TaxTMI 
TaxTMI 
2018 (5) TMI 583
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....2/BANG/2017, ITA 2263/BANG/2017, ITA 2264/BANG/2017, ITA 2265/BANG/2017, ITA 2266/BANG/2017, ITA 2267/BANG/2017, ITA 2268/BANG/2017, ITA 2269/BANG/2017, ITA 2270/BANG/2017, ITA 2271/BANG/2017ITA 2272/BANG/2017, ITA 2273/BANG/2017, ITA 2274/BANG/2017, ITA 2275/BANG/2017, ITA 2276/BANG/2017, ITA 2277/BANG/2017, ITA 2278/BANG/2017, ITA 2279/BANG/2017, ITA 2280/BANG/2017, ITA 2281/BANG/2017, ITA 2282/BANG/2017, ITA 2283/BANG/2017, ITA 2284/BANG/2017, ITA 2285/BANG/2017, ITA 2286/BANG/2017, ITA 2287/BANG/2017, ITA 2288/BANG/2017, ITA 2289/BANG/2017, ITA 2290/BANG/2017, ITA 2291/BANG/2017, ITA 2292/BANG/2017, ITA 2293/BANG/2017, ITA 2294/BANG/2017, ITA 2295/BANG/2017, ITA 2296/BANG/2017, ITA 2297/BANG/2017, ITA 2298/BANG/2017, ITA 2299/BANG/2017 And ITA 2300/BANG/2017 For The Appellant : Shri A Shankar, Advocate And Shri K.K Chaitanya, Advocate For The Respondent : Shri B.R Ramesh, JCIT ORDER PER BENCH : In these group of appeals filed by M/s Karnataka Power Transmission Corporation Ltd.(hereinafter referred to as KPTCL or Assessee), against different orders of CIT(A), the only issue involved is as to whether KPTCL can be considered as "Assessee in Default" under the provi....
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....he date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200:] ...................." 3. Section 10(10AA) of the Act provides for certain exemption when payments are received by an employee in respect of leave period not availed by the employee. Section 10(10AA) of the Act provides for the following exemption viz., "Section 10: Incomes not included in total income. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- ............................ (10AA) (i) any payment received by an employee of the Central Government or a State Government, as the cash equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement whether on superannuation or otherwise; (ii) any payment of the nature....
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....d ought to have been remitted till such time they were actually remitted. 8. The plea of KPTCL was that its employees were employees of the State Government and therefore the entire payment to its employees towards unutilized leave period on retirement was exempt u/s.10(10AA)(i) of the Act. The revenue held that KPTCL was a statutory Corporation and therefore its employees were not employees of State Government and therefore KPTCL ought to have deducted tax at source on payment to employees towards unutilized leave period on retirement in excess of Rs. 3 lacs which alone was exempt u/s.10(10AA)(ii) of the Act. In other words the stand of the revenue was that the clause applicable for determining liability to deduct tax at source was Sec.10(10AA)(ii) and not Section 10(10AA)(i) of the Act. 9. Both the AO and the CIT(A) rejected the plea of KPTCL and that is how KPTCL is in appeal before the Tribunal. The appellants in these appeals are the various divisions of KPTCL situate at various Districts in the State of Karnataka. One set of the divisions of KPTCL was represented by Mr.A.Shankar, Advocate and the other set of divisions of KPTCL was represented by Mr.K.K.Chaitanya, Advoc....
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....ehalf of KPTCL by the learned counsel for KPTCL pointing out the historical background under which KPTCL came into existence. Prior to enactment of Electricity Act, 2003 (Central Act) supply of Electricity was governed by the Electricity (Supply) Act, 1948 (again a Central Act). As per Section 5(1) of the Electricity (Supply) Act, 1948, every State had to constitute a State Electricity Board (SEB) by notification in Official Gazette. Sec.12 of the said Act stipulated that SEBs so constituted shall be a body corporate having perpetual succession and a common seal with power to acquire and hold property both movable and immovable and shall be capable of suing and be sued. That is how Mysore electricity Board came to be established on 1.10.1957 which was subsequently named as Karnataka State Electricity Board (KEB). Employees of State Government became employees of KEB. 13. In view of losses incurred by KEB, Government of Karnataka came out with general policy proposing fundamental and radical reforms in the power sector. Accordingly, Karnataka Electricity Reforms Act, 1999 (KERA) was enacted by the Karnataka State Legislature which advocated division of the functions of generation....
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....ubject to or given by the State Government. 16. The learned counsel for KPTCL also submitted that the issue of whether the Assessee was obliged to deduct tax at source on unutilized leave on retirement u/s.192 of the Act which casts obligation on an employer to deduct tax at source on salaries paid. It was argued that under clause (va) to Sec.17(1) of the Act it is only "any payment received by an employee in respect of any period of leave not availed of by him". It was submitted that on retirement the employer employee relationship between KPTCL and the retiring employee ceases and any payment made thereafter cannot be strictly termed as "Salary". Our attention was drawn to Finance Act, 2018 which inserted Sec.56(2)(xi) w.e.f. 1.4.2018 to avoid a possible plea that may be taken in such cases by holding that any payment post retirement will also be chargeable to tax under income from other sources, if it is not chargeable under the head income from salaries. To highlight the legal position that deeming provisions should receive strict construction in fiscal statute, the learned counsel referred to the decision of the Hon'ble Supreme Court in the case of V.M.Salgaocar & Bros.(P) ....
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....ACIT ITA No.1395 to 1412, 1424 to 1426, 1456 to 1458/Bang/2018 order dated 6.4.2018. (ii) Syndicate Bank Vs. ACIT ITA No.1398 to 1403 and 1435 to 1477/Bang/2016 dated 6.4.2017. (iii) CIFCO Finance Ltd. Vs. ITO (2007) 13 SOT 376 (Mum) (iv) Ernakulam District Co-operative Bank Vs. ACIT (2005) 142 Taxman 98 (Kerala) (v) CIT(TDS) Vs. Director, DPS (2011) 14 Taxman.com 45 (P & H) (vi) Drawing & Disbursing Officer Vs. ACIT 115 ITD 411 (All) 19. It was submitted on identical facts such as the Assessee the ITAT Bangalore Bench confirmed orders u/s.201(1) of the Act in the case of Central Food Technological Research Institute (supra) and CSIR National Aerospace Laboratories Vs. ACIT ITA No.453 to 456/Bang.2014 order dated 27.8.2014. 20. We have very carefully considered the rival submissions. We are of the view that the facts and circumstances of the present case are identical to the case of Indian Institute of Science(supra) decided by the ITAT Bangalore Bench. In the said case the deduction of tax at source was u/s.192 of the Act. The question was valuation of perquisites in the form of rent free accommodation provided to employees of a s....
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....t. As far as the Assessee is concerned, his obligation is only to make an "estimate" of the income under the head "salaries" and such estimate has to be a bonafide estimate. 27. The primary liability of the payee to pay tax remains. Section 191 confirms this. In a situation of honest difference of opinion, it is not the deductor that is to be proceeded against but the payees of the sums. To reiterate, the payment towards medical expenditure and leave travel is made keeping in view the employee welfare. The exclusion in respect of payment towards medical expenditure and leave travel is considered after verifying the details and evidence furnished by the employees. No exemption is granted in the absence of details and/or evidence. The exemption in respect of medical expenditure is restricted to expenditure actually incurred by the employees, or Rs. 15,000/- whichever is lower. The exemption is granted even if the payment precedes the incurrence of expenditure. The requirements/conditions of section 10(5) and proviso to section 17(2) are meticulously followed before extending the deduction/exemption to an employee. No tax can be recovered from the employer on account of short....