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TMI Blog2023 (8) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... upport of its case that, the residential accommodation provided by it to its employees must be treated at par with Central Government for the purpose of deduction of TDS on value of perquisites of rent free accommodation. 2. Section 17(2) of Income Tax Act reads, "Perquisite includes the value of rent free accommodation provided to the assessee by his employer". EPFO does not provide any rent free accommodation. License fee in respect of accommodation allotted to them by the Board is deducted at the rates prescribed by Govt. of India. Therefore, Staff Quarter cannot be termed as Rent Free Accommodation. Staff quarters are given in lieu of "House rent allowance" i.e. part of basic wages or salaries and therefore it is not an excess benefit or advantage to be qualified as perquisites U/s 17(2) of IT Act. 3. The Central Board of Trustees, EPFO is governed, controlled and administered by Central Government. Union Minister of Labour and Employment is the Chairman of the Organisation and the Secretary of Ministry of Labour and Employment is the Secretary of the Organisation. 4. EPFO is the extension of the executive power of the Union of India for implementing the mandate envisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 12. Though the salaries of the Appellant EPFO are not drawn out of the consolidated funds of India but paid out of the funds of the Appellant EPFO it is regulated by the Central Government as provided under Section 5D(C), 5D (9) (a) of EPF and MP Act, 1952 and also that the funds of the Appellant EPFO are vested in and administered by the Central Board of Trustees, which is a tripartite body consisting of representatives from Central and State Governments, the Employers and Employees. Hon'ble Minister of Labour and Employment, Government of India is the Chairman of the Central Board of Trustees. 13. In the Orders of the Commissioner of Income Tax (Appeals), Chandigarh vide No.43/09-10 and 44/09-10, the employees of Central Board of Trustees, EPFO stands to be in the category of Central Government Employee. 14. The Learned CIT (A) has not considered the essence of the following decisions of the Hon'ble Apex Court: * Rajasthan State Electricity Board Vs. Mohan Lal ((1967) 3 SCR 377), * Sukhdev Singh & Ors Vs. Bhagath Ram Singh Raghuvanshi & Anr (1975) 1 SCC 421) * Union of India Vs. R.C. Jain & Ors. (1981) 2 SCC 308) 15. The Learned CIT (A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to." 3. Brief facts of the case are as under: 3.1 The assessee is an autonomous body and is a creation under the statute, "Employees Provident Fund Organisation and Miscellaneous Provisions Act 1952". It is submitted that assessee was enacted to execute the duty of the state and therefore is an extension of national administrative authority, as provided as per the mandate of Article 41 of the Constitution of India. It is submitted that the assessee has been created with defined provisions regarding recruitment, salary, allowances and other service conditions in respect of its executive heads and staff. It is also submitted that, the assessee is governed, controlled and administered by the Central Government under the leadership of Union Minister of Labour & Employment who is the chairman of the organisation and Secretary of Ministry of Labour & Employment. It is thus submitted by the assessee that as per Article 258(1) of the Constitution of India r.w.s 8b(1) of the General Clauses Act, 1897, the assessee is to be construed as an executive limb of the Central Government. 3.2 The Ld.AO observed that assessee has provided its employees with unfurnished accommodation, and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore Staff Quarter cannot be termed as Rent Free Accommodation. India has signed many Social Security Agreements with Foreign countries and the responsibility of signing the Certificate of Coverage in India for Social Security Schemes has been entrusted to Employees' Provident Fund Organisation. The role and responsibilities of this Organisation has been accepted by the foreign countries, this means Employees' Provident Fund Organisation has a Sovereign responsibility to certify Indian Nationals travelling abroad for having being covered in Social Security Schemes in India. In view of above, the residential accommodation provided be treated at par with Central Gout. for deduction of TDS on value of perquisites of rent free accommodation." 3.3 The Ld.AO after considering the submissions of the assessee treated the assessee as "assessee in default" for non-deduction of TDS on perquisite value of unfurnished accommodation provided to its employees, and computed the default along with interest u/s. 201/1(A) of the act, for all the years under consideration. 3.4 The Ld.AO also relied on the decision of Coordinate Bench of this Tribunal in case of M/s. Central Food Technologic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass of 7 [establishments] to which the said Scheme shall apply 8 [and there shall be established, as soon as may be after the framing of the Scheme, a Fund in accordance with the provisions of this Act and the Scheme]. [5A. Central Board.-(1) The Central Government may, by notification in the Official Gazette, constitute, with effect from such date as may be specified therein, a Board of Trustees for the territories to which this Act extends (hereinafter in this Act referred to as the Central Board) consisting of the following 2 [persons as members] namely:- (a) [a Chairman and a Vice-Chairman] to be appointed by the Central Government; (aa) the Central Provident Fund Commissioner, ex officio;] (b) not more than five persons appointed by the Central Government from amongst its officials; (c) not more than fifteen persons representing Governments of such States as the Central Government may specify in this behalf, appointed by the Central Government; (d) ten persons representing employers of the establishments to which the Scheme applies, appointed by the Central Government after consultation with such organisations of employers as may be recognised by the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that where the Central Board is of the opinion that it is necessary to make a departure from the said rules or orders in respect of any of the matters aforesaid, it shall obtain the prior approval of the Central Government. (b) In determining the corresponding scales of pay of officers and employees under clause (a), the Central Board shall have regard to the educational qualifications, method of recruitment, duties and responsibilities of such officers and employees under the Central Government and in case of any doubt, the Central Board shall refer the matter to the Central Government whose decision thereon shall be final.] (8) The method of recruitment, salary and allowances, discipline and other conditions of service of officers and employees of a State Board shall be such as may be specified by that Board, with the approval of the State Government concerned. 6D. Laying of schemes before Parliament.-Every scheme framed under section 5, section 6A and section 6C shall be laid, as soon as may be after it is framed, before each House of Parliament, while it is in session....... 7. Modification of scheme.-(1) The Central Government may, by notification in the Official G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial Gazette, make rules to carry out the provisions of this Act." 4.2 Based on the above provisions, the Ld.AR submitted that, the assessee is an organisation consisting of Central Provident Fund Commissioners, Additional Central Provident Fund Commissioners and other officers including Inspector appointed by the Central Government, and therefore cannot be equated to the facts in case of Central Food Technological Research Institute vs. ITO (supra), who is registered under the Societies Registration Act. 4.3 The Ld.AR vehemently submitted that, the assessee is categorised as a state within the meaning of Article 12, as the employees of the assessee are selected by the State and in such manner that the State can create or abolish the posts or /and regulate the conditions subject to which the post is or will be held by such employees of the assessee. It is thus submitted by the Ld.AR that assessee cannot exist independently without the state. 4.4 She submitted that assessee has been formed also to perform through its employees, the sovereign functions like attachment and sale, arrest and detention and cannot be equated with the employees of the decision relied by the revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployee during the previous year. Where the accommodation is provided by any other employer and- (2) (a) where the accommodation is owned by the employer, or (i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census; The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. (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 (b) where the accommodation is taken on lease or rent by the employer. Actual amount of lease rental paid or payable by the employer or 15% of salary whichev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed 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. 6.2 It is the contention of the Ld.AR that assessee falls under S.No. 1 of table 1 of the Rule 3 and therefore no TDS has to be deducted by the assessee on the perquisite value of the unfurnished accommodation provided by assessee to its employees. It is also submitted by the assessee that it is not working as an autonomous body / undertaking under the control of State / Central government / Semi-government organisation and therefore the Circular No. 113/2002 dated 23.12.2002 is not applicable to assessee. 6.3 We have also perused the provisions of "Employees Provident Fund and Miscellaneous Provisions Act, 1952", which is notified by the central government in the official gazette as per section 5A of the Act. Further as per section 5AA, the Central Government by way of notification in the official gazette constitutes the executive committee to assist the central board in performance of its functions. It is noted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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