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TMI Blog2011 (7) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Ld. CIT(A) may be cancelled and that of the Assessing Officer may be restored to the above effect." 2. Adverting first to common ground no.1 in these two appeals, facts, in brief, as per relevant orders are that a survey was undertaken in the premises of M/s Cadila Healthcare Ltd. on 08-07-2008 when it was noticed that the assessee paid ₹ 1,01,90,400/- in FY 2007-08 and ₹ 25,20,400/- in FY 2008-09 to Sodexo Pass Services (India) Pvt. Ltd.['Sodexo' in short] for purchase of Sodexo Lunch Coupons for use by their employees. The ITO-TDS-1 ['AO' in short] was of the opinion that the tax was required to be deducted by the assessee on these payments, the coupons having been provided to the employees by way of perquisites in terms of provisions of section 17(2) of the Income-tax Act, 1961 [hereinafter referred to as the "Act"]. To a query by the AO, the assessee replied that Sodexo Lunch Coupons given to the employees were not in the nature of perquisites as provided u/s 17(2) of the Act and fell within the scope of the provisions of section 115WB of the Act, dealing with "Fringe Benefits". It was explained by the assessee-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the learned CIT(A) allowed the claim of the assessee for the FY 2007-08 in the following terms:- "5. I have considered the facts of the case and the submissions of the ld. A.R carefully. It is seen that the A.O has held that the Sodexho lunch coupons fall within the ambit of sec. 17(2) therefore required to be considered as perquisite i.e. includible in the amount of salary of the recipients for the relevant period. He further concluded that since value of these coupons was part of salary the appellant was required to deduct tax at source on such amount under the provisions of sec. 192 of the Act 5.1 Therefore, in order to arrive at the taxability of impugned amount as perquisite it is to be seen whether the Sodexho lunch coupons are covered within the meaning of perquisite as envisaged u/s 17(2) of the Act. In this regard a close examination of the language of sec. 17(2) is required, which lays an inclusive definition of 'perquisite'. Clause (vi) of sec. 17(2) lays that the value of other Fringe Benefit of Amenity (excluding fringe benefit chargeable to tax) would be included within the meaning of perquisite. 5.2 Further w.e.f. 1.4.2005 the provision of Rule 3(7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o default could be ascribed to the assessee merely because some employees misused the facility provided. Learned senior standing counsel appearing for the appellant had contended in this context that for the first period, namely, April, 2003, to November, 2003, the inquiries had been undertaken on September 25, 2003, and, therefore, even if the findings of the appellate authorities that the assessee had acted bona fide were to be accepted yet for the second period, covering December, 2003, to March, 2004, the assessee became liable as the assessee could not thereafter claim any bona fides. The said contention proceeds on a misconception as to the relevant provisions stipulated by the rule in question. The assessee at the time of issuance of coupons' cannot envisage as to which of the employees would misuse the Coupons because the liability to deduct tax at source is corelated with the taxability of the amount in the hands of a particular employee and there can be no case of estimation on percentage basis. The primary liability to offer the amount for tax is that of the employee concerned and it is only by a prescribed mode of recovery that the employer is required to deduct t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) The value of free food and non-alcoholic beverages provided by the employer, who is not liable to pay fringe benefit tax under Chapter XII-H of the Act, to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity: Provided that nothing contained in this sub-rule shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof in either case does not exceed ₹ 50 per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation." 5.1 Moreover, as per clause (ii) of section 115WB(2)(B) of the Act, even FBT was not payable by the employer on the expenditure incurred through paid food vouchers which were not transferable and usable only at eating joints or outlets. Inter alia, since the AO did not bring any material on record that Sode ..... 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