2021 (7) TMI 110

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....ution constituted under the National Institutes of Technology, Science, Education and Research Act, 2007. The petitioner is engaged in imparting higher education in engineering, technology, management, science, arts etc. and also encourages research in such fields. The petitioner receives 100% assistance from the central government and has been declared as an institution of national importance. To its employees the petitioner institution provides accommodation in terms laid down in NITA Residential Rules, 2009(hereinafter to be referred to as Residential Rules). The question of deducting tax at source in the context of such accommodation provided by the petitioner to its employees is at the center of this petition. [3] The starting point....

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....s under the Act. He sent a reminder on 09.04.2015 to the Registrar. It appears that pursuant to such correspondence the petitioner deposited certain amount with the Income Tax Officer by way of TDS. [4] On 16.03.2018, the Registrar of the NIT made a written representation with the Income Tax Officer (TDS) and contended that the provisions of Section 17 (2) of the Act are not applicable to the employees of NIT and therefore, the petitioner was not liable to deduct tax at source and deposit it with the Income Tax Authority in terms of Section 192 of the Act. [5] The Income Tax Officer(TDS) by the impugned order dated 05.09.2019 turned down the representation of the petitioner for exemption from deducting tax at source primarily observin....

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....ter of rent respecting any accommodation provided to the assessee by his employer. Undoubtedly, since the petitioner does not provide rent free accommodation to its employees, the present case does not fall under clause (i) of sub-section (2) of Section 17 of the Act. However, if there is any concession in the matter of rent respecting the accommodation provided by the petitioner to its employees, the case would be covered under sub-clause (ii) of sub-section (2). This question has to be ascertained as provided in rule 3 of the said Rules which pertains to value of perquisites. It provides that for the purpose of computing the income chargeable under the head of salary, the value of perquisites provided by the employer directly or indirectl....

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....ution. This, however, still would not bring NIT within the fold of Sl.No.1 in table below sub-rule(1) of Rule 3 of the said Rules. Sl.No.1 would be applicable only in a case where the employer is either the Central or the State Government. All other cases would fall under Sl.No.2. This distinction is significant because in cases falling under Sl.No.1, where the accommodation is unfurnished, license as determined by the Central or State Government in respect of such accommodation as reduced by the rent paid by the employee would be considered as a perquisite. In other words, if the employee bears full license fees fixed by the employer government, there would be no question of any perquisite. Whereas in cases falling under sl.No.2 of the tab....