LIC of India, Rourkela V. ITO(TDS), Rourkela

ITA 218/CTK/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5345 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 01-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SUNAKAR MAHANTY
• Keywords: Salary income; TDS
• Section: 201(1); 250; 201; 251; 194A; 72; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 196 /CTK/201 9 ( / ASSESSMENT YEAR : 2012 - 2013 ) BRANCH MANAGER, LIC OF INDIA, RO URKELA VS. ITO(TDS), ROURKELA PAN NO. AAACL 0582 H & T AN NO. : BBN L 00159 F AND . / ITA NO.199/CTK/2019 ( / ASSESSMENT YEAR :2011 - 2012) BRANCH MANAGER, LIC OF INDIA, ROURKELA VS. ITO(TDS), ROURKELA PAN NO. AAACL 0582 H & TAN NO. : BBNL 00159 F AND . / ITA NO.218/CTK/2019 ( / ASSESSMENT YEAR :2011 - 2012) LIC OF INDIA, ROURKELA VS. ITO(TDS), ROURKELA PAN NO. AAACL 0582 H & TAN NO. : BBNL 0015 0 D AND . / ITA NO. 219 /CTK/2019 ( / ASSESSMEN T YEAR :2012 - 2013) LIC OF INDIA, ROURKELA VS. ITO(TDS), ROURKELA PAN NO. AAACL 0582 H & TAN NO. : BBNL 00150 D AND . / ITA NO. 250 /CTK/2019 ( / ASSESSMENT YEAR :201 1 - 201 2 ) SHRI PRAHALLAD BEHERA, BRANCH MANAGER (SALES) , LIC OF INDIA, ROURKELA VS. ITO(TDS), ROURKELA PAN NO. AAACL 0582 H & TAN NO. : BBNL 00 172 E AND . / ITA NO. 251 /CTK/2019 ( / ASSESSMENT YEAR :2012 - 2013) SHRI PRAHALLAD BEHERA, BRANCH MANAGER (SALES), LIC OF INDIA, ROURKELA VS. ITO(TDS), ROURKELA PAN NO. AAACL 0582 H & TAN NO. : BBNL 001 72 E ( / APPELLANT ) .. ( / RESPONDENT ) ITA NO S . 196,199,218 ,219,250&251 /CTK/201 9 2 /ASSESSEE BY : SHRI SUNAKAR MAHANTY , A DV . /REVENUE BY : SHRI SUBHENDU DUTTA, DR / DATE OF HEARI NG : 22 / 01 /20 20 / DATE OF PRONOUNCEMENT : 17 / 02/2020 / O R D E R PER BENCH : TH ESE SIX APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), SAMBALPUR, ALL DATED 1 5.03.2019 FOR THE ASSESSMENT YEARS 201 1 - 201 2 & 201 2 - 201 3 . 2. IN ALL THE ABOVE APPEALS, THE ASSESSEE HAS RAISED COMMON GROUND WITH REGARD TO CONFIRMING THE ADDITION BY THE CIT(A) MADE U/S.201(1) OF THE ACT BY THE AO FOR SHORT - DEDUCTION OF TDS AND INTEREST U/S.201(1A) OF THE ACT. 3 . BRIEF FACTS OF TH E CASE ARE THAT THE ASSESSEE - BANK IS A COOPERATIVE SOCIETY WHICH HAS BEEN CREATED BY THE SPECIAL ACT OF THE LEGISLATURE. A TDS VERIFICATION WAS CONDUCTED ON 1 9 TH OCTOBER, 2012 IN THE IMPUGNED CASES AND THE ITO(TDS) FOUND FROM THE PAY BILLS REGISTER, FORM NO.16 AND OTHER RELEVANT DOCUMENTS RELATING TO SALARY PAYMENTS OF THE EMPLOYEES OF THE ASSESSEE THAT CASH MEDICAL BENEFIT WAS ALLOWED EXEMPTION U/S.10 OF THE ACT BY THE DEDUCTOR. THE ITO(TDS) NOTED THAT UNDER THE PROVISIONS OF INCOME TAX ACT, THE CASH MEDICAL BENEFIT WHICH IS PAID AS AN ALLOWANCE IS TAXABLE U/S.15 OF THE ACT IRRESPECTIVE OF THE FACT THAT IT IS PAID IN ADDITION TO, OR IN LIEU OF SALARY. ACCORDINGLY, THE ITA NO S . 196,199,218 ,219,250&251 /CTK/201 9 3 ITO(TDS) CALCULATED THE TDS LIABILITY FOR SHORT DEDUCTION OF TAX U/S.201(1) AND INTEREST PAYA BLE U/S.201(1A) OF THE ACT FOR THE RESPECTIVE ASSESSMENT YEARS UNDER CONSIDERATION IN THE RESPECTIVE APPEALS AS UNDER : - SL NO ITA NO. AY. SHORT DEDUCTION OF TAX U/S.201(1) OF THE ACT INTEREST PAYABLE U/S.201(1A) OF THE ACT 1. ITA NO.196/CTK/19 2012 - 2013 RS.43,777/ - RS.3,064/ - 2. ITA NO.199/CTK/19 2011 - 2012 RS.83,162/ - RS.15,801/ - 3. ITA NO.218/CTK/19 2011 - 2012 RS.1,72,582/ - RS.34,597/ - 4. ITA NO.219/CTK/19 2012 - 2013 RS.33,578/ - RS.2,686/ - 5. ITA NO.250/CTK/19 2011 - 2012 RS.1,39,001/ - RS.26,410/ - 6. IT A NO.251/CTK/19 2012 - 2013 RS.40,824/ - RS.2,858/ - 4 . FEELING AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE APPEALED BEFORE THE CIT(A), HOWEVER, THE CIT(A) DISMISSED ALL THE APPEALS OF THE ASSESSEE. 5 . NOW, AGGRIEVED FURTHER FROM THE ORDER OF CIT(A), THE A SSESSEE IS IN APPEALS BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6 . LD. AR SUBMITTED THAT THE CIT(A) HAS WRONGLY CONFIRMED THE ORDER OF AO FOR NON - DEDUCTION OF TDS AS PER SECTION 194A OF THE ACT. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT BOTH THE AUTHORIT IES BELOW HAVE FAILED TO APPRECIATE THAT CBDT VIDE LETTER REF.L F.NO.200/75/2001 - ITAT, DATED 20.05.2002 CLARIFIED THE MATTER RELATING TO THE INCOME TAX ON LUMP SUM CASH MEDICAL BENEFIT TO OFFICER AND EMPLOYEES OF LIC OF INDIA AND HAS ALLOWED EXEMPTION UP TO RS.15,000/ - AS PER THE PROVISO (V) OF SECTION 17(2) OF THE ACT IN RESPECT OF ANY EXPENDITURE INCURRED BY THE OFFICER/EMPLOYEE ON HIS MEDICAL TREATMENT ITA NO S . 196,199,218 ,219,250&251 /CTK/201 9 4 OR TREATMENT OF ANY MEMBER OF HIS FAMILY REIMBURSED BY THE EMPLOYER. THEREFORE, LD. AR VEHEMENTLY SUBM ITTED THAT THE LUMP SUM CASH MEDICAL BENEFIT TO OFFICERS AND EMPLOYEES UPTO RS.15000/ - IS NOT CHARGEABLE TO TAX IN VIEW OF THE PROVISO (V) OF SECTION 17(2) OF THE ACT AND ALSO THE INTEREST CANNOT BE LEVIABLE. THEREFORE, LD AR SUBMITTED THAT THE APPEALS OF THE ASSESSEE DESERVES TO BE ALLOWED. 7 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE IS TO BE TREATED AS ASSESSEE - IN - DEFAULT FOR NON - DEDUCTION OF TDS AS PER SECTION 201(1) OF THE ACT. THEREFORE, LD. DR SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD . 8 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE NOTICED FROM THE ORDERS OF AUTHORITIES BELOW THAT THE ITO(TDS) NOTED THAT UNDER THE INCOME TAX ACT, THE CASH MEDICA L BENEFIT WHICH IS PAID AS AN ALLOWANCE IS TAXABLE U/S.15 OF THE ACT IRRESPECTIVE OF THE FACT THAT IT IS PAID IN ADDITION TO OR IN LIEU OF SALARY. T HE AO WAS OF THE VIEW THAT WHAT IS CONTEMPLATED BY PROVISO (IV) TO SEC.17(2) OF THE ACT WAS 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. SINCE THE ASSESSEE WAS PAYING MEDICAL REIMBURSEMENT AS A COMPONENT OF THE MONTHLY PAYMENT TO THE EMPLOYEE AND LATER CLAIMING THAT IT WAS NOT PERQUISITE TO THE EXTENT OF RS.15,000, THE SAME HAD TO BE CONSIDERED AS ITA NO S . 196,199,218 ,219,250&251 /CTK/201 9 5 SALARY AND NOT EXEMPT PERQUISITE. THE REASONING IS THE SAME THAT THE PAYMENT SHOULD NOT PRECEDE THE ACTUALLY INCURRING OF THE EXPENSES AND IT SHOULD BE O NLY BY WAY OF REIMBURSEMENT. THE GRIEVANCE OF THE ASSESSEE IS THAT THERE SHOULD NOT BE ANY DEDUCTION OF TDS ON REIMBURSEMENT OF MEDICAL ALLOWANCE AND CHARGING OF INTEREST THEREON. ON PERUSAL OF THE IMPUGNED ORDER, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS PAID FIXED MEDICAL ALLOWANCE AND AS PER THE CBDT LETTER ISSUED TO LIC, THE EXEMPTION OF RS.15000/ - IS ALLOWED TO REIMBURSEMENT OF ACTUAL EXPENDITURE. WE FIND THAT MEDICAL ALLOWANCE IS A FIXED ALLOWANCE PAID TO THE EMPLOYEES OF A COMPANY ON A MONTHLY BASIS IRRESPECTIVE OF WHETHER THEY SUBMIT THE BILLS TO SUBSTANTIATE THE EXPENDITURE OR NOT. HOWEVER, MEDICAL REIMBURSEMENT IS A PAYMENT MADE TO EMPLOYEES AGAINST SPECIFIC MEDICAL BILLS SUBMITTED BY THEM, SUBJECT TO ENTITLEMENT. IF EMPLOYEES WANT TO CLAIM TAX BEN EFIT, THEY SHOULD SUBMIT BILLS FOR THE CORRESPONDING AMOUNT UNDER MEDICAL REIMBURSEMENT. AS PER THE PROVISIONS OF INCOME TAX ACT, 1961 , MEDICAL ALLOWANCE IS NOT CATEGORISED AS AN ALLOWANCE WHICH BEARS ENTIRE EXEMPTION. THEREFORE, THE M EDICAL ALLOWANCE IS A FIXED PAY PROVIDED BY AN EMPLOYER, AND IS FULLY TAXABLE. EMPLOYEES CAN CLAIM A TAX BENEFIT UP TO RS.15,000 / - UNDER MEDICAL REIMBURSEMENT ON PRODUCTION OF BILLS AND SUPPORTING DOCUMENT AS PER SECTION 17 (2) OF THE IT ACT, 1961. ITA NO S . 196,199,218 ,219,250&251 /CTK/201 9 6 9 . IN VIEW OF THE ABOVE FA CTUAL ASPECT OF THE CASE, WE FIND THAT THE EMPLOYER HAS PROVIDED FIXED MEDICAL ALLOWANCE TO HIS EMPLOYEES. IT IS CLEAR FROM THE ORDER OF THE AUTHORITIES BELOW THAT THE EMPLOYEES HAVE NOT SUBMITTED ANY BILLS/VOUCHERS REGARDING THEIR MEDICAL EXPENSES INCURRE D BY THEM. THE ALLOWANCE IS EXEMPT TO THE EXTENT OF EXPENDITURE INCURRED BY THE EMPLOYEES. IN THE IMPUGNED CASE, THERE IS NO ANY PROOF OF MEDICAL EXPENDITURE INCURRED BY THE EMPLOYEES WHICH IS CLEAR FROM THE ORDERS OF AUTHORITIES BELOW. THE LD. AR OF THE A SSESSEE ALSO COULD NOT SUBSTANTIATE THAT THE EMPLOYEES HAVE SPENT THE ALLOWANCES RECEIVED BY THEM FOR THE INTENDED PURPOSE . THEREFORE, THE FIXED MEDICAL ALLOWANCE GIVEN BY THE EMPLOYER IS TAXABLE AS SALARY INCOME. THE EMPLOYER HAS NOT BEEN DEDUCTED TDS ON THE FIXED MEDICAL ALLOWANCE. THE CBDT LETTER RELIED ON BY THE LD. AR OF THE ASSESSEE HAS NO APPLICATION ON THE ISSUE UNDER CONSIDERATION AS THE CIT(A) HAS ALREADY DEALT THE SAME IN THE APPELLATE ORDER. THE AUTHORITIES BELOW HAVE DECIDED THE ISSUE IN DETAI L AND ACCORDINGLY, WE UPHOLD THE SAME. THUS, THE SOLE GROUND RAISED IN ALL THE APPEALS UNDER CONSIDERATION IS DISMISSED . 10 . IN THE RESULT, ALL APPEAL S OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 / 02 / 20 20 . S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 17 / 02 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO S . 196,199,218 ,219,250&251 /CTK/201 9 7 / COPY OF THE ORDER FORWARDED T O : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY //