TaxTMI 
TaxTMI 
2018 (6) TMI 162
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.... as to why it should not be treated as 'an assessee in default' under section 201(1) of the Income-tax Act (hereinafter referred to as 'the Act') as it failed to deduct tax at source on the perquisite value of rent free residential accommodation provided to its employees, in terms of rule 3 as applicable , where the accommodation is provided by any employer other than Central Government or State Government. In response to the same the assessee contended that the assessee-society falls under the definition of 'State' as defined under article 12 of the Constitution and the employees of the assessee-society are the employees of the Central Government. However the TDS officer had not accepted the contention and held that the employees of the assessee society cannot be treated as employees of the Central Government and therefore held that the assessee is under obligation to deduct tax on the perquisite value of the accommodation provided to its employees as applicable under clause(ii) of rule 3 of IT Rules. Accordingly TDS officer held the assessee society as 'assessee in default' and demanded tax of Rs. 2,6 2,740/- under section 201 (1)and interest of Rs. 1,03,782/- und....
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.... 6. The Learned CIV (has) erred in not taking nQte of the Judgment of Rajasthan High Court in ICAR vs. State of Rajasthan (SB Civil WP No.733/2004 and 7053/2003) where it has been held that Property of ICAR as property of union of India and therefore it is exempt from payment of land and building tax in view of Article 285 of the Constitution. If the quarters of the appellant is the property of the Government question of computation of perquisite as provided under section 17 (2) (ii) (c) of the Income tax Act, 1.961 does not arise at all. 7. Reliance placed by CIT(A) on the judgment of Hon'ble Supreme Court in the case of Arun Ku mar v. UOI is not relevant to facts of the case. The appellant is neither claiming that there is violation article 14 of the constitution while calculating value -.if: RA of Government Employees vis-à-vis employees of public sector undertakings, corporation etc nor it is appellant's case that alt the 'other authorities" falling within the word "State" under Article 12 shall be treated at par with Government Employees. 8. The appellant is not disputing that in view of the amendment to Rule 3 of Income-tax Rules 1962 that for the p....
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.... submitted that the judgment of the Hon'ble Supreme court in ArunKumar vs. UOI (286 ITR 89) is not applicable to the facts of the present case. Therefore, the employees of the assessee-society should be treated as Central Government employees. Alternatively it was submitted that the default for non deduction of tax at source is only on account of difference of opinion as to taxability of an item and the employer cannot be treated as an assessee in default. Reliance in this regard is placed on the decision of the Hon'ble Andhra Pradesh High Court in the case of P.V.Rajgopal vs. Union of India (233 ITR 678). It was further contented that in the absence of finding that estimate of salary income was not fair and honest, no proceeding can be initiated against employer under section 201(1) of the Act and reliance in this regard was placed on the decision of the Hon'ble Madhya Pradesh High Court in the case of Gwalior Rayon Silk Co. Ltd. vs. CIT (140 ITR 832). Reliance was also placed on the decision of the co-ordinate bench in the case of Central Silk Board vs ITO in ITA No.1077/Bang/2017 dated 23/10/2017. 6. On the other hand, the learned Departmental Representative submitted that ....
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....of welfare state. Financial autonomy and functional autonomy are required 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- (i) a statutory corporation has a separate and indepcn.dcnt 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; (ii) 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 ser....
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....ld in several decisions referred to by the ld. Counsel for the assessee, the obligation of the assessee is only to make a bona tide estimate of the salary. In our view, in the facts and circumstances of the present case, assessee has made such an estimate. The assessee's obligation u/s 192 is therefore properly discharged and hence proceedings 201(1) & 201(1A) of the Act have to be quashed and are hereby quashed." This decision was again followed by the Tribunal in the case of ACIT Vs. IISC for the Assessment Year 2011-12 vide order dt.11.8.2016. We further note that it is not a fresh issue raised by the assessee but it is only a plea in respect of the same subject matter and issue of deduction of TDS in respect of the accommodation provided to the employees. Therefore in the facts and circumstances and in view of the decisions of the Tribunal, we set aside this issue to the record of the Assessing Officer to examine the matter in the light of the decisions as relied upon by the assessee as well as by the department." 8. This decision was followed by this Tribunal again in the case of Central Silk Board in ITA No.1077/Bang/2017 date 23/10/2017 to which one of the Members v....