Gujarat Urja Vikas Nigam Ltd., Baroda V. The Income tax Officer,(TDS), Baroda

ITA 2/AHD/2010

• Counselvise Citation: 220514 RSA 2010
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH SR DR
• Assessee Lawyers: J P SHAH SRAR
• Keywords: Non-deduction of tax
• Section: 201(1); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.02/AHD/2010 ASSESSMENT YEAR:2005-06 GUJARAT URJA VIKAS NIGAM LTD., (ERSTWHILE GUJARAT ELECTRICITY BOARD) SARDAR PATEL VIDYUT BHAVAN, RACE COURSE CIRCLE, BARODA [ PAN NO.AACCG 8540N ] V/S . INCOME TAX OFFICER (TDS), ANAND / APPELLANT .. / RESPONDENT) /BY APPELLANT SHRI J.P. SHAH, SR-AR /BY RESPONDENT SHRI D.K SINGH, SR-DR /DATE OF HEARING 05-12-2012 /DATE OF PRONOUNCEMENT 14-12-2012 / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA (C IT(A) FOR SHORT) DATED 09-10-2009 PERTAINING TO ASSESSMENT YEAR (AY) 2005- 06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW AND ON FACTS HAS CONFIRMED THE TAX OF RS.4,19,723/- PAYABLE UNDER SECTION 201(1) OF THE IT ACT FOR THE ALLEGED NON-DE DUCTION OF TAX AT SOURCE FROM PERQUISITE ON ACCOUNT OF RENT FREE RESI DENTIAL ACCOMMODATION PROVIDED TO THE EMPLOYEES. ITA NO.2/AHD/2010 A.Y. 2005-06 G.U.V.N.LTD. V. ITO(TDS) ANAND PAGE 2 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN LAW AND ON FACTS HAS CONFIRMED THE LEVY OF INTEREST OF RS.1,63,692/- UNDER SECTION 201(1A) OF THE I T ACT FOR THE ALLEGED NON- DEDUCTION OF TAX AT SOURCE FROM PERQUISITE ON ACCOUNT OF RENT FREE RESI DENTIAL ACCOMMODATION PROVIDED TO THE EMPLOYEES. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE-COMPANY I S INCORPORATED UNDER THE COMPANIES ACT, 1956 IS HOLDING COMPANY OF COMPA NIES ENGAGED IN THE BUSINESS OF GENERATION, TRANSMISSION AND DISTRIBUTI ON OF ELECTRICITY IN THE GUJARAT STATE. DURING THE YEAR UNDER CONSIDERATION THAT THE ORDER U/S.201(1) R.W.S. 194 OF THE INCOME-TAX ACT, (HEREINAFTER REFE RRED TO AS THE ACT) WAS PASSED BY INCOME TAX OFFICER (TDS) THEREBY HE COMPU TED TAX PAYABLE OF RS.4,19,723/- AND INTEREST OF DELAYED PAYMENT OF TA X U/S.201(1A) OF THE ACT OF RS.S1,63,692/- AND TOTAL DEMAND OF RS.5,83,415/- WA S MADE. 3. AGAINST THIS ORDER, ASSESSEE FILED AN APPEAL BEF ORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DISMISSED T HE APPEAL. NOW BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSEE FILE D APPEAL BEFORE US. 4. FIRST GROUND OF THE ASSESSEES APPEAL IS WITH RE GARD TO NON-DEDUCTION OF TAX. LD. SR-COUNSEL FOR THE ASSESSEE, SHRI J.P.SHAH VEHEMENTLY ARGUED THAT THE TAX WAS NOT DEDUCTIBLE AS THE ASSESSEE HAS NOT PROVIDED ANY RENT FREE ACCOMMODATION TO ITS EMPLOYEES. HE SUBMITTED THAT A S PER SECTION 17(*2)(I) OF THE ACT, PERQUISITE INCLUDES THE VALUE OF RENT FREE ACCOMMODATION PROVIDED TO THE ASSESSEE BY HIS EMPLOYER. HE SUBMITTED THAT IN THE PRESENT CASE NO RENT FREE ACCOMMODATION WAS PROVIDED BY THE EMPLOYER. HE SUBMITTED THAT THE EMPLOYER OF THE ASSESSEE-COMPANY WERE ON DEPUTATION TO GUJARAT STATE ELECTRICITY CORPORATION LIMITED (GSECL FOR SHORT) H AD PROVIDED THE ACCOMMODATION TO THE EMPLOYEES OF THE ASSESSEE-COMP ANY. HE SUBMITTED THAT THIS FACT IS UNDISPUTED THAT THE ACCOMMODATION BELONGED TO GSECL AND GSECL HAD PROVIDED THE ACCOMMODATION TO THE EMPLOYE ES. ON THE CONTRARY, LD. SR-DR ON BEHALF OF THE REVENUE SUBMITTED THAT S ECTION 17(2)(I) TO BE READ WITH THE RULE-3 OF THE I.T. RULES, 1962. HE SU BMITTED THAT IT IS QUITE CLEAR ITA NO.2/AHD/2010 A.Y. 2005-06 G.U.V.N.LTD. V. ITO(TDS) ANAND PAGE 3 THAT FOR THE PURPOSE OF COMPUTING THE INCOME CHARGE ABLE UNDER THE HEAD SALARY. THE VALUE OF PERQUISITES PROVIDED BY THE EMPLOYER DIRECTLY OR INDIRECTLY TO THE ASSESSEE OR TO ANY MEMBER OF HIS HOUSEHOLD BY REASON OF HIS EMPLOYMENT IS DETERMINED IN ACCORDANCE WITH SUB-RUL ES OF RULE-3 OF THE IT RULES. HE SUBMITTED THAT THE ACCOMMODATION TO THE E MPLOYEE IS PROVIDED BY GSECL BY REASON OF HIS EMPLOYMENT WITH THE ASSESSEE -COMPANY. HE SUBMITTED THAT DUE TO EMPLOYMENT AND HIS APPOINTMEN T TO CARRY OUT THE WORK SUCH ACCOMMODATION WAS PROVIDED. HE STRONGLY SUPPOR TED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE RENT FREE ACCOMMODATION WAS NOT PROVIDED BY THE EMPLOYER, THE REFORE, THE EMPLOYER WAS NOT RESPONSIBLE FOR DEDUCTION OF TAX AS SUCH SA ME IS NOT A PERQUISITES WITHIN THE MEANING OF SECTION 17(2)(I) OF THE ACT. IN THIS CASE IS THE ISSUE IS WHETHER RENT ACCOMMODATION PROVIDED BY THE GSECL TO THE EMPLOYEE OF GUJARAT URJA VIKAS NIGAM LIMITED (GUVNL FOR SHORT), THE ASSESSEE HEREIN, WOULD TANTAMOUNT TO PERQUISITES WITHIN THE MEANING OF SECTION 17(2)(I) OF THE ACT READ WITH RULE-3 OF THE IT RULES. FOR BETTER UN DERSTANDING SECTION. 17(2)(I) IS REPRODUCED HEREINBELOW:- 17. FOR THE PURPOSES O SECTION 15 & 16 AND OF THI S SECTION, - (1) .. (2) PERQUISITE INCLUDES (I) THE VALUE OF RENT-FREE ACCOMMODATION PROVIDED T O THE ASSESSEE BY HIS EMPLOYER ; FURTHER, RULE-3 OF THE I.T. RULES, SPEAKS AS UNDER: - 3. FOR THE PURPOSE OF COMPUTING THE INCOME CHARGEA BLE UNDER THE HEAD SALARIES, THE VALUE OF PERQUISITES PROVIDED BY TH E EMPLOYER DIRECTLY OR INDIRECTLY TO THE ASSESSEE (HEREINAFTER REFERRED TO AS EMPLOYEE) OR TO ANY MEMBER OF HIS HOUSEHOLD BY REASON OF HIS EMPLOY MENT SHALL BE DETERMINED IN ACCORDANCE WITH THE FOLLOWING SUB-RUL ES, NAMELY:- ITA NO.2/AHD/2010 A.Y. 2005-06 G.U.V.N.LTD. V. ITO(TDS) ANAND PAGE 4 THE UNDISPUTED FACTS IN THIS CASE ARE THAT THE ASSE SSEE-COMPANY HAS EXECUTED A TRANSMISSION SERVICE AGREEMENT WITH GUJA RAT ENER4GY TRANSMISSION CORPORATION LIMITED (GETCO FOR SHORT) AND GSECL. IT IS ALSO UNDISPUTED FACT THAT THE EMPLOYEES WERE DEPUTED FOR THE PURPOSE OF CARRYING OUT RESPONSIBILITY OF THE ASSESSEE-COMPANY ARISING OUT OF THE TRANSMISSION SERVICE AGREEMENT. THEREFORE, THE DEPUTATION OF THE EMPLOYEES AT GIVEN PLACES WERE BY THE REASON OF EMPLOYMENT. NOW COMING TO THE PROVISIONS OF LAW AS PER RULE-3 OF THE I.T. RULES VALUE OF PERQUI SITES PROVIDED BY THE EMPLOYER DIRECTLY OR INDIRECTLY TO THE ASSESSEE OR TO ANY MEMBER OF HIS HOUSEHOLD BY REASON OF HIS EMPLOYMENT IS DETERMINED IN ACCORDANCE WITH RULE-3(1) OF THE IT RULES. IN THE PRESENT CASE THE UNDISPUTED FACT REMAINS THAT ALTHOUGH THE RENT FREE ACCOMMODATION WAS NOT PROVID ED DIRECTLY BY THE ASSESSEE-COMPANY BUT THE ACCOMMODATION WAS GIVEN TO THE EMPLOYEES OF THE ASSESSEE BY A THIRD PARTY AT WHOSE PLACES THE EMPLO YEES OF THE ASSESSEE- COMPANY WERE DEPUTED FOR CARRYING OUT THE RESPONSIB ILITIES OF THE ASSESSEE- COMPANY UNDER THE AGREEMENT EXECUTED BETWEEN THE AS SESSEE-COMPANY AND THE GSECL (THIRD PARTY). ADMITTEDLY, THE SUBMISSION S THAT THE EMPLOYER HAS NOT PROVIDED ANY RENT FREE ACCOMMODATION TO ITS EMP LOYEES WAS NOT MADE BEFORE LD. CIT(A) AND THIS ASPECT HAS NOT BEEN EXAM INED. THEREFORE, IT WOULD BE IN THE INTEREST OF JUSTICE THAT THIS ISSUE IS RE STORED BACK TO THE FILE OF LD. CIT(A) TO DECIDE AFRESH AFTER PROVIDING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS ALLOW ED FOR STATISTICAL PURPOSES. 6. NEXT GROUND IS WITH REGARD TO CHARGING OF INTERE ST U/S. 201(1A) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON CE THE TAX WAS NOT DEDUCTIBLE THEREFORE THE ASSESSEE CANNOT BE TERMED AS A DEFAULTER U/S. 201(1A) OF THE ACT AND NO INTEREST CAN BE CHARGED U /S. 201(1A) OF THE ACT. ON THE CONTRARY, LD. SR-DR STRONGLY SUPPORTED THE ORDE R OF AUTHORITIES BELOW. ITA NO.2/AHD/2010 A.Y. 2005-06 G.U.V.N.LTD. V. ITO(TDS) ANAND PAGE 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. SINCE WE HAVE ALREADY REMITTED BACK FIRST GROUND OF THIS ASSESSEES APPEAL AS INDICATED ABOVE TO THE FILE OF LD. CIT(A) THEREFORE, THIS GROUND OF ASSESSEES APPEAL IS ALSO REMITTED BACK T O THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION AFTER PROVIDING REASONABLE OPPOR TUNITY OF BEING HEARD TO ASSESSEE.. THIS GROUND OF ASSESSEES APPEAL IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP !' #-14/12/2012 )*+ , --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '+'-2 3 / CONCERNED CIT 4. 3- / CIT (A) 5. .56 ---2, -2 , )*+ / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ , /TRUE COPY/ =/) '> -2 , )*+ , STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 06/12 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 06/12 4) DATE OF CORRECTION 07/12 ITA NO.2/AHD/2010 A.Y. 2005-06 G.U.V.N.LTD. V. ITO(TDS) ANAND PAGE 6 5) DATE OF FURTHER CORRECTION 07/12, 10/12 6) DATE OF INITIAL SIGN BY MEMBERS 11/12 7) ORDER UPLOADED ON 14/12 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 14/12