National Dairy Development Board, Anand V. The Income tax Officer, TDS, Anand

ITA 3916/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5782 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 22-10-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Depreciation; Charitable institution; Bonafide belief; Notional interest; TDS
• Section: 12A; 201(1); 201; 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI A.N. PAHUJA, A.M.) I.T.A. NOS. 3916 TO 3919/AHD./2007 ASSESSMENT YEARS : 2003-2004 TO 2006-2007 NATIONAL DAIRY DEVELOPMENT BOARD, ANAND VS.- I NCOME TAX OFFICER (TDS), ANAND (PAN : AABCN 2029 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI YOGESH SHAH RESPONDENT BY : SMT. NEETA SHAH, SR. D .R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THESE FOUR APPEALS FILED BY THE ASSESSEE ARE AGAIN ST THE COMMON ORDER DATED 13.07.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV, BARODA FOR THE FINANCIAL YEARS 2002-03 TO 2005-06 RELEVANT TO THE ASSESSMENT YEARS 2003-04 TO 2006-07. 2. THESE APPEALS WERE HEARD ON THE SAME DATE, ARGUE D BY LD. COMMON REPRESENTATIVES, AND INVOLVED COMMON ISSUES, THEREFORE, THESE ARE DECIDE D BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. IN ALL THESE APPEALS, IDENTICAL GROUNDS ARE RAIS ED, THEREFORE, WE RE-PRODUCE HEREUNDER THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR THE FI NANCIAL YEARS 2002-03 RELEVANT TO THE ASSESSMENT YEAR 2003-04 :- (I) THE LEARNED CIT(A.) HAS ERRED IN NOT QUASHING O RDER U/S. 201 R.W.S. 192 OF THE ACT. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMST ANCES OF THE CASE, THERE IS NO DEFAULT U/S. 192 OF THE ACT AND THEREFORE PROVISION S OF SECTION 201 ARE NOT APPLICABLE. IT IS SUBMITTED THAT THE ORDER PASSED B Y THE LD. INCOME TAX OFFICER IS BAD IN LAW AND REQUIRES TO BE QUASHED. (2) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN HOLDING THE PROVISIONS OF RULE 3(5) ARE APPLICABLE. IT IS SUBMI TTED THAT IN THE FACTS AND CIRCUMSTANCES, THE CIT(A.) OUGHT TO HAVE CONSIDERED THAT THE FACILITY IS NOT PROVIDED BY THE EMPLOYER AND THEREFORE, CANNOT BE T REATED AS PERQUISITE. IT BE SUBMITTED THAT IT BE SO HELD NOW. (3) THE LEARNED CIT(A.) ERRED IN HOLDING THAT THE E XPENDITURE INCURRED BY THE EMPLOYER TO PROVIDE ANY FACILITY IS NOT RELEVANT. I T IS SUBMITTED THAT SINCE NO 2 ITA NOS . 3916 - 3919/AHD/2007 EXPENDITURE HAS BEEN INCURRED BY THE APPELLANT, THE VALUE OF PERQUISITES, IF ANY, OUGHT TO HAVE BEEN DETERMINED AT NIL. IT BE SO HELD NOW. (4) THE LEARNED CIT(A.) ERRED IN HOLDING THAT PROVI SO TO RULE 3(5) IS NOT APPLICABLE IN THE PRESENT CASE. IN THE FACTS AND CI RCUMSTANCES VALUE PER CHILD PER MONTH DOES NOT EXCEED RS.1000 AND THEREFORE, THE PR ESENT CASE IS COVERED BY PROVISO TO RULE 3(5). IT IS SUBMITTED THAT IT BE SO HELD NOW. (5)THE LEARNED CIT(A.) ERRED IN CONSIDERING ACTIVIT Y FEES, REFRESHMENT CHARGES AND SPORTS FEES WHILE CALCULATING THE DIFFERENTIAL FEES. IT IS SUBMITTED THAT WHILE VALUING BENEFIT ARISING OUT OF CONCESSIONAL EDUCATI ONAL FACILITY, FEES FOR ONLY EDUCATIONAL ACTIVITIES SHOULD BE CONSIDERED AND ANY OTHER FEES RECOVERED FROM STUDENTS SHOULD BE IGNORED. IT IS SUBMITTED THAT IT BE SO HELD NOW. (6) THE LEARNED CIT(A.) ERRED IN CONSIDERING NOTION AL INTEREST ON DIFFERENTIAL SECURITY DEPOSITS WHILE CALCULATING THE DIFFERENTIA L FEES. IT IS SUBMITTED THAT WHILE VALUING BENEFIT ARISING OUT OF CONCESSIONAL EDUCATI ONAL FACILITY, FEES FOR ONLY EDUCATIONAL ACTIVITIES SHOULD BE CONSIDERED AND NOT IONAL INTEREST COSTS SHOULD BE IGNORED. IT IS SUBMITTED THAT IT BE SO HELD NOW. (7) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN NOT ALLOWING THE SUM OF RS.1000 AS A DEDUCTION WHILE CALCULATING THE VALUE OF PERQUISITE, IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES, THE VALUE OF PERQUISITE IF ANY, WOULD BE CALCULATED AFTER ALLOWING THE DEDUCTION OF RS.10 00 P.M. AS PER PROVISO TO RULE 3(5). IT IS SUBMITTED THAT IT BE SO HELD NOW. (8) THE LEARNED CIT(A.) ERRED IN NOT ALLOWING EXEMP TION U/S. 10(16) OF THE INCOME TAX ACT, 1961 IN RESPECT OF THE PERQUISITE PROVIDED TO THE EMPLOYEES. IN THE FACTS AND CIRCUMSTANCES, THE CONCESSION WAS GRANTED TO ME ET THE COST OF EDUCATION AND THEREFORE, IT OUGHT TO HAVE BEEN TREATED AS SCHOLA RSHIP AND SHOULD HAVE BEEN EXCLUDED FROM TOTAL INCOME. IT IS SUBMITTED THAT IT BE SO HELD NOW. (9) THE LD. CIT(A.) FAILED TO APPRECIATE THAT THE A PPELLANT HAS DEDUCTED TAX U/S. 192 ON BONAFIDE ESTIMATE OF THE SALARY O THE EMPLOY EES AND THEREFORE, IF AT ALL ANY SHORTFALL ON ACCOUNT OF DIFFERENT INTERPRETATION TH EN TAX SHOULD NOT BE RECOVERED FROM THE APPELLANT. IT BE SO HELD NOW. (10) THE LD. CIT(A.) ERRED IN CONFIRMING LEVY OF IN TEREST U/S. 201(1A) OF THE ACT. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, INTEREST U/S. 201(1A) IS NOT CHARGEABLE. IT IS SUBMITTED THAT IT BE SO HE LD NOW. 4. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE C AME INTO EXISTENCE BY AN ACT OF THE PARLIAMENT CALLED NATIONAL DAIRY DEVELOPMENT BOARD ACT, 1987 (NDDB ACT). ANANDLAYA SCHOOL IS RUN BY ANANDLAYA EDUCATION SOCIETY, WHICH IS REGISTERED AS A CHARITABLE INSTITUTION AND APPROVED UNDER SECTION 12A OF THE INCOME TAX ACT, 1 961. THE SCHOOL IS SITUATED IN ANAND AND IS PROVIDING EDUCATION AND IS CONSIDERED TO BE A RENOW NED EDUCATIONAL INSTITUTION IN ANAND. IN THE 3 ITA NOS . 3916 - 3919/AHD/2007 YEAR 1994, THE ASSESSEE GAVE CORPUS FUND OF RS.3 CR ORES TO THE ANANDLAYA EDUCATION SOCIETY. IN ADDITION TO ABOVE, THE ASSESSEE PROVIDES GRAND-IN-A ID TO THE SOCIETY, WHICH IT PROVIDES TO OTHER CHARITABLE INSTITUTIONS ALSO. ANANDLAYA EDUCATION S OCIETY PROVIDES CONCESSION IN FEES CHARGED TO EMPLOYEES OF VARIOUS ORGANIZATION LOCATED IN ANAND. THE ASSESSEE DOES NOT INCUR ANY EXPENDITURE TOWARDS SUCH CONCESSION BEING PROVIDED BY THE SOCIETY. FOR ALL THESE FOUR ASSESSMENT YEARS, THE ASSESSING OFFICER PASSED THE ORDER UNDER SECTION 201(1) AND 201A FOR NOT DEDUCTING THE TAX AT SOURCE ON CONTRIBUTIONS MADE B Y THE ASSESSEE TOWARDS TUITION FEE OF THE WARDS OF ITS EMPLOYEES. THE ITO(TDS), ANAND COMPUTE D THE PERQUISITE VALUE AND WORKED OUT DEDUCTION OF TDS AND LEVIED INTEREST THEREON. THE A SSESSING OFFICER IN ORDER UNDER SECTION 201(1) WORKED OUT THE PERQUISITE VALUE, WHICH IS RE QUIRED TO BE INCLUDED IN THE SALARY IN EACH EMPLOYEES AS UNDER :- CLASS NET PERQUISITE KG-V 960/- VI X 1,010/- XI - XII 1,110/- ON THE ABOVE BASIS, THE ITO(TDS), ANAND CALCULATED THE SHORT DEDUCTION OF TAX UNDER SECTION 201(1) AND INTEREST UNDER SECTION 201(1A) IN EACH O F THE FOLLOWING FINANCIAL YEAR AS UNDER :- TAX UNDER SECTION 201(1) INTEREST UNDER SECTION 201(1A) RS.4,23,629/- RS.1,91,782/-/- 5. ON APPEAL BEFORE THE ASSESSING OFFICER, THE ASSE SSEE CONTENTED THAT RULE 3(E) OF THE INCOME TAX RULES EXISTED UPTO THE ASSESSMENT YEAR 2 001-02 AS PER WHICH, PAYMENTS MADE BY THE EMPLOYER TOWARDS FREE EDUCATIONAL FACILITIES ONLY C OULD BE TREATED AS PERQUISITE IN THE HANDS OF THE EMPLOYEES. SINCE THE ASSESSEE WAS NOT CONTRIBUT ING TOWARDS FULL TUITION/ EDUCATIONAL EXPENSES OF ITS EMPLOYEES, THEREFORE, THE PROVISIONS OF RULE 3(E) WERE NOT APPLICABLE FOR THE ASSESSMENT YEARS UNDER APPEAL. THE NEW RULE 3(5) OF THE INCOME TAX RULES, WHICH WERE INSERTED W.E.F. 1.4.2001, ARE APPLICABLE FROM FINANCIAL YEAR 2001-0 2 ONWARDS AND UNDER THE SAID NEW RULES, IF PAYMENT MADE BY THE EMPLOYER TOWARDS EDUCATIONAL FA CILITIES OF THE CHILDREN OF THE EMPLOYEES DID NOT EXCEED RS.1,000/- PER CHILD PER MONTH THEN THE CONTRIBUTION TOWARDS SUCH EDUCATIONAL FACILITIES COULD NOT BE TREATED AS PERQUISITE IN TH E HANDS OF THE EMPLOYEES. SINCE THE CONTRIBUTION MADE BY THE ASSESSEE FOR SUCH EDUCATIONAL FACILITIE S PER CHILD PER MONTH WAS LESS THAN RS.1,000/-, 4 ITA NOS . 3916 - 3919/AHD/2007 THEREFORE, THE ASSESSEE WAS UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS MADE TO THE ANANDALAYA EDUCATION SOCIETY. THE ASSESSING OFF ICER DID NOT, HOWEVER, AGREE WITH THE CONTENTION OF THE ASSESSEE BECAUSE PERQUISITE AS PE R SECTION 17(2)(III) INCLUDES THE VALUE OF ANY BENEFIT PROVIDED FREE OF COST OR AT CONCESSIONAL RA TE BY AN EMPLOYER TO AN EMPLOYEE AND FURTHER AS PER SECTION 17(2)(IV), PERQUISITES INCLUDE ANY S UM PAID BY AN EMPLOYER IN RESPECT OF ANY OBLIGATION WHICH, BUT FOR SUCH PAYMENT, WOULD HAVE BEEN PAYABLE BY THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER HELD THE ASSESSEE WAS IN DEFA ULT FOR NON DEDUCTION OF TAX AT SOURCE FROM THE PAYMENTS MADE TOWARDS EDUCATIONAL EXPENSES OF THE C HILDREN OF ITS EMPLOYEES. 6. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE, THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT THE FEES UNDER WHATEVER HAD CHARGED IS THE AMO UNT PAYABLE ON BEHALF OF THE STUDENT TO BE ALLOWED TO STUDY IN THE SCHOOL. THEREFORE, THE BENE FIT HAS ACCRUED TO THE EMPLOYEES ON THE CONCESSIONAL CAUTION MONEY PAYABLE TO THEM. THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) ACCORDINGLY HELD THAT THE ASSESSING OF FICER RIGHTLY CALCULATED THE PERQUISITE VALUE TO THE EMPLOYEES. HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TOOK THE VIEW THAT THE VALUE OF PERQUISITE FOR THE EMPLOYEES WHOS E WARDS ARE STUDYING IN CLASS KG TO CLASS V IS RS.960/-. THE AMOUNT BEING BELOW RS.1,000/- IS N OT TO BE TREATED AS PERQUISITE. THE EMPLOYEES WHOSE WARDS ARE STUDYING ABOVE CLASS V COME UNDER W ITHIN THE TAXABLE DEFINITION OF PERQUISITE AND, THEREFORE, THE ASSESSEE-COMPANY SHOULD HAVE DE DUCTED TAX AT SOURCE. ON THIS BASIS, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DIRECTE D THE ASSESSING OFFICER TO RECOMPUTE TAX UNDER SECTION 201 AND INTEREST UNDER SECTION 201(1A ) OF THE INCOME TAX ACT EXCLUDING THE EMPLOYEES WHOSE WARDS ARE STUDYING CLASS KG TO CLAS S V. 7. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER O F INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 8. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI YOGESH SHAH APPEARED AND REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). HIS SUBMISSIONS CAN BE SUMMARIZED AS UNDER :- (A) THE EDUCATIONAL FACILITY IS NOT PROVIDED BY EMP LOYER TO EMPLOYEE AND THEREFORE, NOT WITHIN PURVIEW OF PERQUISITE. 5 ITA NOS . 3916 - 3919/AHD/2007 (B) NDDB HAS NOT INCURRED ANY EXPENDITURE TO PROVID E SUCH FACILITY AND THEREFORE, VALUE OF BENEFIT, IF ANY, IS TO BE TAKEN AT NIL. (C) ALL EMPLOYEES ARE TREATED AT PAR AND, THEREFORE , IT CANNOT BE TREATED AS CONCESSION BEEN GRANTED TO EMPLOYEES. (D) ONLY TUITION FEES AND LIBRARY FEES IS REQUIRED TO BE CONSIDERED FOR WORKING OUT THE DIFFERENTIAL FEES. (E) INTEREST ON SECURITY DEPOSIT CANNOT BE CONSIDER ED TO VALUE BENEFIT. (F) ON EXCLUDING OTHER FEES AND NOTIONAL INTEREST O N DIFFERENTIAL SECURITY DEPOSIT, VALUE OF BENEFIT IN ALL CASES IS LESS THAN RS.1,000/- AND THEREFORE, VALUE OF PERQUISITE WOULD BE NIL. (G) EVEN IF OTHER FEES ARE CONSIDERED, FOR AY 2003- 04 TO 2006-07, FOR STANDARDS KG TO V, THE VALUE OF BENEFITS DOES NOT E XCEED RS.1,000/- AND, THEREFORE, VALUE OF PERQUISITE IS NIL. (H) FOR AY 2003-04 TO 2006-07, FOR STANDARDS VI TO X, THE VALUE OF BENEFIT DOES NOT EXCEED RS.1,000/- (EXCLUDING NOTIO NAL INTEREST) AND THEREFORE, VALUE OF PERQUISITE IS NIL. (I) FOR STANDARDS XI & XII, FOR AY 2003-04 TO 2006- 07, THE VALUE OF PERQUISITE, IF AT ALL, LIABLE TO TAX, IS ONLY RS.10 0/- PER MONTH (I.E. BENEFIT IN EXCESS OF RS.1,000/- IF OTHER FEES ARE CONSIDERE D. (J) THE AMOUNT EVEN IF TREATED AS PERQUISITE, IS LI ABLE TO BE EXCLUDED FROM TOTAL AMOUNT BY VIRTUE OF SECTION 10(16) BY TREATIN G THE SAME AS SCHOLARSHIP. (K) TDS WAS CALCULATED ON BONAFIDE BELIEF AND THE E MPLOYER SHOULD NOT BE PENALIZED FOR BONAFIDE BELIEF. FINALLY THE LD. COUNSEL OF THE ASSESSEE DREW OUR AT TENTION TO A CHART SUBMITTED TO THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), WHICH IS APPEA RING ON PAGE 3 IS AS UNDER :- FY CLASS NON-SPONSORED FEES SPONSORED FEES INTEREST ON CAUTION DEPRECIATION VALUE OF PERQUISITE 2002- 2003 KG-V 1350 400 10 960 KG-X 1400 400 10 1010 KG-XII 1500 400 10 1510 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE BASIS OF COMPUTING THE PERQUISITE VALUE AS GIVEN IN THE AFORESAID CHART IS SAME IN ALL THE ASS ESSMENT YEARS UNDER APPEAL. HE SUBMITTED THAT IN 6 ITA NOS . 3916 - 3919/AHD/2007 RESPECT OF CLASS KG TO CLASS V STUDENTS, THE VALUE OF PERQUISITE COMPUTED IS RS.960/-, WHICH HAS BEEN ACCEPTED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND PERQUISITE VALUE HAS BEEN EXCLUDED. IN RESPECT OF CLASS VI TO CLASS X, T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) COMPUTED THE PERQUISITE VALUE AT RS.10 10/-. HE SUBMITTED THAT THERE IS NO PERQUISITE VALUE IN RESPECT OF INTEREST ON CAUTION DEPOSIT. THEREFORE, RS.10/- SHOULD BE EXCLUDED. AFTER EXCLUDING RS.10/-, PERQUISITE VALUE IS RS.1,0 00/-. IN RESPECT OF CLASS XI AND XII, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) COMPUTE D THE PERQUISITE VALUE AT RS.1510/- AND WORKED OUT AT PAGE 3 OF HIS IMPUGNED ORDER AS UNDER :- F.Y. CLASS NON-SPONSORED FEES SPONSORED FEES INTEREST ON CAUTION DEPRECIATION VALUE OF PERQUISITE 2002-06 KG TO V 1350 400 10 960 VI-X 1400 400 10 1010 XI - XII 1500 400 10 1510 IN RESPECT OF CLASS-XI, XII, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS MENTIONED I NCORRECTLY THE NON-SPONSORED FEES AT RS.1500/- INSTEAD OF RS.1100/-. THE CORRECT VALUE A S PER CHART SHOULD BE RS.1,100/-. IF ONE EXCLUDES THE INTEREST ON CAUTION DEPRECIATION, THE PERQUISITE VALUE IS ONLY RS.1,100/-. THE LD. COUNSEL OF THE ASSESSEE FURTHER RELYING ON THE DECI SION DATED 13.10.2006 OF ITAT, D BENCH, AHMEDABAD IN ITA NOS. 1833 TO 1835/AHD/2006 ALONGWI TH CO NOS. 234 TO 236/AHD/2006 IN THE CASE OF ITO VS.- INSTITUTE OF RURAL MANAGEMENT , ANAND FOR THE ASSESSMENT YEARS 2002-03 TO 2004-05 CONTENDED THAT BY VIRTUE OF PROVISO TO RULE 3(5) OF INCOME TAX RULES, 1962, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE AS THE CONTRIBUTION DID NOT EXCEED RS.1000/- PER MONTH PER CHILD. THE INTEREST ON CAUTION DEPRECIATI ON CANNOT BE CONSIDERED AS PERQUISITE BECAUSE THERE IS NO EVIDENCE WHATSOEVER THAT ASSESSEE HAS I NCURRED ANY INTEREST EXPENDITURE. THEREFORE, IN RESPECT OF CLASS VI TO X, THE PERQUISITE VALUE IS O NLY RS.1,000/- THAT SHOULD BE IGNORED. THE PERQUISITE VALUE OF RS.100/- SHOULD BE CONSIDERED F OR CLASS XI AND XII STUDENT. 9. ON THE OTHER HAND, SMT. NEETA SHAH, SR. D.R. APP EARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. LEARNED COMMI SSIONER OF INCOME TAX(APPEALS). SHE CONTENDED THAT THE MERE FACT THAT THE ASSESSEE COMP ANY HAS NOT INCURRED ANY EXPENDITURE IN THE PREVIOUS YEAR RELEVANT TO THE FINANCIAL YEAR UNDER APPEAL IS NO GROUND TO HOLD THAT THE ASSESSEE 7 ITA NOS . 3916 - 3919/AHD/2007 HAS INCURRED NO COST IN PROVIDING EDUCATION AT CONC ESSIONAL RATE TO ITS EMPLOYEES. THIS IS BECAUSE IN THE INITIAL YEAR THE ASSESSEE HAS GIVEN A CORPUS DONATION TO ANANDALAYA EDUCATION SOCIETY IN THE YEAR WHEN THE SAID SCHOOL WAS SET UP. THEREFORE , THE PLEA OF THE LD. COUNSEL OF THE ASSESSEE THAT THERE IS NO PERQUISITE VALUE, CANNOT BE ACCEPT ED. 10. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ITAT, D BENCH, AHMEDABAD IN ITA NOS. 1833 TO 1835/AHD/2006 ALONGWITH CO NOS. 234 TO 236/AHD/2006 IN THE CASE OF ITO VS.- INSTIT UTE OF RURAL MANAGEMENT, ANAND FOR THE ASSESSMENT YEARS 2002-03 TO 2004-05 IN PARA 8 HELD AS UNDER :- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. RULE 3(5) HAS ALREADY BE EN REPRODUCED IN THE ABOVE PART OF THIS ORDER. THERE IS NO DISPUTE TO TH E EXTENT THAT RELEVANT CONTRIBUTIONS HAVE BEEN MADE BY ASSESSEE TO ANANDAL AYA EDUCATION SOCIETY FOR THE PURPOSE OF PROVIDING EDUCATIONAL FA CILITIES TO THE CHILDREN OF ITS EMPLOYEES AS THE SAME RELATES TO ONLY THE CH ILDREN OF EMPLOYEES OF THE ASSESSEE. THE LEGISLATURE IN ITS WISDOM HAS CON SIDERED THAT THE CONTRIBUTION OF THE EMPLOYER TOWARDS EDUCATIONAL FA CILITIES PROVIDED TO THE CHILDREN OF ITS EMPLOYEES WILL NOT BE CONSIDERE D TO BE PERQUISITE PROVIDED THE SAME DOES NOT EXCEED RS.1,000/- PER MO NTH PER CHILD. EARLIER TO INSERTION OF RULE 3(5), UNDER RULE 3(E) THERE WAS NO LIMIT SET OUT FOR EXEMPTION THESE CONTRIBUTIONS/ ALLOWANCES T O ANY EXTENT AS THE WHOLE OF SUCH CONTRIBUTION/ DISALLOWANCE WAS CONSID ERED TO BE PERQUISITE AS IT EXISTED UPTO 31 ST MARCH, 2001. NOW FOR THE YEAR UNDER CONSIDERATION UNDER RULE 3(5) SUCH CONTRIBUTION OF EMPLOYER ARE N OT CONSIDERED AS PERQUISITE IF THE SAME DOES NOT EXCEED RS.1,000/- P ER MONTH PER CHILD. WHERE SUCH BENEFIT IS PROVIDED, IT SHOULD BE EFFECT IVELY GIVEN. THE VIEW OF ASSESSING OFFICER THAT THE CONTRIBUTION WILL BECOME PERQUISITE WITHIN THE MEANING OF RULE 3(5), IF IT IS NOT A FREE EDUCATION AL FACILITY, APPEARS TO BE A TECHNICAL VIEW. ACCORDING TO RULE OF INTERPRETATI ON THE PROVISO IS TO BE READ WITH MAIN PROVISION. THE MAIN PROVISION PROVID ES THAT THE VALUE OF BENEFIT TO THE EMPLOYEE RESULTING FROM THE PROVISIO N OF FREE OR CONCESSIONAL EDUCATIONAL FACILITIES TO ANY MEMBER O F HIS HOUSEHOLD WILL BE CONSIDERED TO BE PERQUISITES IN A CASE WHERE FRE E EDUCATIONAL FACILITIES ARE ALLOWED IN ANY OTHER INSTITUTION BY REASONS OF HIS BEING IN EMPLOYMENT OF THE EMPLOYER. IT IS FURTHER PROVIDED THAT WHERE ANY SUCH AMOUNT IS PAID OR RECOVERED FROM THE EMPLOYEE ON TH AT ACCOUNT, THE VALUE OF BENEFIT SHALL BE REDUCED BY THE AMOUNT SO PAID O R RECOVERED. THUS IT IS APPARENTLY CLEAR THAT IF ASSESSEE IS PAYING ANY AMO UNT WHICH CONTRIBUTES TO THE EDUCATIONAL FACILITIES OF THE CHILDREN OF EM PLOYEES THE SAME WILL BE CONSIDERED TO BE FALLING WITHIN THE TERM FREE EDUCA TIONAL FACILITIES PROVIDED TO THE CHILDREN OF THE EMPLOYEE AS THE TER M FREE EDUCATIONAL FACILITIES AS EXISTING IN PROVISO RULE 3(5) IS EMBE DDED THEREIN ALSO THE 8 ITA NOS . 3916 - 3919/AHD/2007 TERM CONCESSIONAL EDUCATIONAL FACILITY BECAUSE OF MAIN RULE 3(5). THUS ACCORDING TO US, CIT(A.) HAS RIGHTLY INTERPRETED TH E PROVISION OF RULE 3(5). 11. WE FOUND CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE THAT THERE IS NO EVIDENCE THAT THE ASSESSEE HAS INC URRED COST BY WAY OF INTEREST ON CAUTION DEPRECIATION. THEREFORE, THREE IS NO JUSTIFICATION WHATSOEVER FOR COMPUTING THE VALUE OF THE SAME AT RS.10/- IN RESPECT OF EACH STUDENT. IF ONE EXCLU DES RS.10/-, THE VALUE OF PERQUISITE IN RESPECT OF CLASS V TO X IS WORKED OUT UPTO TO RS.1,000/- P.M. FOLLOWING THE AFORESAID DECISION DATED 13.10.2006 OF ITAT, D BENCH, AHMEDABAD IN ITA NO S. 1833 TO 1835/AHD/2006 ALONGWITH CO NOS. 234 TO 236/AHD/2006 IN THE CASE OF ITO VS. - INSTITUTE OF RURAL MANAGEMENT, ANAND FOR THE ASSESSMENT YEARS 2002-03 TO 2004-05, WE ARE OF THE VIEW THAT THERE IS NO PERQUISITE VALUE IN RESPECT OF CLASS KG-I TO X. FOR CLASS XI & XII, THE PERQUISITE VALUE IS ONLY RS.100/- P.M. PER STUDENT. ON THIS BASIS, ASSESSING OFFICER IS DIRECT ED TO RE-WORK OUT THE SHORT DEDUCTION OF TAX FOR ALL THE FOUR ASSESSMENT YEARS. 12. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 25.06.201 0 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 / 06 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.