TaxTMI 
TaxTMI 
2013 (2) TMI 303
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....ls were heard together and are being disposed of by way of this common order for the sake of convenience. 2. First we take up the appeal of the assessee with regards to allegation of the Assessing Officer that the assessee has not deducted TDS from the cost of uniform items, stitching charges, washing expenses etc., reimbursed to the employees. This appeal is ITA No. 184/Ahd/2010. The only ground raised by the assessee is as under:- "1. The learned CIT(Appeals) has erred in law and in facts and circumstances of the case in upholding the order passed by ACIT, TDS, Baroda whereby the appellant was held to be an assessee in default for not deducting tax at source from the cost of Uniform items, Stitching Charges, Washing Expenses, etc. reimbursed to its employees and was called upon to pay the tax allegedly short deducted from its employees u/s. 201(1) addition interest thereon u/s. 201(1A) of the Income Tax Act, 1961." 3. Brief facts on this issue till the stage of passing of order by AO u/s. 201 & 201(1A) of the Act are noted by Ld. CIT(A) in para-4 and 4.1 of his order and these two Paras are reproduced below:- "4. The second ground of appeal is that the A....
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....statute book before its amendment by the Finance No.2 Act 2009 with effect from 1-4-2010, perquisites did not include the fringe benefits chargeable to tax under Chapter-XIIH. He further submitted that as per section 115WB (2)E under Chapter-XIIH, any expenditure incurred for employees' welfare is considered as fringe benefit on which FBT is payable excluding these expenditure for employees' welfare which are incurred to fulfill any statutory obligation or to mitigate occupational hazard etc., It was further submitted by him that benefits given by the assessee-company to its employees by way of uniform, stitching charges and washing expenses etc., were not to fulfill any statutory obligation or to mitigate occupational hazard and this expenditure did not fall under exclusion as specified in the Explanation to clause-E of sub-section 2 of section 115WB and therefore, FBT is payable by the assessee-company on the benefits provided by the assessee-company to its employees and assessee has duly paid FBT on these payments to its employees and therefore, the same cannot be considered as perquisites and as a result, no TDS is required to be deducted by the assessee from this expenditure. ....
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....es Ltd. (2009) 308 ITR 82 (Guj) although reliance on this judgment was placed by Ld. AR of the assessee also. Regarding reliance placed by the assessee on the judgment of Hon'ble apex court rendered in the case of R & B Falcon (A) Pty. Ltd. (supra), it was submitted that this judgment is not applicable in the present case because the Ld. AR has drawn inference from this judgment but the same is not correct. He further submitted that FBT is not payable on this expenditure and even if paid by the assessee, it will not alter legal position regarding requirement of deduction of TDS by the assessee. 7. Regarding this contention of the Ld. AR of the assessee that assessee was under the bona fide belief, it was submitted that no person can have bona fide belief in the absence of any control about actually incurring of expenditure by the employees. 8. In rejoinder, it was submitted by the Ld. AR of the assessee that there is no dispute on this aspect that FBT was paid by the assessee on this expenditure and if it is held that the FBT was not payable on this expenditure and therefore, TDS was required to be deducted, direction may be given for granting refund of the FBT paid by....
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....ture is in the nature of employees' welfare. One more contention was raised by the Ld. DR of the Revenue that in the present case, these allowances are given to each employee separately and the benefit arising to each employee is ascertainable and therefore, on such benefit, FBT is not payable and only those expenditures in respect of employees' welfare are liable to FBT, which are common expenditure and benefit obtained by each employee is not ascertainable. We do not find any merit in this contention of Ld. DR of the Revenue because there is no such restriction provided in section 115WB that only common expenditure on employees' welfare is liable to FBT and not those expenditures which are attributable to an employee directly and whose benefit enjoyed by an employee is ascertainable. Only exception carved out from the liability of FBT is as per Explanation to Clause- E of this Section as reproduced above which includes those expenditures which are incurred to fulfill any statutory obligation or to mitigate occupational hazards etc. The impugned expenditure which is in dispute before us does not fall in any of the exclusion clause of the explanation. The second argument of the Ld.....
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....meeting the employer's statutory obligation under the Employment Standing Order Act, 1948 fall within the scope of exclusion in the explanation to clause-E of sub-section-2 of 115WB and therefore, to the extent, such expenditure is covered by this exclusion, FBT is not required to be paid. In the present case, we have seen that the expenditure incurred by the assessee in respect of uniform, washing charges etc., is not a statutory obligation of the assessee-company and therefore, it is not covered by the exclusion clause of Explanation to clause-E of sub-section 2 of section 115WB. The consequence of this is that the same is not perquisites as per section 17 (2) (vi) of the IT Act. Now, we examine the applicability of the judgment of Hon'ble apex court rendered in the case of R & B Falcon (A) Pty. Ltd. (supra). In para-17 of this judgment, it is noted by Hon'ble apex court that FBT is new concept and the tax is to be levied on the fringe benefit provided or deemed to have been provided by any employer to employee @ 30% on the value of such fringe benefit. It is further noted by Hon'ble apex court that intention of the Parliament to tax the employer on the one hand for the expenditu....
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.... employer had not deducted TDS on the same." 15. Brief facts on this issue are noted by Ld. CIT (A) in para-3 and 3.1 of his order, which are reproduced below:- "3. The first ground of appeal is that the Assessing Officer has treated the appellant as in default for not deducting the tax deducted at source from the amount of CMRE (Conveyance and maintenance of Expenses) reimbursed to employees. 3.1 The survey action was carried by the TDS Circle, Baroda at the premises of the appellant. During the course of survey details of salary were verified and the Assessing Officer came to the conclusion that the CMRE and the Transport Allowances are part of the salary and which are not based on any reimbursement nature. The Assessing Officer also contended that as a payment of CMRE is made even to employees provided a staff car, even if he does not keep his car at the station of posting and also when on leave, concluded that the payment of CMRE is nothing but additional salary paid in the form of allowances and it deserved to be taxed as salary income u/s. 17(1)(iv). Before the Assessing Officer the assessee submitted that CMRE is subject to FBT and being in the nature of reimburseme....
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.... various parameters into account. Each employee is required to submit his claim on monthly basis for the reimbursable running & maintenance expenditure incurred din the preceding month, in the prescribed form. The claims are submitted by employee on line by making necessary entries in the appellant's computerized system. It is also not true that all employees automatically become eligible for d\receiving CMRE payments. Rather, CMNRE is allowed only to those employees in respect of whom permission is granted by a competent authority to do so after applications are made by the employees and after such applications are approved by the employees' controlling officers, on a through scrutiny. In addition, employees are also allowed reimbursement once every year towards the cost of insurance incurred by them on the vehicles for which they have been allowed to claim CMRE. This reimbursement is allowed on production of receipt for payment of insurance premium and copy of insurance policy/cover note etc., Restrictions on payments when employees were on leave or absent from duties for more than 30 days and 60 days reveal that the contention of the AO that even when the vehicles were not us....
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....21. Ground raised by assessee is as under:- "1. The learned CIT(Appeals) has erred in law and in facts and circumstances of the case in upholding the order passed by ACIT, TDS, Baroda whereby the appellant was held to be an assessee in default for not deducting tax at source from the cost of Uniform items, Stitching Charges, Washing Expenses, etc. reimbursed to its employees and was called upon to pay the tax allegedly short deducted from its employees u/s. 201(1) addition interest thereon u/s. 201(1A) of the Income Tax Act, 1961." 22. Both sides agreed that issue involved in this appeal is identical to the issue involved in ITA No. 184/Ahd/2010 and this can be decided on similar line. In ITA No.184/Ahd/2010, this issue was decided by us in favour of assessee as per Para - 9 to 12. Accordingly, in this appeal also, this issue is decided in favour of assessee on similar line. 23. In the result, assessee's this appeal is also allowed. 24. The ground in Revenue's appeal i.e. ITA 610/Ahd/2010 is identical to ITA No.609/Ahd/2010. This appeal was decided in favour of the assessee as per para-17 above. On similar line, in this year also, This issue is decided in favour of the ....
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.... of the Revenue supported the order of Ld. CIT (A). 28. We have considered the rival submissions and perused the material on record and gone through the orders of authorities below. We find that issue in dispute is this as to whether TDS was required to be deducted from hiring charges of CMRE u/s 194C of the IT Act @ 2% or u/s194I @ 10%. On this issue, Ld. CIT (A) has directed the Assessing Officer to re-compute the liability after the assessee provides the required details regarding charges paid for CMRE. Before us, the submission of the Ld. AR of the assessee is this that the A. O. may be directed to decide this entire issue afresh after necessary details are filed by the assessee before him and after providing reasonable opportunity of being heard to the assessee. We are of the considered opinion that in the interest of justice, the AO may be directed to do so and hence, we set aside this order of Ld. CIT(A) on this issue and restore this entire matter back to the file of AO for fresh decision. The assessee has to furnish necessary details before the AO regarding CMRE hiring charges paid by the assessee and thereafter, this entire issue will be decided by AO afresh and he has....
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....32 of the order of Ld. CIT(A) in respect of Revenue's appeal in ITA No.1347/Ahd/2010. He submitted that a clear finding has been given by the Ld. CIT(A) that the car for vehicle was to transport employees of the assessee from place to place i.e. from residence to workplace and back as per time-schedule of the contractee and it may be used for any of the business purpose as deemed necessary by the assessee and there is no stipulation in the agreement that the same car or vehicle has been provided and it is enough if the mere type or model of the vehicle as specified is placed at the disposal of the assessee for the purpose for which the same has been hired and therefore, this is for rendering service and not vehicles given on hire. He further submitted that Ld. CIT(A) has rightly held that for such services availed by the assessee on payment of car hiring charges, section 194C is applicable and not section 194I of the Act and therefore, the order of Ld. CIT(A) on this aspect should be affirmed. 33. Regarding third aspect i.e. regarding seismic job service and short hole and hire of plant and equipments, he submitted that as per Explanation-2 to Section 9(1)(viii), professional se....
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....ore the 1st day of April, 1976, and approved by the Central Government. Explanation 1 - For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date. Explanation 2 - For the purposes of this clause, fees for technical services means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "salaries"." 35. From the above Explanation-2 to Section 9(1)(vii), we find that consideration paid for any construction, assembly mining or like project undertaken by the recipient chargeable or receipts taxable under the head "salary" are to be excluded from fees for technical services. In the present case, this is not the case of anybody that impugned amount....
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....llular mobile telephone services were provided to the subscriber and under these facts, it was held by Hon'ble Madras High Court that when a person decides to subscribe to a cellular telephone service in order to have the facility of being able to communicate with others, he does not contract to receive a technical service. What he does agree to is to pay for the use of the airtime for which he pays a charge. The fact that the telephone service provider has installed sophisticated technical equipment in the exchange to ensure connectivity to its subscriber, it does not amount to rendering of technical services to its subscriber. In the present case, technical services were rendered by the recipient of the consideration and therefore, this judgment is not applicable in the present case. 37. Similarly, the reliance placed by Ld. AR of the assessee on the Tribunal's decision rendered in the case of Gujarat State Electricity Corporation Ltd. (supra) is also of no help to the assessee because facts are different. In that case, payments were made by the assessee-company to Gujarat Electricity Board for entire operation and maintenance of power plant under a comprehensive contract and ....
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....erred in law as well as facts of the case in deleting the order passed u/s. 201(1) & interest charged u/s. 201(1A) of the IT Act of Rs.3,90,114,538/- for A.Y. 2009-10 by the AO even though during the course of verification it was noticed that the assessee company was aid conveyance, maintenance, reimbursement expenditure (CMRE) to its employees every month based on their status, designation. Despite the fact the payment of CMRE was taxable as salary and employer had not deducted TDS on the same. 2. The Ld. CIT(A) erred in law as well as facts of the case in deleting the order passed u/s. 201(1) & interest charged u/s.201(1A) of the IT Act of Rs.2,16,40,530/- for A.Y. 2009-10 by treating the various contract u/s. 194C of the Act as against 194J of the Act by the AO." 44. Regarding ground No.1 of this appeal, it was agreed by both sides that this issue is identical to ground No.1 raised by Revenue in ITA No.309/Ahd/2010 and the same can be decided on similar line. While deciding that appeal, we have already decided this issue in favour of assessee and accordingly, here also, we decide this issue in favour of assessee. Accordingly, ground No.1 is rejected. 45. Regarding gr....