2017 (10) TMI 1317

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....xtiles, Government of India. The Assessing Officer proceeded to hold the assessee as assessee in default under Section 201(1) and 201(1A) of the Income Tax Act, 1961 (in short 'the Act') for want of deduction of TDS in respect of the house accommodation provided by the assessee to its employees. The Assessing Officer computed the tax liability in accordance with the Table I of Rule 3 and treating the assessee in the category of the employer other than the Central Government or State Government. The Assessing Officer was of the view that the assessee is neither Central Government nor the State Government nor its employees can be considered holding office or post in connection with the affairs of the union or state. The Assessing Officer accordingly determined the tax liability vide order passed under Section 201(1) and 201(1A) of the Act. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed. 4. Before us, the learned Authorised Representative of the assessee has submitted that the assessee is established under the Central Silk Board Act, 1948. The assessee is a statutory body functioning directly under the control of M....

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....or the purpose of Rule 3. Further the assessee has significant financial as well as administrative autonomy. The learned Departmental Representative has relied upon the decision of the co-ordinate Bench of this Tribunal dt.4.7.2014 in the case of Central Food Technology Research Institute Vs. ITO (TDS) in ITA No.1607 to 1611/Bang/2013 and submitted that an identical fact the Tribunal has held that an autonomous body constituted under the statute receiving grants from the government cannot cannot be treated as government or state for the purpose of Rule 3 of the IT Rules. He has relied upon the orders of the authorities below. 6. We have considered the rival submissions as well as the relevant material on record. As regards the applicability of the Sl.No.2 in Table 1 of Rule 3 for the purpose of computing the perquisite value of the accommodation provided by the assessee, the issue is covered by the decision dt.4.7.2014 of the co-ordinate Bench of this Tribunal in the case of Central Food Technology Research Institue Vs. ITO (supra) wherein the Tribunal after discussing all the relevant facts held in paras 10 to 12 as under : 7. However the issue has not been examined by the a....

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....t to have appreciated that the appellant constituted the State within the meaning of Article 12 of the Constitution of India and that the salaries to its employees are paid from the Consolidated Fund of India and accordingly. ought to have held that the employees of the appellant are employees of the Centrai Government. 6. The learned Commissioner (Appeals) erred in following the decision of the Hon'ble Income Tax Appellate Tribunal - Bangalore Bench in Central Food Technological Research Institute v. ITO in ITA Nos. 1607 to 1611/Bang/2013 which is distinguishable on facts and the ratio of which is not applicable to the case of the appellant. Document 2 7. The learned Commissioner (Appeals) ought to have followed the decisions of the Hon'ble Income Tax Appellate Tribunal Delhi Bench in Ram Kanwar Rana v. ITO 159 ITD 431 & Pune 'B' Bench in Smt. Sapna Sanjay Raisoni v. ITO 179 TTJ (Pune) (UO) 34 relied upon by the appellant and accordingly, ought to have held that the employees of the appellant are employees of the Central Government. 8. The learned Commissioner (Appeals) erred in holding that Ground Nos. 1, 2 & 13 are general in nature an....

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....for such purpose. These corporations are commercial corporations, development corporations, social services corporations or financial corporations. Such corporations have all trappings of Government but their employees cannot be equated with employees either holding office or post in connection with the affairs of the Union or of such State. Eminent Author Seervai in his book Constitutional Law of India, 1984 Vol II pp.2578-79 has deducted the following principles with regard to the status of employees of a statutory corporation- Document 4 (i) a statutory corporation has a separate and independent existence and is a different entity from the Union or the State Government with its own property and its own fund and the employees of the corporation do not hold civil post under the Union or the State; makes little difference in this respect, whether the Union or the State holds the majority share of the Corporation and controls its administration by policy directives or otherwise; (iii) it also makes little difference if such a statutory corporation imitates or adopts the Fundamental Rules to govern the service conditions o....