TaxTMI 
TaxTMI 
2021 (2) TMI 321
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....nder section 133A of the Act, for the years under consideration at branch offices mentioned hereinabove. On verification, Ld.AO observed that, the assessee has not deducted TDS under section192, in respect of cash medical benefit paid to its employees, payment made to Chinnu Graphics, payment to Kulkarni Services, payments to Sodexo SVC India Pvt.Ltd., payment made to HP India Sales Pvt.Ltd., and EMDC Projects. Ld.AO also observed that the cash medical benefit paid to employees was considered as exempt under section 10 of the Act in respect of cash Medical Benefit. 2.1. Ld.AO after considering submissions of assessee, in respect of Cash Medical Benefit held that, under the Act, any allowance received by an employee is fully taxable, unless it is specifically exempted by provisions of the Act. Ld.AO held that the deductor(assessee) is giving fixed medical benefits to its employees to meet medical expenditure irrespective of actual expenditure incurred by the employee. He noted that, employees get such benefit without furnishing any proof of having utilised the amount for medical treatment/expenditure either for the employee or any of the family members and therefore, fixed ....
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....efit u/s 192 Payment to Chinnu Graphics u/ s 194C Payment to Sodexo SVC India Pvt Ltd u s 194C Total TDS deductible Interest 201(1A) TDS deductible Interest 201(1A) TDS deductible Interest u/s 201 (1A) 2011-12 9,645 8,064 - - - - 17,709 2012-13 9,300 6,696 1,207 864 - - 18,067 2013-14 31,003 18,600 - - - - 49,603 2014-15 36,482 17,472 707 350 8,814 4,224 68,049 2015-16 40,020 14,400 1,460 588 - - 56,468 2016-17 1,30,588 31,320 666 156 9,116 2,275 1,74,121 Shivamogga: Cash Medical Benefit u/s 192 Payment to HP In la Sales Pvt. Ltd. an MDC Projects u s 194J# Total TDS deductible Interest u/ s 201(1A) TDS deductible Interest u/ s 201(1A) 201 1-12 2, 49,647 2,09,703 - - 4,59,350 2012-13 1,04,870 75,506 21,277 Refer Note # - 2,16,972 2013-14 1,24,514 85,915 - - 2, 10,429 2014-15 1,40,103 79,859 - - 2, 19,962 2015-16 1,33,322 59,995 - - 1,93,317 2016-17 3,70,886 1,2....
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....ites. Clause (v) of the proviso specifies as under: (v) any sum paid by the employer: in respect of any expenditure actually incurred .by the employee on his, medical treatment or treatment of any-member of his family [other than the treatment referred to in Clause (i) and (ii)]; so however, that such sum does not exceed (fifteen) thousand rupees in the previous year; From the above it is clear that on satisfying specific conditions such expenditure will not be considered as a Perquisite in the hands of the-employee, which are as under: i) Employee should have spent the amount on medical treatment: ii) The amount should have been spent on his own or his family members ' treatment iii) Such amount should be reimbursed by the employer. iv) Amount reimbursed by the employer does not exceed Rs. 15000 in the financial year: 6.2 In case of the appellant, the AO has recorded finding that fixed cash medical benefit given to its employees irrespective of the actual expenditure incurred by the employee. The employee is not required to furnish any proof for having utilized the amount for the purpose of medical treatment/expend....
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....tion of tax if a bonafide estimate of salary taxable in the hands of the employees has been made by the employer. It is observed that when (he provision is very clear that only reimbursement for the expenditure incurred by the employee to an amount of Rs. 15000 is exempt from being treated as perquisite, there is no scope for any assumption or presumption for the employer as regards deciding the taxability or fixed cash medical benefit given to employees. Besides the appellant has not brought any material on record either before ITO(TDS) or before the undersigned to support its contention that estimates have been filed by the individual employees with regard to their tax liability in respect of income received by them. In absence of any evidence to conclude that the deductor(LIC) has based deduction of tax at source on the estimation provided by the employees, the claim of bonafide estimate by the appellant will not muster any credence. It is not the case of the appellant that employees have included cash equivalent of CMB as part of the income or provided the accountant's certificate to prove that this income has been offered for tax as mandated in the proviso to Sec.201. In f....
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.... Aggrieved by the order of Ld.CIT(A), assessee is in appeal before us now. 4. Ld.Counsel before us filed summary of grounds pertaining to the years under consideration at page 7-15 of the paper book as under: Grounds AYs Thirtha haili Haveri Chithra durga Shiva mogga Davan gere The Order of the Learned Commissioner (Appeals) in so far as it is prejudicial to the interest of the Appellant is not justified in law and on facts and circumstances of the case. 2011-12 1 1 1 1 1 2012-13 1 1 1 1 1 2013- 14 1 1 1 1 1 2014-15 1 1 1 1 1 2015-16 1 1 1 1 1 2016-17 1 1 1 1 1 The notice issued and the impugned order passed by Learned Income Tax Officer, T DS Ward, Davangere under Section 201 (1) [201 (IA) are bad and without jurisdiction 2011-12 2 2 2 2 2 2012-13 2 2 2 2 2 2013- 14 2 2 2 2 2 2014-15 2 2 2 2 2 2015-16 2 2 2 2 2 2016-17 2 2 2 2 2 The notice issued by the Learned Income Tax Officer, TDS Ward Davangere under Section 201 is bad bein....
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.... 6.3 2012-13 6.3 6.3 6.3 6.3 6.3 2013-14 6.3 6.3 6.3 6.3 6.3 2014-15 6.3 6.3 6.3 6.3 6.3 2015-16 6.3 6.3 6.3 6.3 6.3 2016-17 5.3 5.3 5.3 5.3 5.3 The Lower Authorities have failed to appreciate that the Appellant has not been deducting tax at source under Section 192 on medical reimbursements relying on the CBDT's letter dated 20.05.2002. 2011-12 6.4 6.4 6.4 6.4 6.4 2012-13 6.4 6.4 6.4 6.4 6.4 2013-14 6.4 6.4 6.4 6.4 6.4 2014-15 6.4 6.4 6.4 6.4 6.4 2015-16 6.4 6.4 6.4 6.4 6.4 2016-17 5.4 5.4 5.4 5.4 5.4 The Lower Authorities have failed to appreciate that in the impugned financial year, the Appellant was not obliged to obtain evidence or proof of medical expenditure from the employees since Section 192(2D) which was inserted by the Finance Act, 2015 was applicable with effect from AY 2015-16 and even othemvise Section 192(2D) read with Rule 26C is not applicable to reimbursement of medical expenses. 2011-12 6.5 &n....
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.... 6.9 6.9 2015-16 6.9 6.9 6.9 6.9 6.9 2016-17 5.9 5.9 5.9 5.9 5.9 The Learned CIT (Appeals) has failed to appreciate that when the Appellant took a plausible legal stand on exemption of medical reimbursement, it should not be treated as assessee in default. 2011-12 6.10 6.10 6.10 6.10 6.10 2012-13 6.10 6.10 6.10 6.10 6.10 2013-14 6.10 6.10 6.10 6.10 6.10 2014-15 6.10 6.10 6.10 6.10 6.10 2015-16 6.10 6.10 6.10 6.10 6.10 2016-17 5.10 5.10 5.10 5.10 5.10 Without prejudice to the above, the Lower Authorities have failed to appreciate that no order u/ s 201 (1) / 201(1A) of the IT Act can be passed against the Appellant since the employees have filed their respective returns of income reflecting their incomes under the head 'salaries'. 2011-12 6.11 6.11 6.11 6.11 6.11 2012-13 6.11 6.11 6.11 6.11 6.11 2013-14 6.11 6.11 6.11 6.11 6.11 2014-15 6.11 6.11 6.11 6.11 6.11 2015-16 6.11 6.11 6.11 6.11 6.11 2016-....
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....the payment of rent towards hiring of generators as payment to contractors under Section 194C when the same is in the nature of renting of machine/plat/equipment under Section 194 I and the appellant is not able to deduct tax on the payment of rent towards generators under Section 1941 since the amount paid to the payee does not exceed the threshold limit prescribed. 2011-12 8.2. NA NA NA NA 2012-13 8.2. NA NA NA NA 2013-14 8.2. NA NA NA NA 2014-15 8.2. NA NA NA NA 2015-16 8.2. NA NA NA NA 2016-17 8.2. NA NA NA NA 2011-12 7.2. NA NA NA NA As regards TDS on lower rate on payment to Sodexo SVC India Pvt. Ltd. The Lower Authorities have erred In treating the Appellant as 'assessee-indefault' under Section 201(1) of the IT Act by holding that the Appellant has deducted tax at source at a lower rate with respect to payment to Sodexo SVC India Pvt. Ltd. 2011-12 NA NA NA NA NA 2012-13 NA NA 7.1 NA NA 2013-14 NA NA NA NA NA 2014-15....
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....16-17 pertaining to Theerathahalli, Chitradurga and Davengere); Ground No. 7.2(for assessment years 2011-12 to 2015-16 pertaining to Theerathahalli, Chitradurga and Davengere) and Ground No.6.2(for assessment year 2016-17 pertaining to Theerathahalli, Chitradurga and Davengere); Ground No.8.1(for assessment years 2011-12 to 2015-16 pertaining to Theerathahalli, Chitradurga and Davengere) and Ground No.7.1 (for assessment year 2016-17 pertaining to Theerathahalli); Ground No. 8.2(for assessment years 2011-12 to 2015-16 pertaining to Theerathahalli, Chitradurga and Davengere) and Ground No.7.2 (for assessment year 2016-17 pertaining to Theerathahalli) Further, Ld.Counsel submitted that Ground No.7.1-7.2 for assessment year 2012-13 pertaining to Chitradurga also is not pressed. 4.3. Ld.Counsel in Ground No.2, in respect of all branches, challenges validity of notice by alleging that, impugned notices have been issued by non jurisdictional officer and therefore are bad in law and without any jurisdiction. 4.4. In Ground No.4, for assessment years 2011-12 to 2015-16, for all branches, it is alleged that, the orders passed by Ld.AO under section 201 of the Act is bar....
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.... Issue III& IV: Assessee has been treated to be, assessee in default for short deduction of TDS on payments made to employees towads Cash Medical Benefits and payments made to Sodexo SVC Ltd. 4.7. Cash Medical Benefits to employees: On merits, Ld.Counsel rebutted objections of authorites below by following submissions: Observations by Ld. AO/Ld. CIT (A) in impugned orders Rebuttals Wage revision has happened in the organisation of assessee and letter filed by assessee before CBDT is dated 28/08/2001. It has been submitted that there has not been any change in law or fact since 29/08/2001. And there is no material difference because of the wage revision. CBDT letter dated 20/05/2002 suggests exemption under section 17 claimed the exemption under section 10, which is not allowable for the reasons specified in para 3, 4, 5 of assessment order. exemption has been claimed by the employees under wrong head does not matter. (2), whereas employees It has been submitted that as long as the letter permits exemption under section 17 (2) the manner in which In granting exemption under section 17 (2), there is no specific instruction for the period for which the bo....
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.... Assessee has not produced any renewal letter of the exemption for relevant period for which the proceedings were pending before the authorities below. There is no requirement of annual renewal. This is clear from receipt in practice which is evident from approvals dated 02/01/1991, 17/03/1994 and 25/05/2002 as observed by Ld.CIT(A) in his order. LIC is not furnish any proof in support of its claim that amounts are actually spent for medical treatment of its employees. It has been submitted that the very reason for making application dated 29/08/2001 before CBDT was due to administrative difficulties faced by assessee in getting proof in support of its claim of medical expenditure. The letter clearly expresses the work involved in processing and making payment of medical bills which is an onerous exercise for disbursing the small amounts for purpose of allowing the same as non-taxable perquisite under section 17 (2) of the act. Considering the size of employee strength in the organisation assesseephased administrative difficulty in verifying individual claims with bills and evidences. This was the sole reason for its application and the subsequent approval received from....
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....India Ltd reported in (2013) 37Taxmann.com327, • Karnataka Power Transmission Corporation Ltd vs ITO (TDS) reported in (2019) 102 Taxmann.com 245, and • ACIT(TDS) vs SAP Labs India(P.)Ltd reported in (2013) 36 Taxmann.com 200 • Decision of Hon'ble Karnataka High Court in case of CIT vs Symphony Marketing Solutions India Pvt.Ltd., reported in (2016) 388 ITR 457 • He also submitted that assessee has been granting medical reimbursement from decades together, initially as per reimbursement of medical expenses scheme 1980 which was subsequently replaced by Cash medical benefit at a particular rates applicable for Class I Officers and Class III & IV employees. It has been submitted that assessee has been paying Cash Medical Benefits to its employees (Class III & IV) for over three decades at varying rate. 4.8. Ld.Counsel filed detailed written submission in support of his contention on above issues placed at page 1-174 of paper book. He places reliance on the same. Ld.Counsel thus submitted that, assessee cannot be treated as "assessee in default" for the reason that amendment brought in by Finance Act 2015 by inserting sub section (....
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....is no delay in passing the order as contended by the appellant. 4. The following are submitted in respect of the merits of the case i.e. the applicability of TDS on Cash Medical Benefits (CMB) provided by the employer. The cash medical benefits is the fixed amount given by the employer to the employee to meet the medical expenditure which is not exempt from income tax u/s.10 of the Act as mentioned in Form 16 issued by the deductor. It IS exempt if the same is spent for a medical treatment, whereas in this case the employees are not supposed to file any declaration for having spent the CMB The employees also have not declared this as Income and paid the taxes and it was claimed as exempt and the same was observed by the CIT (A) In para 6.4 of the order. 4.1 The CMB was given as a fixed allowance to the employees irrespective of the actual expenditure Incurred by the employees. So It forms part of the salary and it is the obligation of the employer to deduct TDS as per Section 192(1) of the Act which was not done by the appellant. 4.2. Even In the appellants own case, on the same issue, the Honourble ITAT Cuttack (unreported decision of LIC of India ,Rourk....
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....ded on 30th September, date of filing of quarterly return is 09/09/2011. 3rd quarter ended on 31 December, date of filing of quarterly return is 06/02/2012. 4th quarter ended on 31 March and date of filing of quarterly return is 15/05/2012. Davangere: Assessment year 2011-12: 1st quarter ended on 30th of June date of filing of quarterly returns not available with assessee. 2nd quarter ended on 30th September, date of filing of quarterly return not available with assessee. 3rd quarter ended on 31 December, date of filing of return not available with assessee. 4th quarter ended on 31 March date of filing of return not available with assessee. Assessment year 2012-13: 1st quarter ended on 30th of June, date of filing of return not available with assessee. 2nd quarter ended on 30th September, date of filing of return not available with assessee. 3rd quarter ended on 31st December, date of filing of return not available with assessee. 4th quarter ended on 31st March date of filing of return not available with assessee. Chitradurga Assessment year 2011-12: 1st quarter ended on 30th of June date of filing of quarterly returns not available w....
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....ncial year 2011-12 (assessment year 2012-13), expired on 31/03/2014 under unamended section 201 (3)(i) of the Act. It was submitted that, Clause (3) by way of insertion of to section 201 was inserted by way of Finance (No.2) Act, 2014 and therefore not applicable to these assessment year. 6.2.3. He submitted that, there is no dispute to the fact that, assessee filed TDS returns. Only apprehension is regarding the date of filing in respect of first three quarters for assessmet years 2011-12 and 2012-13, in respect of Davangere and Chitradurga Branches, which assessee is not able to ascertain. It was submitted that, date of filing of Q1 -Q3 TDS returns for Thirthahalli Branch is not ascertainable. Therefore, we have to proceed on the basis that in assessee's case, the statements of TDS have been filed. 6.2.4. Keeping the aforesaid factual position in view it is necessary to examine the relevant statutory provisions. Section 201 lays down the consequences of failure to deduct tax at source or having deducted not remitted to the Government account, in its original form, did not provide any time limit for passing the order under sub-section (1) of section 201. Looking at the d....
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....n." Thus, as could be seen from the aforesaid amended provision, a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. The issue before us is, whether the un-amended sub-section (3) which existed before introduction of amended subsection (3) by Finance Act, 2014, will apply to assessee's case for assessment years under consideration or not. 6.2.7. It is the case of the assessee that, since, clause (i) of sub-section (3) of section 201 is applicable to the assessee and limitation period of two years expired by the time provision was amended by Finance Act, 2014, the extended period of limitation of seven years as per the amended provision will not apply. Whereas, it is the case of the Revenue that the amended sub-section (3) brought into the statute by Finance Act, 2014, will apply retrospectively, hence, orders passed by Ld.AO under Section 201 of the Act, are within the period of seven years, and are valid. 6.2.8. It is a fact on record that, by the time the amended provisions of sub-section (3) was introduced by Finance Act, 2014, the limitation period of two years as per....
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.... Sodexo SVC India Pvt.Ltd reported in (2018 92 Taxmann.com 260 • ACIT vs.Acer India Pvt.Ltd in ITA No. 2570 to 2572/Bang/2017 for assessment year 2009-10 to 2011- 12 by order dated 14/09/2019. 6.2.11. Hon'ble Gujarat High Court, in case of Tata Teleservices vs.UOI reported in (2016) 385 ITR 497, on identical issue extensively dealt on the issue of retrospective applicability of the provisions by applying principles laid down by Hon'ble Supreme Court in number of cases. Hon'ble Gujrat High Court held as under:- "15.00. Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, to the facts of the case on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201(3)(i) of the Act had already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and therefor....
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.... would also stand covered by the unamended provision being 201(3)(i), based on our observation herein above. Accordingly Ground no.4 raised by assessee for assessment years 2013-14 and 2014-15 stands allowed. As we have quashed and set aside the assessment orders for assessment years 2013-14 and 2014-15, the demand raised u/s.201(1) and interest levied under section201(1A), by Ld.AO for assessment years by Ld.AO for these years stands deleted. Accordingly, appeals filed by assessee for assessment years 2013-14 and 2014-15 stands allowed on legal issue raised. 6.2.14. However same view cannot be applied for assessment year 2015-16 since the amendment was with effect from 01/06/2015. We therefore dismiss Ground 4 for assessment year 2015-16 Assessment year 2015-16 &2016-17 6.3. At the outset, the Ld.Counsel submitted that, for assessment years 2015-16 & 2016-17, grounds pertaining to payment made to Chinnu Graphics for Theerthahalli, Chitradurga and Davangere and Payment made to Kulkarni services for Theerthahalli, branch stands not pressed by assessee. Accordingly these grounds are dismissed as not pressed. Issue III Payment made towards Cash Medical Benefit ....
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....argeable to tax under the head "Salaries", and income described therein consists of salary from the employer or former employer falling in three categories. Section16 of the Act contains deductions to be made from salaries. And, section 17 of the Act is inclusive definition of "salary" for purposes of Section 15, Section 16 and Section 17 of the Act which, along with other items, includes "perquisite" and these terms are also separately defined therein. Sec.17 of the Act, that defines "Salary", "perquisite" and "profits in lieu of salary" as under: "For the purposes of sections 15 and 16 and of this section -(1) "Salary" includes- ........ (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; ....... (2) "perquisite" includes- ........ (iv) any sum paid by the employer in respect of any obligation which but for such payment, would have been payable by the assessee; and ......... Provided that nothing in this clause shall apply to,- .......... (v) any sum paid by the employer in respect of any expenditure actually incurred by the emp....
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.... Taxman 698 Guj) • ITO v. Gujarat Narmada Valley Fertilizers Co. Ltd. (2000) 113 Taxman 586 (Guj.) • CIT v. Nestle India Ltd. (2000) 109 Taxman 403 (Delhi) • Gwalior Rayon Silk Co. Ltd. v. CIT (1983) 14 Taxman 99 (MP) • ITO v G. D. Goenka Public School (No. 2) (2008) 23 SOT 77 (Delhi) • Usha Martin Industries Ltd. v. Asstt. CIT (2004) 86 TTJ 574 (Kol.) • Nestle India Ltd. v. Asstt. CIT (1997) 61 ITD 444 (Delhi) • Indian Airlines Ltd. v Asstt. CIT (1996) 59 ITD 353 (Mum). 6.3.7. Further we note that, assessee relied on letter issued by CBDT dated 20/05/2002 granting exemption, placed at page 219 of paperbook. It is very clear from the letter that CBDT clearly understood the Cash Medical Benefit, to be in the nature of fixed medical allowance, and that, the fixed medical allowance is for the expenditure, which is both actually incurred or to be incurred. The letter also states that, as long as assessee is satisfied that the expenditure is actually incurred, CBDT do not have any objection in extending the exemption under section 17(2), Proviso (v) of the Act. The said letter was issued by CBD....
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....) Where, by reason of an assessee's salary being paid in arrears or in advance or by reason of his having received in any one financial year salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, his income is assessed at a rate higher than that at which it would otherwise have been assessed, the Income-tax Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed." 6.3.10. This sub-section required an employee to move an application before the ITO to grant such relief as may be prescribed while the prescription of the relief has been made under Rule 21A(2) of the Income-tax Rules, which came to be inserted by I.T. (Amendment) Rules, 1972 with effect from April 1, 1971. This situation created great hardship and harassment for the employees and entailed an unnecessary exercise. The Legislature, therefore, in its wisdom, inserted new sub-section (2A) in section 192 with effect from June 1, 1987 incorporating therein the relief permissible in section 89(1) to be granted by the employer. 6.3.11. Section 192(2A) permits the employer to grant relief under the pro....
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....e person collecting tax ('the collector') also is required to file a quarterly Tax Collection at Source (TCS) statement containing the details of collection of tax made during the quarter by the prescribed due date. ........................................ Under section 192 of the Act, the person responsible for paying (DDO) income chargeable under the head "salaries" under the Act is authorised to allow certain deductions, exemptions or allowances or set-off of certain loss as per the provisions of the Act for the purposes of estimating income of the assessee or computing the amount of the tax deductible under the said section. The evidence/proof/particulars for some of the deductions/exemptions/allowances/set-off of loss claimed by the employee such as rent receipt for claiming exemption of HRA, evidence of interest payments for claiming loss from self occupied house property etc. is generally not available with the DDO. In these circumstances, the DDO has to depend upon the evidence/particulars furnished, if any, by the employees in support of their claim of deductions, exemptions, etc. As the existing provisions of the Act do not contain any guidance r....
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....ne lakh 2 Leave travel concession or assistance Evidence of expenditure 3 Deduction of interest under the head "Income from house property". Name, address and permanent account number of the lender. 4 Deduction under Chapter VI-A. Evidence of investment or expenditure It was submitted by the Ld.Counsel that even after insertion of clause (2D) to section 192, in the absence of specific requirement under Rule 26C to collect evidence in respect of Medical expenses, the employer is not obliged to collect evidence/proof from the employee with respect to medical reimbursement that falls under clause (v) of Proviso to section 17(2). Reliance was placed on decision of Hon'ble Supreme Court in case of CIT vs.ITI Ltd (supra) and ACIT vs L&T Ltd(supra). Placing reliance on following observation of Hon'ble Supreme Court in case of ACIT vs. Bharat V.Patel reported in (2018) 92 taxmann.com 336, it was submitted that, in the absence of specific provision, assessee cannot be subjected to tax. "10. It is a matter of record that the Respondent was employed as the Chairman-cum-Managing Director of the (P&G) India Ltd. at the relevant time and the said company is....
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....allotment or transfer of specified securities is made in pursuance of an option exercised by an individual, the value of the specified securities shall be taxable in the previous year in which such option is exercised by such individual. Explanation- For the purposes of this clause,- (a) "cost' means the amount actually paid for acquiring specified securities and where no money has been paid, the cost shall be taken as nil; (b) "specified securities" means the securities as defined in clause(h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and includes employees' stock option and sweet equity shares; (c) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called; and (d) "value" means the difference between the fair market value and the cost for acquiring specified securities;' 13. The intention behind the said amendment brought by the legislature was to bring the be....
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....ling exemption by the employees so availing LTC, have not been disputed by the AO. Even assuming the case of the AO, that at the time of payment the Assessee ought to have deducted tax at source, is sustainable; the Assessee on a review of the taxes deducted during the earlier months of the previous year is entitled to give effect to the deductions permissible under proviso (iv) to Sec.17(2) or exemption u/s.10(5) of the Act in the later months of the previous year. What has to be seen is the taxes to be deducted on income under the head 'salaries' as on the last date of the previous year. The case of the AO is that LTC and Medical reimbursement should be paid at the time the expenditure is incurred or after the expenditure is incurred by way of reimbursement and not at an earlier point of time. If it is so paid, then, even though the payment would not form part of taxable salary of an employee, the employer has to deduct tax at source treating it as part of salary, is contrary to the provisions of Sec.192(3) of the Act and cannot be sustained. The reliance placed by the AO on the expression "actually incurred" found in Sec.10(5) of the Act and proviso (iv) to Sec.17(2) of ....
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....ported in (2018) 93 taxmann.com 89, following the above observations in ACIT vs.Infosys BPO Ltd.(supra), held as under:- "19. We have considered the rival submissions. In our view, the plea of the Assessee that it made a bona fide estimate of employee's salary by valuing the perquisites in the form of residential accommodation provided to the employees by valuing the same as if employees were employees of Central Govt. has to be accepted. In this regard, it is clear from the records that the position with regard to the assessee not being a Central govt. was brought to its notice by the department only in the proceedings initiated in 2013. Even thereafter, the Assessee has been taking a stand that its employees or employees of Central Govt. As held in several decision referred to by the ld. counsel for the Assessee, the obligation of the Assessee is only to make a bonafide estimate of the salary. In our view, in the facts and circumstance of the present case, assessee has made such an estimate. The Assessee's obligation u/s.192 is therefore properly discharged and hence proceedings u/s.201(1) & 201(1A) of the Act have to be quashed and are hereby quashed." ....
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..../90, dated November 11, 1996 and Circular No. Q/FD/695/2/2000, dated September 21, 2010 issued by Ministry of External Affairs, Government of India and came to the conclusion that the per diem allowance of $ 50 to $ 75 paid by the assessee to its employees on official trips to USA and Europe to be reasonable and that the same would be covered as exempt under section 10(14) of the Act. In the impugned order for the assessment year 2009-10 dated September 25, 2014, the last of the impugned orders to be passed, the learned Commissioner of Income-tax (Appeals) held as under at 3 to 5 as under : '3. I have carefully considered the facts, the appellant's submissions and perused the impugned order. I agree with the argument of learned authorised representative that the per diem allowance paid to its employees qualifies for exemption under section 10(14)(i) of the Act read with rule 2BB(1). Clause (b) of rule 2BB(1) refers to any allowance to meet the ordinary daily charges incurred by an employee on account of absence from normal place of duty. There is no monetary limit prescribed and hence unless such allowance is said to be fictitious or abnormally high or otherwise ta....
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....lude such amounts of per diem allowances form the amounts liable to deduction of tax at source under section 192. Appellate Grounds of appeal (Nos. 1.1 to 1.4) on the issue are allowed. 4. The other ground (No. 2) of appeal raised is with regard to levying of interest under section 201(1A), amounting to Rs. 12,93,117 relating to default under section 201(1) read with section 192. Since, the assessee has been held to be not in default under section 201(1) with regard to the per diem allowances paid the interest under section 201(1A) is also held to be not chargeable, and hence deleted. 5. As a result, the appeal is allowed.' 4.3.3 Before us, except for raising the grounds of appeal and supporting the views of the Assessing Officer, which are not tenable in the light of the judicial pronouncements of the Tribunal and the Circulars of Ministry of External Affairs, Government of India referred to above, the Revenue has not been able to controvert the findings in the impugned orders of the learned Commissioner of Income-tax (Appeals). Following the decision of the hon'ble Income-tax Appellate Tribunal, Kolkata Bench in the case of Saptarshi Ghosh (supr....
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....out verification of the expenses already incurred by the employee concerned. 6. Section 10(14) of the Act reads as under : "(14)(i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, as may be prescribed, to the extent to which such expenses are actually incurred for that purpose ; (ii) any such allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living, as may be prescribed and to the extent as may be prescribed : Provided that nothing in sub-clause (ii) shall apply to any allowance in the nature of personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to the place of his posting or....
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....ource under section 192, selfcertification on the part of the employee that the conveyance was owned by him and being used by him for the purposes of employment was adequate. The present case relates to uniform allowance, which as noticed earlier is exempt from tax under section 10(14)(i) of the Act read with rule 2BB(1)(f) of the rules to the extent to which such expenses are actually incurred for that purpose. Under the Act, the liability to the employer is to deduct tax at source to the extent of the taxable income of the employee. If any part of such income is exempt, there is no liability to deduct tax at source from such income. Since liability to pay tax under the Act is of the individual employee and the liability on the part of the employer is only to deduct tax at source, Circular No. 15 dated 8-5-1969 provides that self certification on the part of the employee is sufficient for the disbursing officer for calculation of the tax deductible at source. While the said circular relates to conveyances, the underlying principle can well be applied even in the case of uniform allowance. Therefore, if an employee gives a certificate certifying that he had incurred certain expendi....
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....ts and circumstances found by the tribunal no question of law referable to this court arises as the answer is evident. The tax at source in the case of an employee in receipt of salaries is deducted on the basis of estimate of income under the head "Salary" emanating from the employer. That estimate also include a fair estimate by the employer whether any amount paid by him is not likely to be subjected to tax under any provisions of the Income-tax Act. As we have noticed above, the evidence regarding operation of the scheme clearly attracted the provisions of sec. 10(14) inasmuch as reimbursement is granted for use of one vehicle owned and possessed by the employee for expenses incurred in undertaking official journeys and the payment is made on employee issuing a certificate that he has incurred more expenses than the amount which is being reimbursed to him at the end of the month. The fact that reimbursement upto a maximum limit and not more does not detract from the fact that expenses are being paid as far as employer is concerned towards reimbursing actual expenses incurred by the employee in undertaking official journeys upto the extent amount is actually reimbursed. Nor the ....
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....n of Hon'ble Karnataka High Court has been affirmed by Hon'ble Supreme Court reported in (2008) 297 ITR 167. 6.3.25. Under section 192(1), the assessee is expected to make an honest and fair estimate of income and deduct tax at source. For assessment year 2015-16 and 2016-17, clause (2D) was applicable, however in the absence of specific requirement under Rule 26C, assessee was not obliged to collect evidence/ proof from the employees for reimbursement of medical expenditure. The assessee has sought permission from CBDT vide letter dated 20/05/2002, regarding extending the exemption under Proviso(v) to Section 17(2) of the Act, based on satisfaction of the assessee. Assessee has been following this practice since the year 1991. Further the exemption at no time exceeded Rs. 15,000/- 6.3.25. Based on above discussions we note that assesse was under a bonafide belief that; • Section 192(1) requires assessee to make payments to its employees on estimation; • Non deduction of TDS is based on letter dated 20/05/2002 by CBDT; • Incurring of actual expenditure by the employees was supported by self attested declaration from employees; â....