TaxTMI 
TaxTMI 
2010 (10) TMI 697
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....s that the Schemes have to be in accordance with the guidelines as prescribed in Rule 2BA of Income Tax Rules. In other words, in order to avail the benefit of Section 10(10C), the Voluntary Retirement Schemes should be framed according to the guidelines as prescribed in Rule 2BA. It would mean that in case the guidelines as per Rule 2BA are not adhered to, no exemption u/s. 10(10C) will be available to the assessee. In the present case the assessee company has made the payments in violation of section 10(10C) as much as (i) salary of more than 3 months have been paid under the different Circulars to a number of workers (ii) payment of more than Rs.5 lacs have been made to a number of employees (iii) as per Rule 2BA the scheme should be applicable to all employees, but in case of assessee deductor, additional benefits have been granted to only those employees who opted for early retirement, in view of the circular followed by the VRS Scheme. In view of the above assessee company is being treated as an assessee in default for not deducting and depositing the tax on these payments u/s 201(1A) of the Income Tax Act. The Average Tax in these years is 30.60% and 30% respectively....
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.... made in regard to early bird incentives, the tax has been deducted by the company on such payments and paid to the Govt. The Assessing Officer is directed to verify the quantum of such amount and ascertain whether TDS has been deducted as per the provisions of the relevant Section and charge interest u/s 201(1A) for any delay or short deduction." 2.3 Ld. Commissioner of Income Tax (Appeals) further noted that assessee has raised a ground of being treated as assessee in default for alleged shortfall of deduction at source. In this regard, he referred to the assessee's submissions and case laws. Ld. Commissioner of Income Tax (Appeals) further held as under:- "I have carefully considered the submissions made by the counsel of the assessee. The case of the Assessing Officer was that the entire Scheme of VRS is not in conformity with Rule 2BA and provisions of Section 10(10C) of the Act. It is already held in the earlier part that the scheme introduced by the Company adhere to the various guidelines, rule 2BA and provisions of section 10(10C) of the Act. The assessee has submitted that where ever the payment is in excess of Rs.5 lacs the TDS has been deducted by the co....
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....he time of deduction of tax at source. The employer is required to have a broad picture of the estimated income which is to be subjected to tax. The department could not successfully show that the assessee's conduct in not deducting tax at source in the instant case was a mala fide one for which the penalty was leviable in its hands. Therefore, the penalties levied under section 201(1) would not be upheld." Revenue's reference application under section 256(3) of the Act has been dismissed by the Delhi High Court vide C.I.T. vs. Nestle India Ltd. reported in 243 ITR 435. The Hon'ble Court observed as under:- "In our view, the proposed questions are not fit for reference to this Court. From the afore-extracted portion of the order of the Tribunal it is evident that the Tribunal's finding that the assessee had a good and sufficient reason for not deducting tax at source on the said amount is founded on the fact that it was under a bona fide belief that the conveyance allowance was not to be included in the salary. The conclusion arrived at by the Tribunal is a pure finding of fact, which does not give rise to any question of law. The tribunal has not examined, and righ....
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....ts and circumstances of the case as well as in law, the Ld. C.I.T.(A) has erred in holding that the Scheme of Voluntary retirement was in conformity with Rule 2BA of the IT rules without appreciating the facts that as per Rule 2BA the Scheme should be applicable to all employees, but in case of assessee deductor, additional benefits (VSS) have been granted to only some of the employees. (iv) On the facts and circumstances of the case as well as in law, the Ld. C.I.T.(A) has erred in treating the assessee as not in default by holding that the Scheme of Voluntary Retirement was in conformity with Rule 2BA of the IT Rules. He has failed to appreciate that additional benefits granted to some of the employees in the grab of VSS floated by assessee on same day and a few days after VRS cannot be treated as separate and distinct from VRS, but only a part of it. 4.1 Ld. counsel of the assessee on the other hand supported the order of the Ld. Commissioner of Income Tax (Appeals). We have carefully consider the submission. We find that Assessing Officer has held that Guidelines as per Rule 2BA are not adhered to and no exemption u/s 10(10C) will be allowable to the assessee. h....
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....er of Income Tax (Appeals) has directed the Assessing Officer to verify the quantum of such amount and ascertain that the TDS has been deducted as per the provision of relevant section and charge interest u/s 201(1A) for any delay or short deduction. We find that Ld. Commissioner of Income Tax (Appeals)'s in his order in this regard is in conformity with the Hon'ble Gujrat High Court decision cited above and it does not need to interfere in the same. 4.4 Another aspect which the Ld. Commissioner of Income Tax (Appeals) has addressed that assessee has acted in a bona fide and for good and sufficient reasons. In this regard, decision of the Delhi Bench of the Tribunal in Nestle India Pvt. Ltd. 61 ITD 441 has been referred in the Ld. Commissioner of Income Tax (Appeals)'s order in which it has been held that assessee cannot be treated in default u/s 201(1A) of the Act when the conduct of the assessee for not deducting TDS was not malafide. 4.5 Revenue has appealed against the above order Hon'ble Delhi High Court in the case of C.I.T. vs. Nestle India Ltd. reported in 243 ITR 435 has dismissed the revenue's appeal by holding as under:- "In our view, the proposed....