M/s. Bharat Sanchar Nigam Ltd., Indore V. The A.C.I.T. (TDS), Indore

ITA 265/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47825 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: C P RAWKA
• Keywords: Retrospective amendment; Reasonable cause; Difference of opinion
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS. 260 TO 266/IND/2010 A.YS. 2002-03 TO 2008-09 BHARAT SANCHAR NIGAM LIMITED INDORE PAN AABCB-5576G APPELLANT VS ACIT(TDS) INDORE RESPONDENT APPELLANT BY : SHRI C.P. RAWKA, FCA RESPONDENT BY : SHRI P.K. MITRA O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DATED 25.2.2010 FOR THE ASSESSMENT YEARS 2002-03 TO 2008-09 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/SS 201(1) AND 201(1A) OF THE AC T. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A GOVERNMENT OF INDIA UNDERTAKING. IT IS ENGAGED 2 IN PROVIDING TELE-COMMUNICATION SERVICES ALL OVER THE INDIA WITH VARIOUS UNITS ALL OVER THE COUNTRY. THE BSNL IS HAVING COMMON PAN FOR ALL VARIOUS UNITS ALL OVER THE COUNTRY. HOWEVER, IT IS HAVING TAX DEDUCTION ACCOUNT NO. SEPARATELY FOR DIFFERENT PLACES WHEREVER PERSON RESPONSIBLE FOR MAKING THE PAYMENT IS THERE. REGULARLY IT WAS FILING TDS RETURNS WITH REGARD TO TAX DEDUCTED AT SOURCE FROM THE SALARY OF THE EMPLOYEES DULY INCORPORATING VARIOUS AMOUNTS PAID TO THEM AND THE REQUISITES, ETC. THERE WAS AMENDMENT TO SECTION 17(2) BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1.4.2002 AND AS SUCH THE ASSESSEE WAS MADE LIABLE TO DEDUCT AND PAY HIGHER TAX ON THE PERQUISITE PROVIDED IN THE FORM OF RESIDENTIAL ACCOMMODATION TO ITS EMPLOYEES. THE ASSESSEE PAID ENTIRE AMOUNT OF TAX COMPUTED ON THE VALUE OF PERQUISITE IN TERMS OF AMENDMENT BROUGHT BY THE FINANCE ACT, 2007. THEREAFTER, THE ASSESSING OFFICER ALSO LEVIED INTEREST U/S 201(1A) OF THE ACT. IT WAS HELD BY THE LOWER AUTHORITIES THAT THE PAYMENT OF INTEREST IS A STATUTORY LIABILITY AND, THEREFORE , 3 THE ASSESSEE IS REQUIRED TO PAY THE SAME FOR LATE DEPOSIT OF TDS. NOW, THE ASSESSEE IS IN APPEAL IS BEFORE. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE FOR PAYMENT OF HIGHER AMOUNT OF TDS AND INTEREST THEREON ARISES DUE TO THE FACT THAT FINANCE ACT, 2007 INSERTED EXPLANATION TO SECTION 17(2) OF THE ACT WITH RETROSPECTIVE EFFECT FROM APRIL, 2002. WE FIND THAT THE ASSESSEE HAD DULY SUBMITTED THE REQUIRED RETURN FROM TIME TO TIME FOR ALL THE YEARS UNDER CONSIDERATION AND THERE WERE NO PROCEEDINGS AGAINST THE ASSESSEE FOR ALLEGED NON-DEDUCTION OR SHORT DEDUCTION OF TDS ON PERQUISITES. HOWEVER, ON 11.8.2008 THE ACIT (TDS) MADE A SPOT VERIFICATION DURING WHICH IT WAS NOTICED THAT THE ASSESSEE DEPOSITED HIGHER AMOUNT OF TDS ON PERQUISITE ON ACCOMMODATION U/S 17(2) OF THE ACT AS PER AMENDED PROVISIONS. IT WAS SUBMITTED BEFORE THE LOWER AUTHORITIES THAT AT THE TIME OF PAYMENT OF SALARY, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS OUT OF 4 SALARY IN RESPECT OF PERQUISITES FOR ACCOMMODATION AS RULE 3 WAS NOT APPLICABLE AND THE ASSESSEE ONCE ISSUED THE CERTIFICATE AND THE SAME HAS BEEN ACCEPTED. AS SUCH, THERE WERE NO PROCEEDINGS AGAINST THE ASSESSEE FOR ANY SUCH DEFAULT, THEREFORE, THERE WAS NO REASON FOR TREATING THE ASSESSEE IN DEFAULT DUE TO SUCH RETROSPECTIVE AMENDMENT. FROM THE RECORD, WE FIND THAT DURING THE PERIOD UNDER CONSIDERATION THE ASSESSEE WAS WORKING OUT THE FAIR RENT OF ITS OWN ACCOMMODATION ON THE BASIS OF RATES AS FIXED BY THE DIRECTORATE OF ESTATES, MINISTRY OF URBAN DEVELOPMENT AND POVERTY. WE ALSO FIND THAT THE ASSESSEE BSNL HAS NOT PROVIDED ANY CONCESSION ON RENT TO ITS EMPLOYEES AS THE PERQUISITE IS ACTUALLY NOT A PAYMENT BUT A BENEFIT IN TERMS OF MONEY. THERE WAS NO PROVISION INITIALLY TO DEDUCT TAX AT SOURCE FOR SUCH ACCOMMODATION FOR ITS EMPLOYEES. AS PER THE PROVISIONS OF SECTIONS 192(1), (1A) AND (1B), 200 AND 2001 AND RULE 30, IT IS CLEAR THAT LIABILITY TO DEDUCT TAX IS THERE ON THE DATES WHEN SALARY IS ACTUALLY PAID OR WHOLLY OR PARTLY AT ANY 5 TIME ON THE OPTION OF THE EMPLOYER IF IT WERE ON A VALUE OF PERQUISITE NOT IN THE FORM OF MONETARY PAYMENT. THEREFORE, IF THERE WAS NO PERQUISITE AT THE TIME WHEN THE TAX WAS TO BE DEDUCTED AT SOURCE, THERE WOULD NOT BE ANY LIABILITY TO DEDUCT TAX. IF A PERQUISITE VALUE IS ASSUMED BY RETROSPECTIVE AMENDMENT AFTER THE PERIOD DURING WHICH IT WAS TO BE DEDUCTED, THE EMPLOYER CANNOT BE ASKED TO DEDUCT TAX AND PAY IT TO THE GOVERNMENT. HOWEVER, THIS PLEA WAS NOT FOUND ACCEPTABLE TO THE DEPARTMENT AND THEY HAVE RECOVERED THE SHORT AMOUNT OF TAX FROM THE ASSESSEE. THE ASSESSEES LIABILITY FOR NO TDS ON THE PERQUISITE VALUE DUE TO RETROSPECTIVE AMENDMENT WAS NOT CONSIDERED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) EVEN THOUGH A SPECIFIC GROUND WAS TAKEN BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DISMISSED THIS GROUND MERELY BY OBSERVING THAT THE ASSESSEE HAS ALREADY PAID THE SHORT AMOUNT OF TDS AND, THEREFORE, ACCEPTED ITS LIABILITY FOR SUCH PAYMENT. WE DO NOT FIND ANY 6 MERIT IN THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). WE, THEREFORE, RESTORE GROUND NO. 2 TO THE FILE OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DECIDING WHETHER THE ASSESSEE IS LIABLE FOR TDS U/S 192 ON THE PERQUISITE FOR CONCESSION IN RENT TOWARDS ACCOMMODATION PROVIDED TO ITS EMPLOYEES. 4. NOW COMING TO THE ISSUE DECIDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WITH REFERENCE TO HIS DECISION THAT THE ASSESSEE WAS IN DEFAULT WITHIN THE MEANING OF SECTION 201(1A) OF THE ACT FOR PAYMENT OF INTEREST ON THE DELAY IN PAYMENT OF TDS, WE FIND THAT IT IS AN UNDISPUTED FACT THAT DURING THE YEARS UNDER CONSIDERATION AS PER THE EXISTING PROVISIONS PREVAILING AT THE TIME OF DEDUCTION OF TDS, THE ASSESSEE HAS CORRECTLY DEDUCTED TAX AT SOURCE ON THE AMOUNT OF SALARY AND PERQUISITE PAYABLE TO ITS EMPLOYEES. ONLY DUE TO THE REASON OF CHANGE IN LAW IN 2007 WITH RETROSPECTIVE EFFECT FROM 2002 WHEREIN THE PROVISIONS DEEMING DIFFERENCE BETWEEN THE ACTUAL SUM CHARGED AND SPECIFIED 7 RATE AS CONCESSIONAL TAXABLE AS PERQUISITE IN ACCORDANCE WITH RULES IN RESPECT OF HOUSING PROVIDED BY THE EMPLOYER TO ITS EMPLOYEES BROUGHT IN. SUCH CHANGE IN LAW IS APPLICABLE FOR VALUATION OF PERQUISITE IN EMPLOYEES HANDS BUT IT DOES NOT FASTEN LIABILITY ON THE EMPLOYER FOR DEDUCTION OF TAX FROM BACK DATE. SECTION 17(2)(II) AS IT STOOD PRIOR TO AMENDMENT IN 2007 DID NOT CONTAIN ANY DEEMING CLAUSE TO DEEM RENT PAID AT LESS THAN 10% OR 7.5% OF THE SALARY AS A CONCESSION OR THAT THE EMPLOYEE IS DEEMED TO HAVE RECEIVED THAT CONCESSION. AN EMPLOYER MAY PROVIDE RESIDENTIAL ACCOMMODATION TO ITS EMPLOYEES FOR SEVERAL REASONS. THE ISSUE WITH REGARD TO CONSIDERATION OF ASSESSEE IN DEFAULT IN CASE OF RETROSPECTIVE AMENDMENT WITH RESPECT TO HOUSING PROVIDED BY THE CENTRAL GOVERNMENT/GOVERNMENT UNDERTAKING TO ITS EMPLOYEES HAS BEEN ELABORATELY DEALT WITH BY THE ITAT, NAGPUR BENCH, IN THE CASE OF CANARA BANK AND WESTERN COAL FIELD LIMITED REPORTED AT 319 ITR (AT) 63 WHEREIN IT WAS HELD THAT THERE WAS REASONABLE CAUSE FOR NOT DEDUCTING TAX AT 8 SOURCE AT A PARTICULAR POINT OF TIME AND TO ASK THE ASSESSEE TO BEAR RESPONSIBILITY FOR SUCH LIABILITY WITH RETROSPECTIVE EFFECT. IT WAS HELD THAT AT THE TIME OF SUCH PAYMENT, UNDER THE LAW EXISTING AT THAT TIME, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX FOR ACCOMMODATION PROVIDED TO THEIR EMPLOYEES AS THERE WAS NO CONCESSION AND RULE 3 HAS NO APPLICABILITY. THUS, THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE TO DEDUCT TAX WHILE MAKING PAYMENT OF SALARY. IT WAS CATEGORICALLY HELD BY THE TRIBUNAL THAT IT WOULD NOW BE IMPOSSIBLE ON THE PART OF THE ASSESSEE TO DEDUCT TAX FROM THE SALARY OF THE EMPLOYEES FOR THOSE YEARS IN ACCORDANCE WITH AMENDED SECTION 17(2) OF THE ACT FOR WHICH SALARY HAD ALREADY BEEN PAID IN THESE YEARS. THE ASSESSEE HAD ALL ALONG ACTED IN A BONAFIDE MANNER AND IN ACCORDANCE WITH LAW WHICH EXISTED ON THE DATE ON WHICH TAX WAS TO BE DEDUCTED. MERELY FOR THE REASON THAT THE LAW HAD CHANGED RETROSPECTIVELY, THE ASSESSEE COULD NOT BE TREATED IN DEFAULT FOR NO FAULT OF THEIR OWN 9 AND CHARGED WITH INTEREST WHICH WAS PENAL IN NATURE. 5. IT IS PERTINENT TO MENTION HERE THAT SIMILAR DECISION HAD BEEN TAKEN IN CASE OF ANOTHER BRANCH OF THE ASSESSEE AT NAGPUR WHEREIN FOR THE VERY SAME ASSESSMENT YEARS, BY FOLLOWING THE DECISION OF THE CANARA BANK (SUPRA), IT WAS HELD THAT THERE WAS NO FAULT ON THE PART OF THE ASSESSEE TO DEDUCT MORE TDS AND TO PAY INTEREST THEREON DUE TO RETROSPECTIVE AMENDMENT IN THE PROVISIONS OF SECTION 17(2) EXPLANATION 1 BY THE FINANCE ACT, 2007 WHEREIN RETROSPECTIVE EFFECT WAS GIVEN TO TREAT THE CONCESSION GIVEN IN RESPECT OF HOUSING PROVIDED BY THE EMPLOYER AS PERQUISITE. 6. THE LOWER AUTHORITIES HAVE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ELI LILLY & COMPANY INDIA PRIVATE LIMITED; 312 ITR 225 FOR HOLDING THAT ASSESSEE WAS IN DEFAULT U/S 201(1A). WE HAVE CAREFULLY GONE THROUGH THIS JUDGMENT OF THE HONBLE SUPREME COURT WHEREIN IT WAS HELD THAT INTEREST U/S 201(1A) IS COMPENSATORY IN NATURE FOR WITHHOLDING THE TAX 10 WHICH OUGHT TO HAVE GONE TO THE EXCHEQUER. IT IS NOT THE CASE WHERE DUE TO RETROSPECTIVE AMENDMENT IN LAW, EMPLOYER WAS MADE LIABLE TO DEDUCT TAX WITH RETROSPECTIVE DATE. IT WAS SIMPLY A CASE WHERE TAX ALREADY DEDUCTED BY THE EMPLOYER WAS WITHHELD AND PAYMENT TO GOVERNMENT EXCHEQUER WAS MADE BELATELY, THEREFORE, HONBLE SUPREME COURT HELD THAT INTEREST U/S 201(1A) WAS COMPENSATORY MEASURE FOR WITHHOLDING THE TAX WHICH OUGHT TO HAVE GONE TO THE EXCHEQUER. THUS, THE FACTS OF THIS CASE ARE QUITE DISTINGUISHABLE FROM THE FACTS OF THE INSTANT CASE BEFORE US WHEREIN LIABILITY U/S 201(1A) WAS FASTENED ON THE ASSESSEE NOT DUE TO ANY FAULT ON THE PART OF THE ASSESSEE BUT BECAUSE OF THE RETROSPECTIVE AMENDMENT IN THE PROVISIONS OF THE ACT. DURING THE COURSE OF HEARING BEFORE US, THE LEARNED SR. DR RELIED UPON THIS JUDGMENT OF THE HONBLE SUPREME COURT. IN VIEW OF OUR DISCUSSION MADE HEREINABOVE, WE ARE NOT IN AGREEMENT WITH THE LEARNED SR. D.R. FOR THE REASONS DISCUSSED HEREINABOVE. AS THE FACTS OF THE INSTANT CASE 11 WHICH ARE PARI MATERIA TO THE FACTS AND CIRCUMSTANCES OF THE CASE DECIDED BY THE COORDINATE BENCH IN THE CASE OF ANOTHER UNIT OF THE SAME ASSESSEE AT NAGPUR, WE ARE INCLINED TO FOLLOW THE DECISIONS OF NAGPUR BENCH AS DISCUSSED ABOVE. FOLLOWING WAS THE PRECISE OBSERVATION IN THE CASE OF CANARA BANK(SUPRA) :- FACTS THE ASSESSEE, A PUBLIC SECTOR BANKING INSTITUTION, BESIDES PAYMENT OF SALARY TO ITS EMPLOYEES ACCORDING TO SCALE LAID DOWN BY THE CENTRAL GOVERNMENT, HAD PROVIDED RESIDENTIAL ACCOMMODATION TO OFFICERS WITH A VIEW TO ENABLING THEM TO FUNCTION EFFICIENTLY. IN RESPECT OF SUCH ACCOMMODATION, CERTAIN RENT WAS CHARGED AND RECOVERED FROM THE EMPLOYEES CONCERNED AS SPECIFIED IN THE SERVICE REGULATIONS, WHICH WERE APPROVED BY THE CENTRAL GOVERNMENT. SIMILARLY WCL, A COMPANY ENGAGED IN MINING ACTIVITIES, HAD ALSO PROVIDED ACCOMMODATION TO ITS EMPLOYEES. THE RENT WAS BEING RECOVERED FROM THE EXECUTIVE EMPLOYEES AT THE RATES BASED ON THE RECOMMENDATION OF THE 4TH PAY COMMISSION AND FROM THE NON-EXECUTIVE EMPLOYEES THE RENT WAS RECOVERED AS PER THE WCLS OWN CIRCULAR. THE ASSESSING OFFICER IN BOTH THE CASES BASED ON THE SUPREME COURTS JUDGMENT IN THE CASE OF ARUN KUMAR V. UNION OF 12 INDIA [2006] 286 ITR 89 / 155 TAXMAN 659 UPHOLDING THE CONSTITUTIONAL VALIDITY OF RULE 3 OF THE INCOME-TAX RULES AS AMENDED ON 25-9-2001 WITH EFFECT FROM 1-4-2001 REQUIRED THE ASSESSEE TO DEDUCT TAX ON THE CONCESSIONAL ACCOMMODATION PROVIDED TO ITS EMPLOYEES, AND ALSO TO MAKE PAYMENT OF THE CORRESPONDING TAX ON THE PERQUISITE VALUE FROM THE ASSESSMENT YEAR 2001-02. ACCORDING TO HIM, THE DIFFERENCE IN THE SPECIFIED RATE IN THE RULE 3 (10 PER CENT OR 7.5 PE R CENT, AS THE CASE MAY BE) AND RENT CHARGED BY THE ASSESSEE IN PROVIDING RESIDENTIAL ACCOMMODATION TO ITS EMPLOYEES, WAS A CONCESSION IN THE MATTER OF RENT AND, THEREFORE, A PERQUISITE UNDER SECTION 17(2) AND, CONSEQUENTLY, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THIS PERQUISITE. SINCE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE, IT WAS HELD THAT THE ASSESSEE WAS AN ASSESSEE-IN-DEFAULT UNDER SECTION 192, READ WITH SECTION 201(1), AND ALSO LIABLE TO INTEREST UNDER SECTION 201(1A). ON APPEAL, THE COMMISSIONER (APPEALS) CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER. ON SECOND APPEAL, THE ASSESSEE CONTENDED THAT NO FINDING WAS RECORDED EITHER BY THE ASSESSING OFFICER OR BY THE COMMISSIONER (APPEALS) ON THE ISSUE WHETHER THERE WAS CONCESSION IN THE MATTER OF RENT AND, THEREFORE, THE QUESTION OF PERQUISITE UNDER RULE 3, READ WITH SECTION 17(2)(II), WOULD NOT ARISE; THAT BY RETROSPECTIVE AMENDMENT, AT 13 BEST, AN EMPLOYEE COULD BE CHARGED AND NOT THE EMPLOYER TO DEDUCT TAX ON SUCH PERQUISITE, WHICH WAS NOT THERE AS PER THE LAW, AS IT STOOD AT THE RELEVANT TIME; AND THAT IT WOULD BE IMPOSSIBLE ON THE PART OF ASSESSEE TO DEDUCT TAX FROM SALARY OF EMPLOYEES IN ACCORDANCE WITH AMENDED SECTION 17(2) AS THE REMEDY AVAILABLE TO THE ASSESSEE TO RECOVER TAX FROM ITS EMPLOYEES HAD LAPSED. BOTH THE ASSESSEES HAD PROVIDED ACCOMMODATION TO THEIR EMPLOYEES LOCATED NEARBY THE WORKING PLACES. BOTH HAD RECOVERED RENT IN RELATION THERETO ON THE SAME STANDARD WITHOUT ANY DISCRIMINATION AS PER THE GOVERNMENT OF INDIA NORMS. IN WCL, THE RENT WAS RECOVERED ON THE FLOOR AREA BASIS FROM THE EXECUTIVE EMPLOYEES AS FIXED BY THE ASSESSEE AS PER COAL INDIAS CIRCULAR BASED ON THE RECOMMENDATION OF THE 4TH PAY COMMISSION AND FROM THE NON-EXECUTIVE EMPLOYEES AS PER THE ASSESSEES OWN CIRCULAR. IT WAS AN ADMITTED FACT THAT THE PRINCIPLE ADOPTED IN THE MATTER OF FIXING THE RENT FOR ACCOMMODATION PROVIDED WAS IN NO WAY DISSIMILAR TO THAT ADOPTED BY THE CENTRAL GOVERNMENT. LICENCE FEE WAS FIXED FOR EACH TYPE OF ACCOMMODATION ALLOTTED TO THE CATEGORY OF EMPLOYEES AND THERE WAS NO CONCESSION IN THE MATTER OF RENT IN RESPECT OF ANY ACCOMMODATION PROVIDED BY THE ASSESSEE TO ITS EMPLOYEES. IN THESE CIRCUMSTANCES, AS GENERALLY UNDERSTOOD, THERE WAS NO CONCESSION IN THE MATTER OF RENT 14 UNDER SECTION 17(2)(II) AND, CONSEQUENTLY, PROVISION OF RULE 3 WOULD NOT BE APPLICABLE. [PARA 34] EVEN AFTER AMENDMENT TO RULE 3 IN 2001, THE FUNDAMENTAL QUESTION OF APPLICABILITY OF SECTION 17(2) STILL REMAINS AND FOR THAT, THERE MUST BE A CONCESSION IN THE MATTER OF RENT. THE WORD CONCESSION HAS NEITHER BEEN DEFINED IN THE ACT NOR IN THE RULE,AND, ACCORDING TO DICTIONARY MEANING, IT HAS TO BE A THING THAT IS CONCEDED; A GESTURE MADE IN RECOGNITION OF A DEMAND OR PREVAILING STANDARD; A REDUCTION IN PRICE FOR A CERTAIN CATEGORY OF PERSON. IT IS A GRANT, ORDINARILY APPLIED TO A GRANT OF SPECIFIC PRIVILEGE BY THE GOVERNMENT; A SPECIAL PRIVILEGE GRANTED BY A GOVERNMENT, CORPORATION OR OTHER AUTHORITY. BEFORE SECTION 17(2)(II) CAN BE INVOKED OR PRESSED INTO SERVICE AND BEFORE CALCULATION UNDER RULE 3, THE REVENUE AUTHORITY MUST COME TO A POSITIVE CONCLUSION THAT THERE IS A CONCESSION. [PARA 47] SECTION 17(2)(II), AS IT STOOD PRIOR TO AMENDMENT IN 2007, DID NOT CONTAIN ANY DEEMING CLAUSE TO DEEM RENT PAID LESS THAN 10 PER CENT OR 7.5 PER CENT AS A CONCESSION OR THAT THE EMPLOYEE IS DEEMED TO HAVE RECEIVED THAT CONCESSION. AN EMPLOYER MAY PROVIDE RESIDENTIAL ACCOMMODATION TO ITS EMPLOYEES FOR SEVERAL REASONS. IT IS ALSO POSSIBLE THAT FOR MAKING 15 AVAILABLE STAFF QUARTERS/COLONIES/ ACCOMMODATIONS THE STATE GOVERNMENTS OR THE CENTRAL GOVERNMENT MAY PROVIDE LAND TO PUBLIC SECTOR UNDERTAKINGS/COMPANIES/ CORPORATIONS AT A CONCESSIONAL RATE, IMPOSING APPROPRIATE CONDITIONS INCLUDING THE AMOUNT OF RENT, IF ANY, TO BE RECOVERED BY THE EMPLOYER AND IN SUCH CIRCUMSTANCES AS HELD BY CERTAIN DECISIONS THAT RESIDENTIAL FACILITY PROVIDED BY THE EMPLOYER TO THE EMPLOYEE IS NOT A PERQUISITE WITHIN THE MEANING OF INCOME-TAX LAWS. IN SUCH A CASE INSTEAD OF CONCESSION, THERE WOULD BE COMPULSION. [PARA 48] IN THE ABSENCE OF DEEMING THE DIFFERENCE AS PERQUISITE, IT WAS OPEN TO THE ASSESSEE TO CONTEND THAT THERE WAS, IN FACT, NO CONCESSION IN THE MATTER OF RENT AND THAT COULD ONLY BE ON THE YARDSTICK OF THE CASE LAWS RELIED UPON BY THE ASSESSEE, AND OTHER ATTENDING CIRCUMSTANCES. THE REVENUE HAD TO GIVE A FINDING AS TO CONCESSION IN THE MATTER OF RENT IN THE ABSENCE OF THE DEEMING PROVISION TO TREAT THE DIFFERENCE AS PERQUISITE IN VIEW THE DECISION IN ARUN KUMARS CASE (SUPRA). [PARA 49] AGAIN, THERE MIGHT BE REASONS FOR PROVIDING ACCOMMODATION TO EMPLOYEES LOOKING TO LOCATION, SITUATION, AREAS EXIGENCY OF EMPLOYMENT AND IN SUCH COMPANIES INSTEAD OF CONCESSION, THERE IS COMPULSION. WCL IS IN REMOTE AREA AND THE PROVISO TO RULE 3 ITSELF 16 PROVIDES FOR SUCH AN EXCEPTION WHEN IT STATES THAT NOTHING CONTAINED IN THIS SUB-RULE WOULD BE APPLICABLE TO ANY ACCOMMODATION LOCATED IN A REMOTE AREA PROVIDED TO AN EMPLOYEE WORKING AT A MINING SITE OR AT AN ONSHORE OIL EXPLORATION SITE, OR A PROJECT EXECUTION SITE OR AN ACCOMMODATION PROVIDED IN AN OFFSHORE SITE OF SIMILAR NATURE; OR IN THE AMENDED PROVISO WITH EFFECT FROM 1-10-2004 PROVIDING THAT NOTHING CONTAINED IN THIS SUB-RULE SHALL APPLY TO ANY ACCOMMODATION PROVIDED TO AN EMPLOYEE WORKING AT A MINING SITE OR AN ONSHORE OIL EXPLORATION SITE OR A PROJECT EXECUTION SITE OR A DAM SITE OR A POWER GENERATION SITE OR AN OFF- SHORE SITE WHICH, BEING OF A TEMPORARY NATURE AND HAVING PLINTH AREA NOT EXCEEDING 800 SQUARE FEET, IS LOCATED NOT LESS THAN EIGHT KILOMETERS AWAY FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR A CANTONMENT BOARD, OR IS LOCATED IN A REMOTE AREA. [PARA 50] A RETROSPECTIVE AMENDMENT IS TO BE GIVEN EFFECT TO AS IF IT WAS THERE IN EXISTENCE ON THE DATE WITH EFFECT FROM WHICH IT IS TO BE GIVEN EFFECT TO. THEREFORE, THE PERQUISITE VALUE WAS TO BE WORKED OUT ON THE BASIS OF THE AMENDED PROVISION OF SECTION 17(2) AND THE DECISIONS REFERRED TO BY THE ASSESSEE MIGHT NOT HAVE ANY PRECEDENT VALUE IN DETERMINING THE VALUE OF PERQUISITE OF AN EMPLOYEE, THAT IS, VALUE BEING 17 THE DIFFERENCE IN THE SPECIFIED RATE AND THE RENT CHARGED BY THE EMPLOYER. [PARA 52] HOWEVER, A RETROSPECTIVE AMENDMENT COULD BE VALID FOR LEVY OF TAX ON THE EMPLOYEE, BUT IT COULD NOT BE SAID THAT THE EMPLOYER WOULD ALSO BE UNDER A RESPONSIBILITY TO DEDUCT TAX AT SOURCE RETROSPECTIVELY. [PARA 53] SECTION 192 DEALS WITH DEDUCTION OF TAX AT SOURCE. IT IS COMPUTED ON THE ESTIMATED INCOME OF AN ASSESSEE UNDER THE HEAD SALARY AND THE LIABILITY IS AT THE TIME OF PAYMENT OF SALARY. AS THE PERQUISITE IS ACTUALLY NOT A PAYMENT BUT A BENEFIT NOT IN TERMS OF MONEY, THERE WAS NO PROVISION INITIALLY TO DEDUCT TAX AT SOURCE. IT IS PROVIDED BY SECTION 192(1B) BY THE FINANCE ACT, 2002 WITH EFFECT FROM 1-6-2002 AND AS TO COMPUTATION OF INCOME OF PERQUISITE THE PROVISIONS ARE IN SECTION 192(1A) WHICH HAS ALSO BEEN INTRODUCED BY THE SAME ACT AND WITH EFFECT FROM SAME DATE, 1-6-2002. THIS TAX AT THE OPTION OF THE ASSESSEE COULD BE PAID ON THE WHOLE OR PART OF SUCH INCOME WITHOUT MAKING ANY DEDUCTION THEREFROM AT THE TIME WHEN IT WAS OTHERWISE DEDUCTIBLE UNDER SECTION 192. THEREFORE, IF THERE IS A PERQUISITE THERE IS A RESPONSIBILITY OF THE EMPLOYER TO DEDUCT TAX . [PARA 54] ON A PERUSAL OF PROVISIONS OF SECTIONS 192, 200, 201 AND RULE 30, IT WOULD BE CLEAR THAT THE LIABILITY TO DEDUCT TAX IS THERE ON THE DATE(S) 18 WHEN THE SALARY IS ACTUALLY PAID WHOLLY OR PARTLY AT ANY TIME, AT THE OPTION OF THE EMPLOYER, IF IT WAS ON A VALUE OF THE PERQUISITE NOT IN THE FORM OF A MONETARY PAYMENT, BUT BOTH ARE WITHIN A WEEK OR SO IMMEDIATELY AFTER THE FINANCIAL YEAR OF PAYMENT OR GRANT OF PERQUISITE. [PARA 58] THEREFORE, IF THERE WAS NO PERQUISITE AT THE TIME WHEN THE TAX WAS TO BE DEDUCTED AT SOURCE, THERE WOULD BE NO LIABILITY TO DEDUCT TAX. IF A PERQUISITE VALUE IS ASSUMED BY THE RETROSPECTIVE AMENDMENT AFTER THE PERIOD WHEN IT WAS TO BE DEDUCTED, HOW CAN A DEDUCTION BE MADE ON A BACK DATE? THE RETROSPECTIVE AMENDMENT IS FOR DEEMING VALUATION OF PERQUISITE AND IS NOT EXTENDED TO DEDUCTION OF TAX AT SOURCE THEREON, WHICH REMAINS TO BE WITHIN THE FINANCIAL YEAR OF THE INCOME TO WHICH IT RELATES TO. [PARA 59] AS PER THE PROVISION OF SECTION 200, THE TAX DEDUCTION AT SOURCE IS A MODE OF PAYMENT OF TAX ON THE INCOME OF THE PERSON, I.E., EMPLOYEES IN THIS CASE. THE CREDIT OF THIS DEDUCTION AT SOURCE IS GIVEN AGAINST THE TAX LIABILITY OF THE EMPLOYEE AS PROVIDED IN SECTION 199. THEREFORE, WHEN THE TIME PRESCRIBED FOR DEDUCTION HAS EXPIRED, THE EMPLOYER CANNOT BE ASKED TO DEDUCT TAX AND PAY IT TO THE GOVERNMENT. THE TERM AT SOURCE ALSO SUGGEST THAT THE DEDUCTION HAS TO BE AT THAT TIME, NAMELY, WHEN THE PAYMENT IS MADE OR THE PERQUISITE IS GRANTED AND IF THE SAID TIME HAD EXPIRED AND AT THAT TIME, THERE WAS NO LIABILITY 19 TO DEDUCT TAX, THERE CANNOT BE A LIABILITY TO DEDUCT TAX AFTERWARDS IN ABSENCE OF THE SOURCE AT WHICH IT WAS TO BE DEDUCTED. RETROSPECTIVE AMENDMENT WAS TO DEEM THE VALUE OF PERQUISITE AND NOT TO DEDUCTION OF TAX WHICH WAS TO BE MADE AT THE TIME OF PAYMENT OR GRANTING THE PERQUISITE. THIS LIABILITY CANNOT RELATE BACK AS ONE CANNOT GO BACK IN THE MATTER OF TIME NOR THE WHEELS OF TIME CAN BE RETRIEVED. [PARA 60] SADDLING THE LIABILITY ON THE ASSESSEE-EMPLOYER BY RETROSPECTIVE AMENDMENT AND TREATING HIM TO BE AN ASSESSEE-IN-DEFAULT, WOULD AMOUNT TO OR WOULD BE AKIN TO A PENAL LIABILITY. A PENAL LAW CANNOT GENERALLY HAVE RETROSPECTIVE OPERATION. ARTICLE 20 OF THE CONSTITUTION IMPOSES TWO LIMITATIONS ON THE RETROSPECTIVE APPLICABILITY OF PENAL LAWS - FIRST, THE MAKING OF AN ACT AN OFFENCE FOR THE FIRST TIME AND THEN MAKING THAT LAW RETROSPECTIVE IS PROHI-BITED; SECOND, THE INFLICTION OF A PENALTY GREATER THAN THAT WHICH MIGHT HAVE BEEN INFLICTED UNDER THE LAW WHICH WAS IN FORCE WHEN THE ACT WAS COMMITTED IS NOT PERMITTED. [PARA 61] IT IS A WELL-SETTLED LAW THAT THE LAW AS IT STOOD ON THE DATE OF FILING OF THE RETURN WOULD DETERMINE THE LIABILITY. THE ASSESSEE COULD NOT BE TREATED AS AN ASSESSEE-IN-DEFAULT RETROSPECTIVELY AND INTEREST UNDER SECTION 201(1A) COULD NOT ALSO BE CHARGED ON A LIABILITY 20 WHICH CAME INTO EXISTENCE BY A RETROSPECTIVE AMENDMENT. [PARA 62] THE RETROSPECTIVE AMENDMENT WAS TO DEEM THE DIFFERENCE IN SPECIFIED RENT AND RENT CHARGED AS PERQUISITE AND NOT TO DEDUCT TAX AT SOURCE UNDER SECTION 192. IF THAT BE SO, THERE WAS A REASONABLE CAUSE NOT TO DEDUCT TAX AT SOURCE, AT THE PARTICULAR POINT OF TIME AND TO ASK THE ASSESSEE TO BEAR RESPONSIBILITY FOR SUCH LIABILITY WITH RETROSPECTIVE EFFECT COULD NOT BE JUSTIFIED. A T THE TIME OF SUCH PAYMENT, AS PER THE LAW EXISTING AT THAT TIME, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX FOR ACCOMMODATION PROVIDED TO ITS EMPLOYEES AS THERE WAS NO CONCESSION AND RULE 3 HAD NO APPLICABILITY. THUS, THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE TO DEDUCT TAX WHILE MAKING PAYMENT OF SALARY. MERELY BECAUSE THE LAW HAS BEEN AMENDED WITH RETROSPECTIVE EFFECT, THE ASSESSEE COULD NOT BE HELD TO BE AN ASSESSEE- IN-DEFAULT RETROSPECTIVELY. IT WOULD NOW BE IMPOSSIBLE ON THE PART OF THE ASSESSEE TO DEDUCT TAX FROM THE SALARY OF THE EMPLOYEES FOR THAT YEAR IN ACCORDANCE WITH THE AMENDED SECTION 17(2) FOR WHICH SALARY HAD ALREADY BEEN PAID IN THAT YEAR. REMEDY AVAILABLE TO THE ASSESSEE TO RECOVER THE TAX FROM ITS EMPLOYEES HAD LAPSED AND NOW IT WAS IMPOSSIBLE TO DEDUCT TAX FROM THE SALARIES OF THE EMPLOYEES AS PER THE AMENDED SECTION 17(2). [PARA 67] 21 IT IS A WELL-SETTLED LAW THAT LAW DOES NOT COMPEL A MAN TO DO THAT WHICH HE CANNOT POSSIBLY PERFORM. [PARA 68] EVEN IF THE AMENDMENT HAD BEEN BROUGHT INTO WITH RETROSPECTIVE EFFECT, THE ASSESSEE COULD NOT BE TREATED AS AN ASSESSEE-IN-DEFAULT RETROSPECTIVELY AND INTEREST UNDER SECTION 201(1A) COULD NOT BE CHARGED ON A LIABILITY WHICH CAME INTO EXISTENCE BY A RETROSPECTIVE AMENDMENT. THE ASSESSEE HAD ALL ALONG ACTED IN A BONA FIDE MANNER AND IN ACCORDANCE WITH THE LAW WHICH EXISTED AS ON THE DATE ON WHICH TDS WAS TO BE DEDUCTED. FURTHER, MERELY FOR THE REASON THAT THE LAW HAD BEEN CHANGED RETROSPECTIVELY, THE ASSESSEE COULD NOT BE TREATED TO BE IN DEFAULT FOR NO FAULT OF ITS OWN AND COULD NOT BE CHARGED WITH INTEREST WHICH IS PENAL IN NATURE. THE ANDHRA PRADESH HIGH COURT IN P.V. RAJAGOPAL V. UNION OF INDIA [1998] 233 ITR 678 / 99 TAXMAN 475 HELD THAT THE DEPARTMENT COULD NOT COERCE THE EMPLOYER TO DEDUCT TAX AT SOURCE ON AN AMOUNT WHICH WAS IN DISPUTE AS A PERQUISITE BY THE EMPLOYER. EVEN WHERE THERE IS A DIFFERENCE OF OPINION DUE TO WHICH TAX HAS NOT BEEN DEDUCTED, SECTION 201/201(1A) CANNOT BE INVOKED; IT WOULD APPLY WITH GREATER FORCE WHERE THERE IS NO PERQUISITE ON THE DATE OF DEDUCTION OF TDS. THUS, EVEN ON THIS COUNT, THE ORDER UNDER APPEAL WAS BAD IN LAW, SINCE THE APPLICABILITY OF SECTION 17(2)(II) IN THE 22 INSTANT CASE WAS HIGHLY DEBATABLE AND, ACCORDINGLY, THE ORDER PASSED BY THE ASSESSING OFFICER TREATING THE ASSESSEE-IN-DEFAULT FOR NOT DEDUCTING TDS ON SUCH ALLEGED PERQUISITE WAS NOT IN ACCORDANCE WITH THE LAW. THE FACT THAT RETROSPECTIVE AMENDMENT WAS BROUGHT IN SECTION 17(2) ALSO FORTIFIED THE SAME. HENCE, THE PRINCIPLE LAID DOWN BY THE ANDHRA PRADESH HIGH COURT SQUARELY APPLIED TO THE INSTANT CASE. [PARA 70] BY DEEMING FICTION THE REVENUE CAN ASSESS THE EMPLOYEES AND RECOVER TAX FROM THEM BY MAKING THEIR ASSESSMENTS BUT NOT THE EMPLOYER WHOSE LIABILITY IS NEITHER FIXED BY FICTION NOR SURVIVED BY AFFLUX OF TIME. THE FICTION IS ONLY FOR THE PURPOSE OF DEEMING PERQUISITE AND SHOULD NOT BE EXTENDED TO OTHERS LIABILITY FOR DEDUCTING TAX AT SOURCE. NO LIABILITY IS CREATED ON THE EMPLOYER TO DEDUCT TAX AT SOURCE BY ANY RETROSPECTIVE LEGISLATION, LIKE THAT OF DEEMING PERQUISITE. [PARA 71] IT IS A DEEMING PROVISION AND A DEEMING PROVISION IS INTENDED TO ENLARGE/CURTAIL THE MEANING OF A PARTICULAR WORD WHICH INCLUDES OR EXCLUDES MATTERS WHICH OTHERWISE MAY OR MAY NOT FALL WITHIN THE PROVISION; IT SHOULD, THEREFORE , BE EXTENDED TO THE CONSEQUENCE AND INCIDENCE WHICH SHALL INEVITABLY FOLLOW. [PARA 72] THE EXPLANATION 1 TO SECTION 17(2) BIDS ONE TO TREAT THE DIFFERENCE IN RENT AT SPECIFIED RATE AND 23 THE RENT ACTUALLY CHARGED AS A CONCESSION IN THE MATTER OF RENT AS REAL, WHICH IS OR MIGHT BE AN IMAGINARY STATE OF AFFAIRS, ONE MUST SURELY IMAGINE AS REAL THE CONSEQUENCES AND INCIDENTS WHICH, IF THE PUTATIVE STATE OF AFFAIRS HAD, IN FAC T, EXISTED, MUST INEVITABLY HAVE FLOWN FROM OR ACCOMPANIED IT, I.E., ONE HAS TO ASSUME THAT THE DIFFERENCE WAS PERQUISITE. THE STATUTE SAYS THAT YOU MUST IMAGINE A CERTAIN STATE OF AFFAIRS (DIFFERENCE AS BEING PERQUISITE); IT DOES NOT SAY THAT HAVING DONE SO, YOU MUST CAUSE OR PERMIT YOUR IMAGINATION TO BOGGLE WHEN IT COMES TO THE INEVITABLE COROLLARIES OF THE STATE OF AFFAIRS, THA T THE RENT CHARGED WAS THE STANDARD OR MARKET RENT AND THAT THERE WAS NO CONCESSION IN THE MATTER OF RENT. [PARA 73] IT IS IMPLICIT FROM THE TENOR AND PHRASEOLOGY IMPLIED IN THE EXPLANATION 1 TO SECTION 17(2) WITH RETROSPECTIVE EFFECT IN SUBSTANCE, A LEGAL FICTION IS CREATED BY WHICH THE DIFFERENCE IN RENT HAS BEEN TREATED AS THE CONCESSION IN THE MATTER OF RENT AND, HENCE, PERQUISITE. TO CONSTRUE THIS LEGAL FICTION, IT WILL BE PROPER AND NECESSARY TO ASSUME ALL THOSE FACTS ON WHICH ALONE THE FICTION CAN OPERATE, SO, NECESSARILY, ALL THE PROVISIONS IN THE ACT IN RESPECT OF A PERQUISITE WILL APPLY. AS A CONSEQUENCE, THE SPECIFIED RATE WOULD HAVE TO BE ASSUMED AS REAL RENT OF THE ACCOMMODATION AND THE DIFFERENCE OVER RENT CHARGED, A CONCESSION IN THE MATTER OF RENT AND, CONSEQUENTLY, A BENEFIT 24 GRANTED WHICH IS ASSUMED, BY NECESSARY IMPLICATION, A PERQUISITE. [PARA 74] THE CONTENTION OF THE ASSESSEE, THAT THE OBJECT OF THIS DEEMING SECTION WAS NOT TO TREAT THE DIFFERENCE AS PERQUISITE AND IT WOULD STILL BE OPEN TO SHOW THAT THERE WAS NO CONCESSION IN THE MATTER OF RENT, HAD NO FORCE. IT WOULD AMOUNT TO PERMIT ONES IMAGINATION TO BOGGLE WHEN IT COMES TO THE INEVITABLE COROLLARIES OF THE DEEMED STATE OF AFFAIRS AND ALSO READING SOMETHING WHICH IS PROHIBITED BY THE FICTION AS NOT THERE IN THE PROVISIONS. BECAUSE OF THE FICTION, EVEN IF THE SPECIFIED RATE IS NOT THE REAL MARKET RENT OF THE ACCOMMODATION PROVIDED TO THE EMPLOYEES, IT HAS TO BE ASSUMED SO. THE FICTION IS TO ASSUME THE POSITION THAT THE DIFFERENCE WAS A CONCESSION, SO IT HAS TO BE PERQUISITE TO AN EMPLOYEE. IT IS BECAUSE BY VIRTUE OF DEEMING FICTION ONE HAS TO ASSUME THAT THERE IS A CONCESSION IN THE MATTER OF RENT AND THAT, CONSEQUENTLY, IT HAS TO BE A PERQUISITE. THE ARGUMENT THAT SPECIFIED RATE WAS NOT THE DETERMINING CRITERION FOR FINDING A CONCESSION IN THE MATTER OF RENT HAD THE EFFECT OF AND WOULD AMOUNT TO IGNORING THE FICTION CREATED IN THE PROVISION AND, THEREFORE, HAD NO FORCE AND, HENCE, COULD NOT BE ACCEPTED. [PARA 75] THE LIABILITY TO DEDUCT TAX WAS THERE ON PAYMENT OR ON GRANT OF PERQUISITE AND ENDED AFTER THAT PERIOD WAS OVER, AS AT THAT TIME THERE WAS NO PERQUISITE BY WAY OF CONCESSION IN THE MATTER OF 25 RENT AS THERE WAS NO DEEMING OF THE DIFFERENCE IN RENT AS PERQUISITE BY THE STATUTE AS IT WAS GIVEN EFFECT TO BY THE EXPLANATION 1 TO SECTION 17(2) UNDER THE FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 1-4-2002. RETROSPECTIVE EFFECT WAS GIVEN TO TREAT IT AS A PERQUISITE AND WAS NOT EXTENDED TO CREATE THE LIABILITY ON THE EMPLOYER TO DEDUCT TAX AND TREAT HIM AS AN ASSESSEE-IN-DEFAULT RETROSPECTIVELY. THEREFORE, SO FAR THE ASSESSEE AS EMPLOYER WAS CONCERNED, IT WAS NOT HIT BY THE RETROSPECTIVE INSERTION OF THE EXPLANATION TO SECTION 17(2) THERETO IN ABSENCE OF ANY SUCH EXTENSION OF THE RETROSPECTIVE EFFECT EITHER IN SECTION 192 ORINSECTION20.1[PARA 76] IN THE RESULT, THE APPEALS WERE TO BE ALLOWED. [PARA 77] 7. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR TREATING THE ASSESSEE IN DEFAULT U/S 201(1A) OF THE ACT. 8. THE ISSUE WITH REGARD TO LEVY OF ADDITIONAL LIABILITY ON ACCOUNT OF SHORT DEDUCTION OF TAX AT SOURCE, EVEN THOUGH RAISED BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAD NOT BEEN DECIDED BY HIM ON THE PLEA THAT THE ASSESSEE ITSELF HAS PAID THE AMOUNT OF TDS 26 WHICH IT WAS REQUIRED TO DEDUCT AS PER THE AMENDED LAW WHICH WAS BROUGHT IN FORCE WITH RETROSPECTIVE EFFECT. IN THIS REGARD, WE WILL LIKE TO CITE THE VERDICT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF S.R. KAUSTI; 276 ITR 175 WHEREIN IT WAS HELD AS UNDER :- A WORD OF CAUTION. THE AUTHORITIES UNDER THE ACT ARE UNDER AN OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONLY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UNDER A MISTAKE, MISCONCEPTION OR ON NOT BEING PROPERLY INSTRUCTED, IS OVER-ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRED TO ASSIST HIM AND ENSURE THAT ONLY LEGITIMATE TAXES DUE ARE COLLECTED. THIS COURT, IN AN UNREPORTED DECISION IN THE CASE OF VINAY CHANDULAL SATIA VS N.O. PAREKH, CIT, SPECIAL CIVIL APPLICATION NO.622 OF 1981, RENDERED ON AUGUST 20, 1981, HAS LAID DOWN THE APPROACH THAT THE AUTHORITIES MUST ADOPT IN SUCH MATTERS IN THE FOLLOWING TERMS: THE SUPREME COURT HAS OBSERVED IN NUMEROUS DECISIONS, INCLUDING RAMLAL VS REWA COALFIELDS LTD., AIR 1962 SC 361; STATE OF WEST BENGAL V.ADMINISTRATOR, HOWRAH MUNICIPALITY, AIR 1972 SC 749, AND BABHUTMAL RAICHAND OSWAL V LAXMIBAL R TARTE AIRR 1975 SC 1297, THAT THE STATE AUTHORITIES SHOULD NOT RAISE TECHNICAL PLEAS IF THE CITIZENS HAVE A LAWFUL RIGHT AND THE LAWFUL RIGHT IS BEING DENIED TO THEM MERELY ON TECHNICAL GROUNDS. THE STATE AUTHORITIES CANNOT ADOPT THE 27 ATTITUDE WHICH PRIVATE LITIGANTS MIGHT ADOPT. 9. WE, THEREFORE, SET ASIDE THIS GROUND TO THE FILE OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOR DECIDING THE SAME IN TERMS OF OUR ABOVE DISCUSSION. WE DIRECT ACCORDINGLY. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED IN THE TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN OPEN COURT ON 30TH MAY, 2011. (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 MAY, 2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-