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TMI Blog2015 (12) TMI 1889X X X X Extracts X X X X X X X X Extracts X X X X ..... he same CIT(A) in similar proceedings. First we come to quantum cross appeal as indicated hereinabove for the sake of convenience and brevity. Assessee's appeal ITA 09/Ahd/2012 and Revenue's appeal ITA 321/Ahd/2012 2. The assessee's appeal is stated to be involving three substantive issues inter alia challenging lower appellate order confirming disallowance of Rs. 11,74,000/- relating to amortization of lease rental treated as capital expenditure instead of revenue as claimed, section 80IA deduction disallowance of Rs. 105.52 lacs by holding that the necessary conditions stipulated therein have not been fulfilled as confirming addition to book profit by Rs. 2,13,29,879/- qua provision for bad and doubtful debts. It files a chart before us whose correctness is not doubted at Revenue's behest on facts or law. It is to be seen the assessee's first ground stands considered/rejected by a co-ordinate bench of the tribunal in its own case ITA 4462/Ahd/2007 in assessment year 2004-05. The second substantive of section 80IA deduction is stated to be decided in its favour by another co-ordinate bench of the tribunal in its own case ITA nos. 179 to 181/Ahd/2010 for assessment years 2005-06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional high court in its own case Tax Appeal No. 798 of 2010 decided on 19-01-2015 rejecting the very substantial question framed in assessment year 1999-2000. There is no exception pointed out before us. We respectfully follow the same and uphold the lower appellate findings under challenge. Revenue's appeal ITA 321/Ahd/2012 is partly accepted for statistical purposes. 5. This leaves us with assessee's appeals ITA 461/Ahd/2012 relating to section 201(1) and (1A) proceedings. It raises three substantive grounds of medical reimbursement, storage charges and that of interest of Rs. 1,61,462/-. Only the first substantive ground of medical reimbursement is argued in the course of hearing. 6. This assessee-company manufactures chemicals. The department carried out a survey so as to verify compliance of TDS provision on 16-07-2005. The assessee was found to have claimed section 10 deduction under the head medical reimbursement allowance to the tune of Rs. 15,000/- per employee. It had obtained indemnity bonds from its employees/officers to the effect that they would declare the medical reimbursement claim to be actually spent as well as purchase of general medicines. And also the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees merely on the basis of self declaration or on the basis of production of indemnity bond as made by them. Further, on perusal of format as attached by the appellant alongwith his above submission for payment of medical reimbursement it is seen that the employees made declaration as under : "With reference to circular no. GACL/PER/00/06 Did. 16th Feb. 2006, the company makes reimbursement of medical expenses upto a prescribed limit for the period from _____ to _______ In this connection, I hereby declare that the amount has been actually spent by me for the medical treatment as well as purchase of general medicines. The amount so spent is more than the reimbursement now being made to me. I declare that the details of expenses and evidence thereof are available with me and shall produce the same as when required by the company." From the above declaration it can be seen that the details of expenses incurred and evidences with regard to the same are not produced by the employees to the personnel department for actual verification and medical allowances are paid by the appellant to them merely on the basis of self declaration in the above format or on the basis of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the payments as made to the employees on account of medical allowances wherever the amounts exceed Rs. 15,000/-. In this regard the ACIT (TDS), Baroda is directed to verify the claim of the appellant and wherever the tax is deducted by the appellant at applicable rate on payments made on account of medical allowance, such amounts will be excluded from the total payments for the purpose of calculating non deduction of tax at source u/s 201(1). In this regard the ACIT (TDS), Baroda will ensure that the opportunity of being heard is accorded to the appellant." 8. We have heard both the parties. The assessee strongly argues in support of its bonafide explanation tendered in lower proceedings. The Revenue's submissions seek confirmation of the impugned demands. There is no dispute on facts. The assessee-company has reimbursed medical allowances to its employees on furnishing of indemnity bond and declaration that the actual money spent on medical treatment and general medicines is more than the amount in question coming to maximum of Rs. 15,000/-. There is no issue that this figure of Rs. 15,000/- forms the threshold amount for being treated as a prerequisite u/s. 17(2)(VIII) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strictly see the legal position. However, as far as TDS obligations in respect of the said allowance are concerned, employer's duty is to make a fair and honest estimate of employee's income and deduct the tax on the basis of said estimate. The assessing officer's reliance on the judgment in the case of LIC Officers Association is, therefore, not really relevant inasmuch as it deals with the question of taxability which, strictly speaking, is not even our concern here. It is not in dispute that the assessee is assessed to tax for the last many years. Deduction out of the salary paid has to be made as per the provisions contained in section 192 of the Income Tax Act. The said section requires and employer to make deduction from the salary of an employee on the basis of the estimated income. If an employer has made a fair and honest-estimate of the taxable salary and deducted and paid tax thereon, he cannot be treated as an assessee in default under section 201(1) of the Act even if the assessing officer ultimately assessed the salary at a higher figure. For this proposition, we derive strength from the following observations of the Madhya Pradesh High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here, we are of the view that the assessee was under no obligation to deduct the tax at source on conveyance allowance." When such are the views of the Tribunal, the assessee employer cannot be faulted is holding the view that the conveyance allowance is not taxable in the hands of the employees, and, therefore, excluding the same from estimated income under section 192. It is not even revenue's case that the amount so paid by the assessee tax deductor was so excessive or unreasonable that it was de facto a payment of salary in the garb of allowances. In this view of the matter, the very basis of demands raised under section 201 read with section 192 is not sustainable in law. Accordingly, we are of the considered view that the CIT (A) indeed erred in law in sustaining the same. We, therefore, direct the assessing officer to delete the same. 8. In the result, all the three appeals are allowed." 9. We draw support from the above extracted observations and conclude that the assessee has acted fairly and honestly in computing its TDS liability qua salary and other allowances paid to its employees u/s. 192 of the Act. Nor it is the Revenue's case that it has not acted in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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