Disputed perquisite valuation cannot be reassessed in TDS scrutiny; it belongs in the employee's own assessment.

A disputed car perquisite for a Managing Director could not be revalued at the TDS scrutiny stage where the issue turned on factual questions about official and non-official use. The taxing authority's role, while examining the employer's annual return of salaries, did not extend to determining a debatable perquisite value and raising a short-deduction demand on that basis. The proper forum for resolving the perquisite valuation was the employee's own assessment, not the employer's TDS proceedings. The demand treating the employer as an assessee in default was therefore unsustainable.

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Issues: Whether, while examining the employer's annual return of salaries, the taxing authority could determine the value of a disputed perquisite and raise a demand for short deduction of tax at source under the Income-tax Act, 1961.

Analysis: The controversy concerned the valuation of a car perquisite provided to the Managing Director, which depended on factual and debatable questions about official and non-official use. The dispute was not about the salary shown as paid, but about whether the perquisite value could be revised at the TDS stage. Such a question was held to be properly examined in the employee's own assessment, not while checking deduction of tax at source from the employer's return of salaries.

Conclusion: The authority could not decide the disputed perquisite valuation at the stage of TDS scrutiny, and the demand raised by treating the employer as an assessee in default was unsustainable.

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