2010 (10) TMI 1126

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....dent. 2) The basic question raised in all these appeals is whether the Income Tax Appellate Tribunal was justified in setting aside the orders passed by the Assessing Officer under Section 201 of the Income Tax Act, 1961 (for short, "the Act") ? The Assessing Officer in his orders passed under Section 201 of the Act had held that the respondent assessee was liable to deduct tax at source on the value of perquisites covered under Section 17(2)(ii) of the Act as amended by the Finance Act, 2007. The Assessing Officer had further held that in view of the failure to deduct tax at source, the assessee was liable to be declared as an assessee in default and consequently, liable for the short deduction of tax at source and interest under Sectio....

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....n in the matter of rent and hence, Rule 3 of the Income Tax Rules, 1962 had no application in the present case. Secondly, assuming that there was any tax liability on the employees as a result of the retrospective amendment to Section 17(2) by the Finance Act, 2007, the employer assessee could not be declared as "assessee in default" for the past assessment years as the salary for those years has already been paid. The submission is that since the salary for the period prior to the amendment has already been paid to the employees after deducting tax at source as per the law then prevailing, the question of deducting tax in those years on the basis of retrospective amendment does not arise at all. 7) Rejecting the contentions of the asses....

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....e matter of accommodation provided by the employer to the employees and the case is not covered by Section 17(2)(ii) of the Act. In other words, even after the substitution of Rule 3 with effect from 1/4/2001, in the absence of any specific provision under the Act, it was open to the assessee not to deduct tax at source relating to the accommodation given to the employees on the ground that no concession in rent has been given to the employees. This contention of the assessee has been in fact upheld by the Apex Court in the case of Arun Kumar (supra). To overcome the above decision, the law has been amended by Finance Act, 2007 with retrospective effect from 1/4/2002. The retrospective amendment merely takes away the above argument, which w....