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TMI Blog2018 (5) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... he IT Act appears to be not correct or legal. Assessee cannot be said to be a defaulter of the amount and liable under Section 201 [1] of the I.T Act or to make payment of interest leviable under Section 201 [1A] of the Act. - Decided in favour of assessee. - R/TAX APPEAL No. 894 of 2007 With R/TAX APPEAL No. 895 of 2007 - - - Dated:- 9-5-2018 - MR. AKIL KURESHI AND MR. B.N. KARIA, JJ. For The Petitioner : Mr BS Soparkar for Mrs Swati Soparkar, Advocates For The Respondent : Mrs Mauna M Bhatt, Advocate CAV JUDGMENT ( PER : HONOURABLE Mr. JUSTICE B.N. KARIA) These two appeals are preferred under Section 260A of the Income-tax Act, 1961 [ the Act for brevity], challenging an Order dated 4th October 2006 passed by the Income Tax Appellate Tribunal, Ahmedabad [ the Tribunal for brevity] in respect of assessment years 2001-2001 and 2001-2002. Since the issue involved in both these tax appeals is similar, the facts are being extracted from Tax Appeal No. 894 of 2007. The appellant-assessee in both these appeals is a Cooperative Milk Marketing Federation, having its dairy at Anand. It had filed its return for A.Y 2000-2001 and 2001- 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, whereas, the fact being that the contributions were made for recouping deficiency which the Institute suffered for providing educational facilities to the wards of employees of the appellant-assessee. And therefore, in no way, such amounts paid to Anandalaya could be termed as contributions made towards free or concessional educational facilities to the wards of the employees of the appellant. Attention of CIT [A] was also drawn towards provisions of Rule 3 [e] of the Act to point out that appellant met with only a part of educational expenditure, and therefore, the said provision would not apply in the facts and circumstances of the case. CIT [A] also did not accept the plea of assessee by upholding the order of AO passed under Section 201 [1] and 201 [1A] of the Act. Resultantly, the appellant-assessee moved the Tribunal against a consolidated order of CIT [A] dated 31st May 2006. The Tribunal vide impugned order dated 4th October 2006 upheld the order of CIT [A] and thereby dismissed the appeals preferred by the assessee, giving rise to these Tax Appeals. This Court vide Oral Order dated 3rd April 2008, admitted these appeals for consideration of the following questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concessional rate . Counsel drew attention of this Court to Rule 3 [e] of the Rules which, prior to amendment made vide I.T [22nd Amendment] Rules, 2001, covers only free educational facilities for the members of household of assessee and not the concessional educational facilities, which is specifically included in substituted Rule 3 [5] inserted vide I.T [22nd Amendment] Rules, 2001 to contend that the contributions to Anandalaya towards deficit of education expenses of children of appellant s employees is not perquisite in the hands of the employees, pursuant to provisions of Sections 17 [2] (iii) and (iv) of the Act read with Rule 3 of the Rules. Counsel lastly contended to set aside the order of the Tribunal in confirming the order of levy of penalty and penal interest under Section 201 [1] and 201 [1A] of the Act. On the other hand, learned counsel for the Revenue besides supporting the order passed by the CIT [A] as well as the Tribunal, relied on the decision of Commissioner of Income-tax [TDS] vs. Director, Delhi Public School, reported [2011] 14 taxmann.com 45 [P H]. Counsel for the Revenue submitted that the assessee had made payment of part of fees of children ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1000 If we peruse the aforesaid chart, it is not in dispute that the children of the employees of appellant-assessee are studying in Anandalaya Education Society and are paying fees at a subsidized rate. It is equally true that the recurring deficit of the Society is being recouped by the contributions made by the assessee based on number of students representing the employees wards, and it is under these circumstances that the assessee contributed ₹ 5,91,030/= and ₹ 6,43,126/= for AY 2000-2001 and 2001-2002 respectively. Thus, the burden borne per child per month has never crossed ₹ 1,000/= by the assessee, and therefore, there would be no question of any perquisite arising in the hands of the employees of the assessee, and therefore, deduction of TDS would also be not permissible. The contribution as shown in the chart cannot be said to be perquisite in the hands of the employees for any of the years mentioned above. Learned advocate for the assessee drew attention of this Court to the provisions of Rule 3 [e] of the Rules, which is reproduced hereunder : Rule 3 (e) The value of the benefit to the assessee resulting from the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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