the employee have no right till the contingency occurs. In the assessee's case the Electricity is a basic amenity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall have continuity of service in all respect of the benefits of service. As stated in section 23 (8) of the Electricity Reform Act 1999, with or for the state government or the concern transfree and all the suits or other legal proceedings instituted by or against the board may be continues or instituted by or against the state government or concerned transfree as the case may be. The said scheme is made for the purpose of the transfer and vesting all the properties and all interest, right, and liability of the board in the state government and reversing therefore by the state government in the corporation UPPCL. UPRPVVNL which evidence that the employee of the KESCO are the government employees after restructuring of its division like generation, transmission and distribution. Many other evidences placed on record specially notification no. 151/P-1/2000-24 dated 14.01.2000 signed by Secretary of U.P. Government for declaring the Uttar Pradesh Power Corporation Ltd. a government company which evidences the KESCO as a subsidiary of the U.P. power Corporation Ltd. vis a vis the employees are also government-employees after restructuring. Reliance is placed on the judgment of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the authorities below, we find that undisputedly assessee-company is a Government Public Limited Company and subsidiary of holding company, U.P. Power Corporation Limited and also engaged in distribution of power to its consumers like government, Semi-Government and private bodies. It is also an undisputed fact that the rates for supply of electricity including departmental employees are fixed and decided by the UPERC and such rates are binding on all the consumers as well as distribution companies. As per LMV-10, the UPERC has fixed the rates of charges for metered and un-metered supply to the departmental employees and pensioners. Admittedly the rates of charges for supply of electricity to departmental employees and pensioners are lesser than the ordinary consumers. The reason for doing so has been stated that the assessee-company has to incur minimal expenditure in supplying electricity and recovery of electricity charges. Moreover, the assessee-company has no control over the rates of charges, as it was fixed by the UPERC. In that situation where the assessee-company has no control in granting rebate to its employees in consumption of electricity, the rebate given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 11. In the case of P.V. Rajagopal and Others vs. Union of India and Others (supra), the Hon'ble Andhra Pradesh High Court have also expressed the same view by holding that interest subsidy is not part of salary. Therefore, tax need not to be deducted in respect of such subsidy. 12. Keeping in view the totality of the facts and circumstances of the case, in the light of various judicial pronouncements, we are of the considered view that whatever rates of electricity charges are fixed, they were fixed by the UPERC and the assessee has no control thereon. The reasons for charging lesser rate of electricity were also explained. Therefore, under these circumstances, the assessee cannot be held to be in default for non-deduction of TDS on the value of perquisites as alleged to be availed by the employees on account of lesser rate of electricity charges. We have carefully examined the order of the ld. CIT(A) and we find that the ld. CIT(A) has adjudicated the issue in the light of varius judicial pronouncements and since no specific defect has been pointed out by the ld. D.R. and we find no infirmity therein, we confirm the same. 13. In the result, appeals of the Revenue ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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