TaxTMI 
TaxTMI 
2023 (8) TMI 1414
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.... any of the submissions made by the Appellant in support of its case that, the residential accommodation provided by it to its employees must be treated at par with Central Government for the purpose of deduction of TDS on value of perquisites of rent free accommodation. 2. Section 17(2) of Income Tax Act reads, "Perquisite includes the value of rent free accommodation provided to the assessee by his employer". EPFO does not provide any rent free accommodation. License fee in respect of accommodation allotted to them by the Board is deducted at the rates prescribed by Govt. of India. Therefore, Staff Quarter cannot be termed as Rent Free Accommodation. Staff quarters are given in lieu of "House rent allowance" i.e. part of basic wages or salaries and therefore it is not an excess benefit or advantage to be qualified as perquisites U/s 17(2) of IT Act. 3. The Central Board of Trustees, EPFO is governed, controlled and administered by Central Government. Union Minister of Labour and Employment is the Chairman of the Organisation and the Secretary of Ministry of Labour and Employment is the Secretary of the Organisation. 4. EPFO is the extension of the execu....
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....1952, to enforce Summons, Attachment and Imprisonment and these powers are legitimate powers of Government only. 12. Though the salaries of the Appellant EPFO are not drawn out of the consolidated funds of India but paid out of the funds of the Appellant EPFO it is regulated by the Central Government as provided under Section 5D(C), 5D (9) (a) of EPF and MP Act, 1952 and also that the funds of the Appellant EPFO are vested in and administered by the Central Board of Trustees, which is a tripartite body consisting of representatives from Central and State Governments, the Employers and Employees. Hon'ble Minister of Labour and Employment, Government of India is the Chairman of the Central Board of Trustees. 13. In the Orders of the Commissioner of Income Tax (Appeals), Chandigarh vide No.43/09-10 and 44/09-10, the employees of Central Board of Trustees, EPFO stands to be in the category of Central Government Employee. 14. The Learned CIT (A) has not considered the essence of the following decisions of the Hon'ble Apex Court: * Rajasthan State Electricity Board Vs. Mohan Lal ((1967) 3 SCR 377), * Sukhdev Singh & Ors Vs. Bhagath Ram....
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....Appeal. 19. In view of the submissions made above, the Appellant prays that this Hon'ble Tribunal be please to allow the Appeal and grant all the reliefs that the Appellant is entitled to." 3. Brief facts of the case are as under: 3.1 The assessee is an autonomous body and is a creation under the statute, "Employees Provident Fund Organisation and Miscellaneous Provisions Act 1952". It is submitted that assessee was enacted to execute the duty of the state and therefore is an extension of national administrative authority, as provided as per the mandate of Article 41 of the Constitution of India. It is submitted that the assessee has been created with defined provisions regarding recruitment, salary, allowances and other service conditions in respect of its executive heads and staff. It is also submitted that, the assessee is governed, controlled and administered by the Central Government under the leadership of Union Minister of Labour & Employment who is the chairman of the organisation and Secretary of Ministry of Labour & Employment. It is thus submitted by the assessee that as per Article 258(1) of the Constitution of India r.w.s 8b(1) of the General Clauses....
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.... by the Board is deducted at the rates prescribed by Govt. of India. Our employees have not been provided rent free accommodation and are paying License Fee as per Rules of Govt. of India and are not drawing HRA. Therefore Staff Quarter cannot be termed as Rent Free Accommodation. India has signed many Social Security Agreements with Foreign countries and the responsibility of signing the Certificate of Coverage in India for Social Security Schemes has been entrusted to Employees' Provident Fund Organisation. The role and responsibilities of this Organisation has been accepted by the foreign countries, this means Employees' Provident Fund Organisation has a Sovereign responsibility to certify Indian Nationals travelling abroad for having being covered in Social Security Schemes in India. In view of above, the residential accommodation provided be treated at par with Central Gout. for deduction of TDS on value of perquisites of rent free accommodation." 3.3 The Ld.AO after considering the submissions of the assessee treated the assessee as "assessee in default" for non-deduction of TDS on perquisite value of unfurnished accommodation provided to its employees, and compute....
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....otification in the Official Gazette, frame a Scheme to be called the Employees' Provident Fund Scheme for the establishment of provident funds under this Act for employees or for any class of employees and specify the 7 [establishments] or class of 7 [establishments] to which the said Scheme shall apply 8 [and there shall be established, as soon as may be after the framing of the Scheme, a Fund in accordance with the provisions of this Act and the Scheme]. [5A. Central Board.-(1) The Central Government may, by notification in the Official Gazette, constitute, with effect from such date as may be specified therein, a Board of Trustees for the territories to which this Act extends (hereinafter in this Act referred to as the Central Board) consisting of the following 2 [persons as members] namely:- (a) [a Chairman and a Vice-Chairman] to be appointed by the Central Government; (aa) the Central Provident Fund Commissioner, ex officio;] (b) not more than five persons appointed by the Central Government from amongst its officials; (c) not more than fifteen persons representing Governments of such States as the Central Government may specify in....
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....Provident Fund Commissioner, Assistant Provident Fund Commissioner and other officers and employees of the Central Board shall be such as may be specified by the Central Board in accordance with the rules and orders applicable to the officers and employees of the Central Government drawing corresponding scales of pay: Provided that where the Central Board is of the opinion that it is necessary to make a departure from the said rules or orders in respect of any of the matters aforesaid, it shall obtain the prior approval of the Central Government. (b) In determining the corresponding scales of pay of officers and employees under clause (a), the Central Board shall have regard to the educational qualifications, method of recruitment, duties and responsibilities of such officers and employees under the Central Government and in case of any doubt, the Central Board shall refer the matter to the Central Government whose decision thereon shall be final.] (8) The method of recruitment, salary and allowances, discipline and other conditions of service of officers and employees of a State Board shall be such as may be specified by that Board, with the approval of ....
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....n the notification. 20. Power of Central Government to give directions.-The Central Government may, from time to time, give such directions to the Central Board as it may think fit for the efficient administration of this Act and when any such direction is given, the Central Board shall comply with such direction. 21. Power to make rules.-(1) The Central Government may, by notification in the Official Gazette, make rules to carry out the provisions of this Act." 4.2 Based on the above provisions, the Ld.AR submitted that, the assessee is an organisation consisting of Central Provident Fund Commissioners, Additional Central Provident Fund Commissioners and other officers including Inspector appointed by the Central Government, and therefore cannot be equated to the facts in case of Central Food Technological Research Institute vs. ITO (supra), who is registered under the Societies Registration Act. 4.3 The Ld.AR vehemently submitted that, the assessee is categorised as a state within the meaning of Article 12, as the employees of the assessee are selected by the State and in such manner that the State can create or abolish the posts or /and regulate the condi....
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....by such Government as reduced by the rent actually paid by the employee. The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. Where the accommodation is provided by any other employer and- (2) (a) where the accommodation is owned by the employer, or (i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census; The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year. (ii) 10% ....
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....on which has the lower value with reference to the Table above for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table. Explanation.-For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,- (i) the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and (ii) the value of perquisite of such an accommodation shall be the amount calculated in accordance with Sl. No. (2)(a) of Table I, as if the accommodation is owned by the employer. 6.2 It is the contention of the Ld.AR that assessee falls under S.No. 1 of table 1 of the Rule 3 and therefore no TDS has to be deducted by the assessee on the perquisite value of the unfurnished accommodation provided by assessee to its employees. It is also submitted by the assessee that it is not working as an autonomous body / undertaking under the control of State / Central government / Semi-gov....
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....assessee falls under S.No.1 of the table under Rule 3 of the Income Tax Rules, 1962. We are of the view that assessee cannot be held to be an assessee in default for the reason that it is an organisation under a Statute enacted by the legislature. Further that as the assessee collects license fee in the form of House Rent Allowance from its employees against the unfurnished accommodation and therefore, the provisions of TDS will not apply under such circumstances. Accordingly, the grounds raised by the assessee stands allowed for all the years under consideration. In the result, all the appeals filed by the assessee stands allowed. Order pronounced in the open court on 09th August, 2023. ============= Document 1 4.3 In the light of above discussion the AO has held that EPFO cannot be treated as Government. Further, AO has also relied on the General Clause Act and has noted that the appellant (EPFO) cannot be held as Central Government. It is also noted by the AO that as per section 50 of EPF Scheme, 1952, all contributions received shall be credited to an account to be called Provident Fund Account. The said account shall be operated by the officers ....
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....n records that validity of Rule 3 has been upheld by the Supreme Court vide decision in 'Arun Kumar & Others Vs. Union of India (286 ITR 89)'. Accordingly, the AO has held that Rule-3 of Incorne Tax Rules and provisions with regard to TDS are clearly applicable to the appellant (EPFO). Hence, it has been held by the AO that, the deductor, M/s EPFO is considered as an "Assessed in default" as per provision of section 201(1) of the IT Act for not deducting TDS on value of perquisites in the nature of providing residential accommodation. Further, interest under section 201(1A) of the IT Act has been charged by the AO up to the date of order. Accordingly, additions of Rs. 1,68,848/- u/s 201(1) and addition of Rs. 1,43,521/- u/s 201(1A) amounting to total addition of Rs. 3,12,370/- has been made by the AO in his order dated 29.03.2021. 4.5 The appellant has strongly challenged the findings of the AO and has stated that AO has erred in his findings with regard to appellant (EPFO) being treated as "Assessee in default". The appellant has argued that EPFO is the autonomous body created by the Act of Parliament as well as extension of natio....