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TMI Blog2015 (2) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... ided in favour of assessee. - S.P. No.258/Bang/2014 & ITA No. 1589/Bang/2014 - - - Dated:- 27-2-2015 - SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER Appellant by : Shri Gaurav Jain, C.A. Respondent by : Shri P. Dhivahar, Jt. CIT(DR) O R D E R Per N.V. Vasudevan, Judicial Member This appeal viz., ITA No.1589/Bang/2014 is by the assessee against the order dated 22.7.2014 of the CIT(Appeals)-V, Bangalore relating to assessment year 2010-11. 2. The issue that arises for consideration in this appeal is as to whether order u/s. 201(1) and 201(1A) of the Act treating the assessee as an assessee in default for not deducting tax at source and levying interest on tax not deducted at source respectively can be sustained? 3. The brief facts are that the assessee who is Registrar of Indian Institute of Science ( IISc), Bangalore and person responsible for deduction of tax at source on payments made by IISc can be said to have not deducted tax at source on the salary paid to the employees. The main grievance is that while determining the income under the head 'salary', the assessee had valued perquisites in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for he same by the employee during the previous year. (2) Where the accommodation is provided by any other employer and (a) where the accommodation is owned by the employer, or (b) where the accommodation is taken on lease or rent by the employer. (i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census; (ii) 10% of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 census; (iii) 7.5% of salary in other areas, in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee. Actual amount of lease rental paid or payable by the employer or 15% of salary whichever is lower as reduced by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommodation which has the lower value with reference to the Table above for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table. Explanation : For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,- (i) the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and (ii) the value of perquisite of such an accommodation shall be the amount calculated in accordance with Sl. No. (2)(a) of Table I, as if the accommodation is owned by the employer. 5. If Sl.No.1 of Table-1 of Rule 3 of the Rules is not applicable then value of perquisite has to be computed in accordance with Sl.No.2 of Table-1 of Rule 3 of the Rules and if so done then the value of perquisite will be much more and consequently the amount of tax that has to be deducted by the Assessee as an employer on the income under the head salaries paid by the Assessee will be much higher. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons have been agitating over the fact that the perquisite value should be worked out considering them on par with Government employees. 8. The AO rejected the contentions of the assessee and held that valuation of perquisites had to be done by the assessee by taking 15% of the salary as value of perquisites under Sl.No.2 of Table 1 of Rule 3 of the I.T. Rules. The AO rejected the contention of assessee that the assessee was a Central Govt. providing accommodation to its employees. 9. On appeal by the assessee, the CIT(A) confirmed the order of AO. Hence this appeal by the assessee before the Tribunal. 10. At the time of hearing of the appeal, it was pointed out that this Tribunal in the case of CFTRI v. ITO, TDS in ITA Nos.1607 to 1611/Bang/2011 for the A.Ys. 2007-08 to 2011-12 by order dated 4.7.2014 holding that CFTRI is not a Central Govt. and therefore value of perquisites cannot be made on the basis of licence fee paid to the Govt. for accommodation provided by Govt. and that 15% of the salary will be the valuation of perquisites. 11. The facts and circumstances of the assessee's case are identical to the case decided by the Tribunal referred to above and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate has to be a bona fide estimate. 15. The law on the issue as explained in the decision of ITAT Bangalore in the case of Infosys BPO is as follows:- 26. It is no doubt true that TDS is to be made at the time of payment of salary and not on the basis of salary accrued. Sec.192(3) of the Act permits the employer to increase or reduce the amount of TDS for any excess or deficiency. We have already noticed that the fact that bills/evidence to substantiate incurring of expenditure on medical treatment up to ₹ 15,000/- and the availing of the LTC by the employees and the fulfilment of the conditions contemplated by Sec.10(5) of the Act for availing exemption by the employees so availing LTC, have not been disputed by the AO. Even assuming the case of the AO, that at the time of payment the Assessee ought to have deducted tax at source, is sustainable; the Assessee on a review of the taxes deducted during the earlier months of the previous year is entitled to give effect to the deductions permissible under proviso (iv) to Sec.17(2) or exemption u/s.10(5) of the Act in the later months of the previous year. What has to be seen is the taxes to be deducted on income unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stem Ltd. [2006] 282 ITR 263 (Del) CIT v Oil and Natural Gas Corporation Ltd [2002] 254 ITR 121 (Guj) ITO v Gujarat Narmada Valley Fertilizers Co. Ltd [2001] 247 ITR 305 (Guj) CIT v Nestle India Ltd (2000) 243 ITR 0435 (DEL) Gwalior Rayon Silk Co. Ltd. v. CIT [1983] 140 ITR 832 (MP) ITO v G. D. Goenka Public School (No. 2) [2008] 306 ITR (AT) 78 (Del) Usha Martin Industries Ltd. V. ACIT (2004) 086 TTJ 0574 (KOL) Nestle India Ltd. v. ACIT (1997) 61 ITD 444 (Del) Indian Airlines Ltd. v ACIT (1996) 59 ITD 353 (Mum) 16. The ld. counsel for the assessee accordingly prayed that the orders u/s. 201(1) and 201(1A) be cancelled. 17. The ld. DR relied on the orders of the revenue authorities. According to him, the constitutional validity of Rule 3 was challenged in Ashok Kumar Ors. v. UOI Ors., 286 ITR 89 (SC). In the decision rendered on 15.9.2006, the Hon'ble Apex Court held that amendment to Rule 3 by the Income Tax 22nd Amendment Rules, 2001 was valid. According to him, after rendering of the aforesaid decision, the assessee could not have entertained a bona fide belief that it was a Central Govt. 18. The ld. counsel for the assessee in reply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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