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TMI Blog2018 (6) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... t : Shri J.Jayatheertha, CA. For The Respondent : Dr. P.V.Pradeep Kumar, Addl.CIT(DR) ORDER Per BENCH : This is an appeal filed by the assessee directed against the order of the learned Commissioner of Income-tax (Appeals)-13, Bengaluru [CIT(A)] dated 21/06/2017 for the assessment years 2011-12 to 2013- 14. 2. Briefly facts of the case are as under: The assessee is a research institute in the dairy development and it is accorded status of deemed university. It is under administrative control of the Indian Council of Agricultural Research and Education, Ministry of Agriculture and Food Processing Industry. It is autonomous institution established as a society under the Societies Registration Act 1860. The ACIT(TDS), Circle 13(1) (hereinafter referred to as 'TDS officer') issued show cause notice to the assessee as to why it should not be treated as 'an assessee in default' under section 201(1) of the Income-tax Act (hereinafter referred to as the Act ) as it failed to deduct tax at source on the perquisite value of rent free residential accommodation provided to its employees, in terms of rule 3 as applicable , where the accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of ICAR the Hon'ble Supreme Court has held that ICAR is an instrumentality of the State having control of GOI, despite the fact that the ICAR is a society registered under Societies Registration Act but is wholly financed by Government of India, its budget was voted upon as part of expenses incurred by Ministry of Agriculture and even when its status underwent a change, it was declared as an attached office of the GOI. 5. The learned CIT(A) erred in holding that the appellant is not a part of Central Government because it is a society registered under Societies Registration Act, 1860 in spite of the fact that the Apex Court has held in PKR Iyer's case, supra, that ICAR is almost inseparable adjunct of Government of India having an outward form of society. It could be styled as a society set up by the State and, therefore would be an instrumentality of State. 6. The Learned CIV (has) erred in not taking nQte of the Judgment of Rajasthan High Court in ICAR vs. State of Rajasthan (SB Civil WP No.733/2004 and 7053/2003) where it has been held that Property of ICAR as property of union of India and therefore it is exempt from payment of land and building tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other grounds that may be urged at the time of hearing the Appellant prays that: ( i) The appeal may please be allowed; ( ii) The demand of ₹ 3,66,522 raised u/s 201(1) 201(1A) of the Act is set aside and ( iii) Grant such other relief as the Hon ble Tribunal deem fit in the interest of justice and equity. 5. The learned AR of the assessee vehemently contended that the associate society is under the Department of Indian Council of Agricultural Research (ICAR), Ministry of Agriculture, Government of India and is only a instrumentality of the State under Article 12 of the Constitution of India. Therefore, the employees of the assesseesociety should be treated as the employees of State or Central government. In this connection, he has relied on the decision of the Hon ble Supreme Court in the case of P.K.Ramachandra Iyer and others vs Union of India AIR 1984 SC 541. It is further submitted that the judgment of the Hon'ble Supreme court in ArunKumar vs. UOI (286 ITR 89) is not applicable to the facts of the present case. Therefore, the employees of the assessee-society should be treated as Central Government employees. Alternatively it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer in ITA No. 1607 to 1611/Bang/2013 wherein this Tribunal took a view that the employees of the corporation fully controlled by the Central Government cannot be equated with Central Government employees though it is instrumentality of the State within the meaning of Article 12 of the Constitution of India. 10. We are of the view that the reliance placed by the learned counsel for the Assessee on the aforesaid decision is of any help to the present case. The question in the case of Pradeep Kumar Biswal (supra) was regarding as to whether CSIR is State within the meaning of Article 12 of the Constitution of India. As by the learned DR before us, the meaning of the word State has been defined in Article 12 of the Constitution of India and the decision has to be confined to those cases and cannot extent to interpretation of Rule 3 of the IT Rules, 1962. Public corporations are established by Government to achieve purpose of welfare state. Financial autonomy and functional autonomy are required for such purpose. These corporations are commercial corporations, development corporations, social services corporations or Financial corporations. Such corporations have all tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infructuous. Accordingly the stay petitions are dismissed as infructuous. 7. However the issue has not been examined by the authorities below from the angle of bona fide estimate made by the assessee while valuing the perquisite. The Tribunal in the case of uSC Vs. DCIT dt.27.2.2015 (supra) has dealt with this issue in para 19 as under: 19. We have considered the rival submissions. In our view, the plea of the assessee that it made a bona fide estimate of employees salary by valuing the perquisites in the form of residential accommodation provided to the employees by valuing the same as if employees were employees of Central Govt. has to be accepted In this regard. it is clear from the records that the position with regard to the assessee not being a Central Govt. was brought to its notice by the department only in the proceedings initiated in 2013. Even thereafter the assessee has been taking a stand that its employees are employees of Central Govt. As held in several decisions referred to by the ld. Counsel for the assessee, the obligation of the assessee is only to make a bona tide estimate of the salary. In our view, in the facts and circumstances of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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