State Bank Of India, Hyderabad V. DCIT, Hyderabad

ITA 1765/HYD/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6054 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 19-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NOS.1765 & 1766/HYD/2008 : ASSTT. YEARS : 2004-05 AND 2005-06 STATE BANK OF INDIA, COMMERCIAL BRANCH, HYDERABAD. (PAN - AAA SS 8577 S) VS DY. COMMISSIONER OF INCOME- TAX, CIRCLE 15(1)(TDS) HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.RATNAKAR RESPONDENT BY : SHRI H.PHANI RAJU O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEALS BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 ARE DIRECTED AGAINST THE COMMON O RDER OF THE CIT(A). SINCE AN IDENTICAL ISSUE IS INVOLVED IN ALL TH ESE APPEALS PREFERRED BY THE ASSESSEE, THESE ARE BEING DISPOSED OFF W ITH THIS CONSOLIDATED ORDER. 2. IDENTICAL GROUNDS OF APPEAL OF THE ASSESSEE IN THESE APPEALS ARE AS UNDER- '1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX DATED 10/11/08 IS CONTRARY TO LAW AND FACTS. 2. THE APPELLANT CONTENDS THAT IT HAS NOT COMMITTED AN Y DEFAULT IN THE MATTER OF DEDUCTION OF TAX AT SOURCE OUT OF THE SAL ARIES PAID TO ITS EMPLOYEES. 3. THE APPELLANT CONTENDS THAT THERE IS NO CONCESSIONA L RENTAL PERQUISITE U/S. 17(2)(II) OF THE INCOME-TAX ACT, 19 61 AND THEREFORE THE BANK IS NOT LIABLE FOR DEDUCTION OF TAX AT SOUR CE IN RESPECT OF ANY 2 SUCH ALLEGED PERQUISITE PROVIDED TO ITS EMPLOYEES. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE DCIT(TDS ). 4. IT IS CONTENDED THAT THE BANK HAS SHOWN NO CONCESSI ON IN THE MATTER OF PROVIDING LEASED ACCOMMODATION TO ITS EMPLOYEES AND IT HAS DEDUCTED STANDARD RENT FROM THE SALARIES OF EMPLOYE ES TO WHOM THE ACCOMMODATION HAS BEEN PROVIDED BY THE APPELLANT. C ONSEQUENTLY, THERE IS NO CONCESSIONAL RENT PERQUISITE ON WHICH T AX HAS TO BE DEDUCTED. 5. THE APPELLANT CONTENDS THAT IT ACTED BONA FIDE AND HONEST AND IN ACCORDANCE WITH THE PROVISIONS OF LAW IN FORCE IN T HE RELEVANT YEAR. IT HAS ACTED IN ACCORDANCE WITH THE VARIOUS HIGH CO URT'S DECISIONS WHICH CATEGORICALLY HELD THAT UNDER SIMILAR CIRCUMS TANCES, THERE IS NO RENTAL PERQUISITE ON WHICH TAX HAS TO BE DEDUCTE D AT SOURCE. 6. IT IS CONTENDED THAT AN ACT WHICH IS LEGAL AND VALI D CANNOT BECOME ILLEGAL OR INVALID BY ANY RETROSPECTIVE LEGISLATION . EXPLANATION-1 TO SEC.17(2)(II) OF THE INCOME TAX ACT, 1961 DOES NOT HAVE THE EFFECT OF MAKING THE APPELLANT LIABLE FOR ANY DEFAULT WHEN TH ERE WAS NO DEFAULT AT ALL ON ITS PART AS PER THE LAW THEN IN F ORCE AND APPLICABLE. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE SA ME. 7. WITHOUT PREJUDICE, IT IS CONTENDED THAT THE QUANTIF ICATION OF PERQUISITE VALUE AT RS.3,64,709, QUANTIFICATION OF SHORT DEDUCTION OF TAX AT SOURCE AT RS.1,09,412 AND INTEREST U/S 201 (1A) AT RS.53,612 IS UNCALLED FOR. 8. WITHOUT PREJUDICE IT IS FURTHER CONTENDED THAT THE QUANTIFICATION OF SHORTFALL IN TAX AT THE FLAT RATE OF 30% AT RS.1,09 ,412 IS ERRONEOUS, ARBITRARY AND UNTENABLE. 3. AFTER HEARING BOTH THE PARITIES, WE ARE OF THE OP INION THAT SIMILAR ISSUE AS CONSIDERED BY THIS TRIBUNAL IN IA NOS. 1722 TO 1725/HYD/2008 FOR THE ASSESSMENT YEARS 2004-05 TO 2007-08, WHEREIN IT WS HELD BY THE TRIBUNAL AT PARA-6 OF ITS ORDER, AS FOLLOWS: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. WE FIND THAT EXPLANATION 1 TO S.17(2)(II) WAS INSERTED BY TH E FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1.4.2002, WHEREBY THE VALUE OF THE RESIDENTIAL ACCOMMODATION PROVIDED BY THE ASSESSEE-BANK TO ITS EMPLOYEES BY RECOVERING LESSER AMOUNT OF RENT THAN THE LEASE RENT PAID TO THE LESSOR OF THE PREMISES, AMOUNTS TO PERQUISITE AND THE EMPLOYER IS MADE LIABLE TO DEDUCT TAX ON THE PERQUISITE VALUE THE REOF. HOWEVER, WE FIND THAT AT THE RELEVANT TIME, WHEN THE TDS WAS TO BE EFFECTED BY THE ASSESSEE-BANK, THERE WAS NO SUCH PROVISION ON THE STATUTE BOOK AND THE LAW WAS AMENDED AT A LATER DATE IN 2007, WITH RETROS PECTIVE EFFECT FROM 1.4.2002. WE FIND THAT THE ISSUE WHETHER IN THE FACTS O F THE CASE, THE ASSESSEE COULD BE HELD TO BE IN DEFAULT FOR NON-DEDUCTIO N OF TAX AT 3 SOURCE ON THE PERQUISITE VALUE OF THE RESIDENTIAL ACCOMM ODATION PROVIDED AT A LESSER FIGURE OF RENT THAN ACTUALLY PAID BY THE ASSESSEE TO THE LESSOR OF THE PREMISES, IN VIEW OF THE AMENDMENT I N LAW WITH RETROSPECTIVE EFFECT FROM 1.4.2002, IS COVERED IN FAVO UR OF THE ASSESSEE WITH THE DECISION OF THE NAGPUR BENCH OF THE TRIBUNAL IN THE GROUP CASES OF CANARA BANK (SUPRA), WHEREIN THE COORDINATE BENCH OF THE TRIBUNAL HAS PASSED AN ELABORATE ORDER AND HAS CONSIDERED THE RELE VANT CASE- LAWS AND HAS FOLLOWED THE RATIO OF THE DECISIONS OF THE HON'BLE APEX COURT IN THE CASES OF AMARCHAND (48 ITR 59) (SC) AND M OTHER INDIA (155 ITR 711)( AT 718) AND THE DECISION OF THE HON'BLE PRIVY COUNSEL IN THE CASE OF DELHI CLOTH & GENERAL MILLS CO. LTD. (2 IT C 439)(AT 443), AND HELD THAT AS FAR AS THE ASSESSEE EMPLOYER IS CONCERNED, IT I S NOT HIT BY THE RETROSPECTIVE INSERTION OF EXPLANATION (I) TO S.1 7(2) THEREOF IN THE ABSENCE OF ANY SUCH EXTENSION OF RETROSPECTIVE EFFECT EIT HER IN S.192 OR S.201 OF THE ACT. WE, BEING IN AGREEMENT WITH THE D ECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CITED SUPRA, DECIDE T HE ISSUE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY GROUNDS OF APPEAL OF THE A SSESSEE IN THESE APPEALS ARE ALLOWED. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE ABO VE ORDER OF THE TRIBUNAL, WE ALLOW THE APPEALS OF THE ASSESSEE. 4. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 3-2-2010. SD/- SD/- G.C.GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER. DT/- 3-2-2010. VNR COPY FORWARDED TO: 1. DCIT, CIRCLE 15(1),(TDS), HYDERABAD. 2 STATE BANK OF INDIA, COMMERCIAL BRANCH, HYDERABA D 3. 4 CIT(A)-II, AP., HYDERABAD CIT, HYDERABAD. 4. THE D.R., ITAT, HYDERABAD.