The Superintendent (DDO), Hisar V. ITO (TDS), Hisar

ITA 4817/DEL/2011

• Counselvise Citation: 481720114 RSA 2011
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 09-07-2012
• Assessment Year: misc
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR SENIOR
• Keywords: Salary income; Fair market value
• Section: 201(1); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI G.D. AGARWAL, HONBLE VICE-PRESIDENT AND SHRI RAJPAL YADAV, HONBLE JUDICIAL MEMBER ITA NOS. 4816 TO 4819/DEL/2011 ASST.YRS. 2006-07 TO 2009-10 THE SUPERINTENDENT(DDO), VS. INCOME-TAX OFFICER(T DS) CCS HAU HISAR C/O SECTOR-14, ANIL AGGARWAL & CO., CA HISAR. 22-GREEN PARK, HISAR. (PAN: RTKRO3623E) (APPELLANT) (RESPONDENT) ITA NOS. 4826 TO 4829/DEL/2011 ASST.YRS. 2007-08 TO 2009-10 & 2006-07 THE SUPERINTENDENT(DDO), VS. INCOME-TAX OFFICER(T DS) O/O UNIVERSITY LIBRARIAN, CSS HAU HISAR INCOME-TAX OFFICE, C/O ANIL AGGARWAL & CO., CA SECTOR-14, 22-GREEN PARK, HISAR. HISSAR. (PAN: RTKNO1694A) (APPELLANT) (RESPONDENT) ITA NOS. 4804 TO 4806/DEL/2011 ASST.YRS. 2006-07 TO 2008-09 THE PRINCIPAL, CAMPUS SCHOOK, VS. INCOME-TAX OFFI CER(TDS) CCA HAU HISAR, C/O SECTOR-14, ANIL AGGARWAL & CO., CA HISAR. 22-GREEN PARK, HISAR. (PAN: RTKCO1895F) (APPELLANT) (RESPONDENT) 2 ITA NOS. 4812 TO 4815/DEL/2011 ASST.YRS. 2006-07 TO 2009-10 THE ASSISTANT REGISTRAR(ESTT.), VS. INCOME-TAX OF FICER(TDS) CCS HAU HISAR, C/O SECTOR-14, ANIL AGGARWAL & CO., CA HISAR. 22-GREEN PARK, HISAR. (PAN: RTKCO1886D) (APPELLANT) (RESPONDENT) ITA NOS. 4829 TO 4832/DEL/2011 ASST.YRS. 2006-07 TO 2009-10 THE ASSISTANT REGISTRAR(DDO), VS. INCOME-TAX OFFI CER(TDS) O/O DIRECTOR OF EXTENSION EDUCATION, INCOME-TAX O FFICE, CCS HAU HISAR, C/O SECTOR-14, ANIL AGGARWAL & CO., CA HISAR. 22-GREEN PARK, HISAR. (PAN: RTKDO2664E) (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI BRR KUMAR, SENIOR DR ORDER PER BENCH: THIS IS A BUNCH OF NINETEEN APPEALS FILED A T THE INSTANCE OF THE ASSESSEES AGAINST THE COMMON ORDER OF THE LD.CIT(APPEALS) DAT ED 24.08.2011 PASSED FOR ASSESSMENT YEARS 2006-07 TO 2009-10. IN RESPONS E TO THE NOTICE OF HEARING, NO ONE HAS COME PRESENT ON BEHALF OF THE A SSESSEE. WITH THE 3 ASSISTANCE OF LEARNED DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY AND PROCEED TO DECIDE THE APPEALS EX PARTE. 2. THE FACTS ON ALL VITAL POINTS ARE COMMON IN THE CASE OF ALL THE ASSESSEES. FOR THE FACILITY OF REFERENCE, WE ARE TA KING UP THE FACTS FROM ITA NO.4804/DEL/2011 IN THE CASE OF THE PRINCIPAL CAMPU S SCHOOL, CHAUDHARY CHARAN SINGH HISAR AGRICULTURE UNIVERSITY, HISAR. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY OPERATION UNDER SEC. 133A(1) (I) OF THE INCOME-TAX ACT, 1961 WAS CARRIED OUT ON THE OFFICES OF ALL THE APPE LLANTS ON DIFFERENT DATES. THE PRINCIPAL OF CAMPUS SCHOOL WAS SURVEYED ON 9 TH SEPTEMBER, 2008. THE OFFICE OF SUPERINTENDENT C/O REGISTRAR WAS SURVEYED ON 7 TH OCTOBER, 2009. THE OFFICE OF SUPERINTENDENT (DDO) UNIVERSITY LIBRA RY WAS SURVEYED ON 05.011.2009. ACCORDING TO THE ITO(TDS), HISAR, THE SURVEY TEAM HAS VERIFIED THE TDS RECORD AND DIRECTED THE APPELLANTS TO SUBMIT THESE TDS RECORDS FOR SCRUTINY. THE RECORD WAS PRODUCED BEFOR E THE ITO. ON AN ANALYSIS OF THE RECORD, HE FORMED AN OPINION THAT U NIVERSITY HAS PROVIDED ACCOMMODATION TO ITS EMPLOYEES FOR WHICH IT CHARGES LICENSE FEES BUT DID NOT DEDUCT THE TDS ON THE VALUE OF PERQUISITE OF THE RE NT FREE ACCOMMODATION AS PER THE PROCEDURE PROVIDED IN RULE 3 OF THE INCOME- TAX RULES, 1962. WE FIND THAT ALMOST VERBATIM FINDING HAS BEEN RECORDED BY T HE ASSESSING OFFICER 4 EXCEPT VARIATION IN THE DATES AND QUANTUM, IN THE I MPUGNED ORDER IN ALL THESE APPEALS. FOR THE FACILITY OF REFERENCE, THE FINDING RECORDED IN THE CASE OF PRINCIPLES CAMPUS SCHOOL IS BEING NOTED HERE. IT RE ADS AS UNDER: 5. FROM THE PERUSAL OF TDS RECORDS SUPPLIED BY THE PR/DDO, IT IS NOTICED THAT THE DDO HAS NOT ADDED THE VALUE OF PER QUISITES ON ACCOUNT OF RESIDENTIAL ACCOMMODATION PROVIDED TO TH E EMPLOYEES AS MENTIONED IN ANNEXURE-A. BUT AS PER SEC. 17(2) OF I NCOME-TAX ACT, 1961 READ WITH RULE 3 OF THE INCOME-TAX RULES, 1962 THE DDO WAS REQUIRED TO ADD VALUE OF PERQUISITES IN THE SALARY INCOME OF THE EMPLOYEES TO WHOM RESIDENTIAL ACCOMMODATION PROVIDE D DURING THE YEAR UNDER CONSIDERATION WHICH THE DDO HAS FAILED T O DO SO. 3. LEARNED ASSESSING OFFICER THEREAFTER REP RODUCED THE TABLE APPENDED WITH RULE 3 AND RECORDED A FINDING HOW TO COMPUTE T HE PERQUISITE. ACCORDING TO THE ASSESSING OFFICER, AS PER SUB-RULE (1)(A)(III), 7.5% OF THE SALARY IS TO BE TREATED AS PERQUISITE VALUE OF THE ACCOMMODATION PROVIDED BY THE EMPLOYER TO ITS EMPLOYEES AND THE DDO OUGHT TO HAVE DEDUCTED THE TDS ON SUCH PERQUISITES VALUE. IN THE OPINION OF THE A SSESSING OFFICER, THE APPELLANTS HAVE FAILED TO DEDUCT THE TDS WHILE MAKI NG PAYMENTS OF SALARY TO THE EMPLOYEES. ASSESSING OFFICER COMPUTED THE PERQU ISITE VALUE, TAX PAYABLE ON SUCH AMOUNT AND THE INTEREST FOR NON-PAYMENT OF SUCH AMOUNT IN GOVERNMENTS ACCOUNT WITHIN THE DUE DATE IN THE ANN EXURE ANNEXED WITH EACH 5 ORDER. IN THE CASE OF PRINCIPAL CAMPUS SCHOOL, LEAR NED ASSESSING OFFICER HAS WORKED OUT THE TAX AT RS.16,562 INTEREST UNDER SEC. 201(1A) AT RS.5588 AND RAISED A DEMAND OF RS.22,150 UNDER SEC. 201(1) AND 201(1A) OF THE ACT. SIMILAR DEMANDS HAVE BEEN RAISED IN THE CASES OF OT HER APPELLANTS. 4. DISSATISFIED WITH THE DEMANDS, THE APPELLANTS FI LED APPEALS BEFORE THE LEARNED FIRST APPELLATE AUTHORITY. THEY HAVE CONTEN DED THAT THE LEARNED ITO(TDS) HAS ERRED IN TREATING THE UNIVERSITY EMPLO YEES IN THE CATEGORY OF OTHERS INSTEAD OF TREATING THEM AS A STATE GOVERN MENT EMPLOYEES. ACCORDING TO THE APPELLANTS, THERE IS NO VIOLATION OF PROVISIONS OF SEC. 17(2) OF THE INCOME-TAX ACT, 1961, IN THE INSTANT CASE, A S THE UNIVERSITY EMPLOYEES ARE STATE GOVERNMENT SERVANTS AND CANNOT BE CLASSIF IED UNDER THE CATEGORY OF OTHERS. IT WAS ALSO CONTENDED THAT UNIVERSITY FA LLS WITHIN THE AMBIT OF STATE AS PER ARTICLE 12 OF THE CONSTITUTION OF IN DIA. IT IS ESTABLISHED UNDER AN ACT OF PARLIAMENT AND ITS EMPLOYEES GOT SALARIES FROM OUT OF THE 100% BUDGETARY SUPPORT FROM THE STATE GOVERNMENT. IT FOL LOWS THE STATE GOVERNMENT RULES REGARDING ALL ITS FINANCIAL MATTER S AS WELL AS SERVICE RULES. THE MAJOR AMOUNT OF THE BUDGET COMES FROM THE STATE FUNDS AND IS TOTALLY REGULATED AND CONTROLLED BY THE GOVERNMENT OF HARYA NA. IT WAS ALSO CONTENDED THAT SIMILAR ISSUE HAS ARISEN BEFORE THE ITAT IN ITA 6 NO.1214/DEL/1996 IN THE CASE OF CIT, PANCHKULA VS. DIFFERENT COLLEGES OF CCS HAU. HISAR. SIMILARLY, IN THE CASE OF FINANCIAL OFFICER, MAHARISHI DAYANAND UNIVERSITY, ROHTAK VS. ITO, ROHTAK IN ITA NO.4676/DEL/2005. THE ITAT HAS CONSIDERED AN IDENTICAL ISSUE IN ITA N O.4676/DEL/2005 AND HELD THAT THE ASSESSEE COULD NOT BE TREATED AS AN A SSESSEE IN DEFAULT IN TERMS OF SECTION 201 AND 201(1A) OF THE ACT. LEARNED FIRS T APPELLATE AUTHORITY HAS GONE THROUGH THE CONTENTIONS OF THE ASSESSEE, HOWEV ER, DID NOT CONCUR WITH THE SUBMISSIONS OF THE ASSESSEE. ACCORDING TO THE L EARNED FIRST APPELLATE AUTHORITY, ASSESSEE FAILED TO PLACE ON RECORD COMPL ETE TEXT OF THE ITATS ORDER IN THE CASE OF MAHARISHI DAYANAND UNIVERSITY. AS FAR AS STATUS OF THE ASSESSEE BEING OF A STATE UNDER ARTICLE 12 OF THE C ONSTITUTION OF INDIA IS CONCERNED, LEARNED CIT(APPEALS) HAS OBSERVED THAT E XPRESSION STATE MENTIONED IN PART III OF THE CONSTITUTION OF INDIA UNDER THE FUNDAMENTAL RIGHTS IS WITH REGARD TO NATION AS A STATE AND IT I S FOR THE PURPOSE OF FUNDAMENTAL RIGHTS. IT HAS NO RELEVANCE TO THE TAX MATTERS AS SPECIFIED IN THE INCOME-TAX ACT, 1961. THUS, ACCORDING TO THE LEARNE D CIT(APPEALS), THE EMPLOYEES OF THE ASSESSEE CANNOT BE TREATED AS STAT E GOVERNMENT EMPLOYEES OR CENTRAL GOVERNMENT EMPLOYEES. THE UNIVERSITY IS AN AUTONOMOUS BODY WHICH IS RUN BY BOARD OF GOVERNOR/SENATE. THE ADMIN ISTRATION IS CONTROLLED BY THE VICE-CHANCELLOR. IT MAY BE GETTING ENTIRE B UDGETARY SUPPORT FROM THE 7 STATE GOVERNMENT BUT THAT DOES NOT MEAN THAT IT IS A STATE AND ITS EMPLOYEES ARE GOVERNMENT EMPLOYEES. 5. LEARNED DR RELIED UPON THE ORDERS OF ITO(TDS), A S WELL AS THE ORDER OF THE LEARNED CIT(APPEALS). HE POINTED OUT THAT EM PLOYEES OF THE UNIVERSITY CANNOT BE TREATED AT PAR WITH THE STATE GOVERNMENT EMPLOYEES AND THEY ARE RIGHTLY BEING TREATED IN THE CATEGORY OF OTHERS. SUB-RULE (3) OF INCOME-TAX RULES PROVIDES THE MECHANISM OF VALUATIO N OF PERQUISITE AND ASSESSING OFFICER HAS RIGHTLY VALUED IT AND HAS RIG HTLY TREATED THE ASSESSEE IN DEFAULT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE RECORD CAREFULLY. BEFORE ADVERTING TO THE CONTENTIONS RAIS ED BY THE ASSESSEE BEFORE THE LEARNED FIRST APPELLATE AUTHORITY AS WELL AS RE ASONS ASSIGNED BY THE LEARNED REVENUE AUTHORITIES BELOW. IT MAY BE APPROP RIATE IF WE REFER TO THE RELEVANT PROVISIONS OF THE ACT, THE RULES AND THE I MPORTANT DECISIONS ON THE POINTS. SECTION 17 OF THE ACT DEFINES SALARY, PE RQUISITE AND PROFITS IN LIEU OF SALARY. FOR THE PURPOSE OF THE CONTROVERS Y IN HAND, THE RELEVANT PART OF THE SECTION 17 READS AS UNDER: 17. FOR THE PURPOSES OF SECTIONS 15 AND 16 AND OF THIS SECTION,- (1) (2)PERQUISITE INCLUDES- 8 (I) THE VALUE OF RENT-FREE ACCOMMODATION PROVIDED T O THE ASSESSEE BY HIS EMPLOYER, (II) THE VALUE OF ANY CONCESSION IN THE MATTER OF R ENT RESPECTING ANY ACCOMMODATION PROVIDED TO THE ASSESSEE BY HIS EMPLOYER ; EXPLANATION:- (1) FOR THE PURPOSE OF THIS SUB-CLAUS E, CONCESSION IN THE MATTER OF RENT SHALL DEEM TO HAVE BEEN PROVI DED IF:- (A) X X X X X X X (1) THE ACCOMMODATION IS OWNED BY THE EMPLOYER, THE VALUE OF THE ACCOMMODATION DETERMINED AT THE SPECIFIED RATE IN RESPECT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION W AS OCCUPIED BY THE ASSESSEE DURING THE PREVIOUS YEAR, EXCEEDS THE RENT RECOVERABLE FROM OR PAYABLE BY THE ASSESSEE; X X X X X X X 7. RULE 3 HAS BEEN AMENDED W.E.F. 2001. IN THE ORDE R OF THE ITAT RELIED UPON BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS ), WHICH WE WOULD REFER IN THE LATER PART OF THIS ORDER, THE ITAT CON SIDERED THE RULE PRIOR TO AMENDMENT EFFECTED IN 2001. THEREFORE, WE DEEM IT A PPROPRIATE TO TAKE COGNIZANCE OF THE AMENDED RULES AS WELL AS THE RULE 3 PRIOR TO AMENDMENT IN 2001. IT READS AS UNDER: '3. VALUATION OF PERQUISITES .FOR THE PURPOSE OF COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD SALARIES THE VAL UE OF THE PERQUISITES (NOT PROVIDED FOR BY WAY OF MONETARY PA YMENT TO THE 9 ASSESSEE) MENTIONED BELOW SHALL BE DETERMINED IN AC CORDANCE WITH THE FOLLOWING CLAUSES, NAMELY: ( A )THE VALUE OF RENT-FREE RESIDENTIAL ACCOMMODATION S HALL BE DETERMINED ON THE BASIS PROVIDED HEREUNDER, NAMELY: ( I )WHERE THE ACCOMMODATION IS PROVIDED (A) BY GOVERNMENT TO A PERSON HOLDING AN OFFICE OR POST IN CONNECTION WITH THE AFFAIRS OF THE UNION OR OF A ST ATE; (B) BY A BODY OR UNDERTAKING UNDER THE CONTROL OF G OVERNMENT TO ANY OFFICER OF GOVERNMENT WHOSE SERVICES HAVE BEEN LENT TO THAT BODY OR UNDERTAKING (THE ACCOMMODATION ITSELF HAVING BEEN ALLOTTED TO IT BY GOVERNMENT), AN AMOUNT EQUAL TO (1)IF THE ACCOMMODATION IS UNFURNISHED, THE RENT WH ICH HAS BEEN OR WOULD HAVE BEEN DETERMINED AS PAYABLE BY SU CH PERSON OR OFFICER IN ACCORDANCE WITH THE RULES FRAM ED BY GOVERNMENT FOR ALLOTMENT OF RESIDENCES TO ITS OFFIC ERS; (2)IF THE ACCOMMODATION IS FURNISHED, AN AMOUNT CAL CULATED IN ACCORDANCE WITH SUB-CLAUSE ( I )(1) PLUS 10 PER CENT PER ANNUM, OF THE ORIGINAL COST OF THE FURNITURE (INCLU DING TELEVISION SETS, RADIO SETS, REFRIGERATORS, OTHER H OUSEHOLD APPLIANCES AND AIR-CONDITIONING PLANT OR EQUIPMENT) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, THE ACT UAL HIRE CHARGES PAYABLE THEREFOR; PROVIDED THAT (1) WHERE THE FAIR RENTAL VALUE OF THE ACCOMMODATI ON IS IN EXCESS OF 20 PER CENT OF THE ASSESSEES SALARY, THE VALUE OF PERQUISITE SHALL BE TAKEN TO BE 10 PER CENT OF THE SALARY INCR EASED BY A SUM EQUAL TO THE AMOUNT BY WHICH THE FAIR RENTAL VA LUE EXCEEDS 20 PER CENT OF THE SALARY; SO, HOWEVER, THA T THE ASSESSING OFFICER MAY, HAVING REGARD TO THE NATURE OF THE ACCOMMODATION, DETERMINE THE SUM BY WHICH 10 PER CE NT OF THE SALARY IS TO BE INCREASED, AS A PERCENTAGE (NOT EXCEEDING 100 PER CENT) OF THE AMOUNT BY WHICH THE FAIR RENTA L VALUE EXCEEDS 20 PER CENT OF THE SALARY; (2) WHERE THE ASSESSEE CLAIMS, AND THE ASSESSING OF FICER IS SATISFIED THAT THE SUM ARRIVED AT ON THE BASIS PROV IDED ABOVE EXCEEDS THE FAIR RENTAL VALUE OF THE ACCOMMODATION, THE VALUE 10 OF THE PERQUISITE TO THE ASSESSEE SHALL BE LIMITED TO SUCH FAIR RENTAL VALUE; ( B )THE VALUE OF RESIDENTIAL ACCOMMODATION PROVIDED AT A CONCESSIONAL RENT SHALL BE DETERMINED AS THE SUM BY WHICH THE VA LUE COMPUTED IN ACCORDANCE WITH CLAUSE ( A ), AS IF THE ACCOMMODATION WERE PROVIDED FREE OF RENT, EXCEEDS THE RENT ACTUALLY PAYABLE BY THE ASSESSEE FOR THE PERIOD OF HIS OCCUPATION DURING THE RELEVANT PREVIO US YEAR.' 28. BY THE INCOME-TAX (TWENTY-SECOND AMENDMENT) RULES, 2001, RULE 3 WAS AMENDED AND THE RELEVANT PART READS THUS - [ VALUATION OF PERQUISITES 3. FOR THE PURPOSE OF COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'SALARIES', THE VALUE OF PERQUISITES PROVIDED BY THE EMPLOYER D IRECTLY OR INDIRECTLY TO THE ASSESSEE (HEREINAFTER REFERRED TO AS EMPLOYEE) OR T O ANY MEMBER OF HIS HOUSEHOLD BY REASON OF HIS EMPLOYMENT SHALL BE DETERMINED IN ACCORDANCE WITH THE FOLLOWING SUB-RULES, NAMELY: (1) THE VALUE OF RESIDENTIAL ACCOMMODATION PROVIDED BY THE EMPLOYER DURING THE PREVIOUS YEAR SHALL BE DETERMINED ON THE BASIS PROV IDED IN THE TABLE BELOW ( SEE PAGE 1.36) : TABLE I SL. NO. CIRCUMSTANCES WHERE ACCOMMODATION IS UNFURNISHED WHERE ACCOMMODATION IS FURNISHED (1) (2) (3) (4) (1) WHE RE THE ACCOMMODATION IS PROVIDED BY THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT TO THE EMPLOYEES EITHER HOLDING OFFICE OR POST IN CONNECTION WITH THE AFFAIRS OF THE UNION OR OF SUCH STATE. LICENSE FEE DETERMINED BY THE CENTRAL GOVERNMENT OR ANY STATE GO VERNMENT IN RESPECT OF ACCOMMODATION IN ACCORDANCE WITH THE RULES FRAMED BY SUCH GOVERNMENT AS REDUCED BY THE RENT ACTUALLY PAID BY THE EMPLOYEE. THE VALUE OF PERQUISITE AS DETERMINED UNDER COLUMN (3) AND INCREASED BY 10% PER ANNUM OF THE COST OF FURNITURE (INCLUDING TELEVISION SETS, RADIO SETS, REFRIGERATORS, OTHER HOUSEHOLD APPLIANCES, AIR- CONDITIONING PLANT OR EQUIPMENT) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, THE ACTUAL HIRE CHARGES 11 PAYABLE FOR THE SAME AS REDUCED BY ANY CHARGES PAID OR PAYABL E FOR THE SAME BY THE EMPLOYEE DURING THE PREVIOUS YEAR. (2) WHERE THE ACCOMMODATION IS PROVIDED BY ANY OTHER EMPLOYER AND ( A ) WHERE THE ACCOMMODATION IS OWNED BY THE EMPLOYER, OR ( I ) 15% OF SALARY IN CITIES HAVING POPULATION EXCEEDING 25 LAKHS A S PER 2001 CENSUS; ( II ) 10% OF SALARY IN CITIES HAVING POPULATION EXCEEDING 10 LAKHS BUT NOT EXCEEDING 25 LAKHS AS PER 2001 CENSUS; ( III ) 7.5% OF SALARY IN OTHER AREAS, IN RESPECT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCUPIED BY THE EMPLOY EE DURING THE PREVIOUS YEAR AS REDUCED BY THE RENT, IF ANY, ACTUALLY PAID BY THE EMPLOYEE. THE VALUE OF PERQUISITES AS DETERMINED UNDER COLUMN (3) AND INCREASED BY 10% PER ANNUM OF THE COST OF FURNITURE (INCLUDING TELEVISION SETS, REFRIGERATORS, OTHER HOUS EHOLD APPLIANCES, AIR- CONDITIONING PLANT OR EQUIPMENT OR OTHER SIMILAR APPLIANCES OR GADGETS) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, BY THE ACTUAL HIRE CHARGES PAYABLE FOR THE SAME AS REDUCED BY ANY CHARGES PAID OR PAYABLE FOR THE SAME BY THE EM PLOYEE DURING THE PREVIOUS YEAR. ( B ) WHERE THE ACCOMMODATION IS TAKEN ON LEASE OR RENT BY THE EMPLOYER. ACTUAL AMOUNT OF LEASE RENTAL PAID OR PAYABLE BY THE EMPLOYER OR 15% OF SALARY WHICHEVER IS LOWER AS REDUCED BY THE RENT, IF ANY, ACTUALLY PAID BY TH E EMPLOYEE. THE VALUE OF PERQUISITE AS DETERMINED UNDER COLUMN (3) AND INCREASED BY 10% PER ANNUM OF THE COST OF FURNITURE (INCLUDING TELEVISION SETS, RADIO SETS, REFRIGERATORS, OTHER HOUSEHOLD APPLIANCES, AIR- CONDITIONING PLANT OR EQUIPMENT OR OTHER SIMIL AR APPLIANCES OR GADGETS) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, BY THE ACTUAL HIRE 12 CHARGES PAYABLE FOR THE SAME AS REDUCED BY ANY CHARGES PAID OR PAYABLE FOR THE SAME BY THE EMPLOYEE DURING THE PREVIOUS YEAR. (3) WHERE THE ACCOMMODATION IS PRO VIDED BY THE EMPLOYER SPECIFIED IN SERIAL NUMBER (1) OR (2) IN A HOTEL (EXCEPT WHERE THE EMPLOYEE IS PROVIDED SUCH ACCOMMODATION FOR A PERIOD NOT EXCEEDING IN AGGREGATE FIFTEEN DAYS ON HIS TRANSFER FROM ONE PLACE TO ANOTHER). NOT APPLICABLE. 24% OF SALARY PAID OR PAYABLE FOR THE PREVIOUS YEAR OR THE ACTUAL CHARGES PAID OR PAYABLE TO SUCH HOTEL, WHICH IS LOWER, FOR THE PERIOD DURING WHICH SUCH ACCOMMODATION IS PROVIDED AS REDUCED BY THE RENT, IF ANY, ACTUALLY PAID OR PAYABLE BY THE EMPLOYEE: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-RULE SHALL APPLY TO ANY ACCOMMODATION PROVIDED TO AN EMPLOYEE WORKING AT A MINING SITE OR AN ON-SHORE OIL EXPLORATION SITE OR A PROJECT EXECUTION SITE, OR A DAM SITE OR A POWER GENERATION SITE OR AN OFF- SHORE SITE ( I ) WHICH, BEING OF A TEMPORARY NATURE AND HAVING PL INTH AREA NOT EXCEEDING 800 SQUARE FEET, IS LOCATED NOT LESS THAN EIGHT KILOMET RES AWAY FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR A CANTONMENT BOARD; OR ( II ) WHICH IS LOCATED IN A REMOTE AREA: PROVIDED FURTHER THAT WHERE ON ACCOUNT OF HIS TRANSFER FROM ONE PLAC E TO ANOTHER, THE EMPLOYEE IS PROVIDED WITH ACCOMMODATION AT THE NEW PLACE OF POSTING WHILE RETAINING THE ACCOMMODATION AT THE OTHER PLACE, THE VALUE OF PERQUISITE SHALL BE DETERMINED WITH REFERENCE TO ONLY ONE SUCH ACCOMMOD ATION WHICH HAS THE LOWER VALUE WITH REFERENCE TO THE TABLE ABOVE FOR A PERIO D NOT EXCEEDING 90 DAYS AND THEREAFTER THE VALUE OF PERQUISITE SHALL BE CHARGED FOR BOTH SUCH ACCOMMODATIONS IN ACCORDANCE WITH THE TABLE. EXPLANATION. FOR THE PURPOSES OF THIS SUB-RULE, WHERE THE ACCOMM ODATION IS PROVIDED BY THE CENTRAL GOVERNMENT OR ANY STATE GOV ERNMENT TO AN EMPLOYEE WHO IS SERVING ON DEPUTATION WITH ANY BODY OR UNDERTAKI NG UNDER THE CONTROL OF SUCH GOVERNMENT, ( I ) THE EMPLOYER OF SUCH AN EMPLOYEE SHALL BE DEEMED TO BE THAT BODY OR UNDERTAKING WHERE THE EMPLOYEE IS SERVING ON DEPUTA TION; AND 13 ( II ) THE VALUE OF PERQUISITE OF SUCH AN ACCOMMODATION SHALL BE THE AMOUNT CALCULATED IN ACCORDANCE WITH SL. NO. (2)( A ) OF TABLE I, AS IF THE ACCOMMODATION IS OWNED BY THE EMPLOYER. 8. THE ASSESSEE HAS RELIED UPON THE ORDERS OF THE I TAT IN ITA NO. 4676/DEL/2005 IN THE CASE OF FINANCIAL OFFICER, MAH ARISHI DAYANAND UNIVERSITY, ROHTAK VS. ITO, WARD 2, ROHTAK. THE MAH ARISHI DAYANAND UNIVERSITY IS AN UNIVERSITY SITUATED WITHIN THE HAR YANA STATE AND ITS EMPLOYEES ARE AT PAR WITH THAT OF THE EMPLOYEES OF CHAUDHARY CHARAN SINGH HISAR AGRICULTURE UNIVERSITY, HISAR. THE ITAT IN IT A NO. 4676/DEL/05 HAS OBSERVED THAT THIS ISSUE WAS EARLIER DECIDED BY THE ITAT IN ITA NO.4113/DEL/2004 AND ITA NO. 4185/DEL/04 IN ASSESSM ENT YEAR 2000-01. THE ITAT IN ITA NO. 4113/DEL/ HAS MADE REFERENCE TO THE DECISION OF THE ITAT, CHANDIGARH BENCH IN THE CASE OF A SIMILAR UNI VERSITY, NAMELY, KURUKSHETRA UNIVERSITY VS. ITO (TDS), AMBALA, ( ITA NOS. 64 & 65/CHD/1997). IN THIS CASE, ITAT HAS MADE ANALYSIS OF SIMILAR SITUATION AND THE ITAT, DELHI HAS REPRODUCED THE ANALYSIS MADE BY THE ITAT, CHANDIGARH. THE OBSERVATIONS OF THE ITAT READ AS UNDER: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSIONS, PERUSED THE ORDERS OF TAX AUTHORITIES AND GONE THRO UGH THE 14 CITATIONS GIVEN ABOVE. SECTION 15 CHARGES ANY SALA RY DUE OR PAID BY AN EMPLOYER TO INCOME TAX UNDER THE HEAD S ALARIES SECTION 17 DEFINES SALARY TO INCLUDE PERQUISITE. A S PER SECTION 17(2), PERQUISITE IS TO INCLUDE (II) THE VALUE OF ANY CONCESSION IN THE MATTER OF RENT RESPECTING ANY ACCOMMODATION PROVIDED TO THE ASSESSEE BY HIS EMPLOYER. RULE 3 PROVIDE FOR V ALUATION OF PERQUISITES. ACCORDING TO SUB RULE (A), THE VALUE OF THE UNFURNISHED ACCOMMODATION PROVIDED TO A GOVERNMENT EMPLOYEE IS TAKEN AS THE RENT WHICH WOULD BE PAYABL E BY THE GOVERNMENT EMPLOYEES IN ACCORDANCE WITH THE RULES F RAMED BY THE GOVERNMENT. IN CASE OF OTHERS, IT IS TAKEN AS 10 % OF THE SALARY. SUB RULE (B) STATES THE VALUE OF RESIDENTI AL ACCOMMODATION PROVIDED AT A CONCESSIONAL RENT SHALL BE DETERMINED AS THE SUM BY WHICH THE VALUE COMPUTED I N ACCORDANCE WITH CLAUSE (1), AS IF THE ACCOMMODATION PROVIDED FREE OF RENT EXCEEDS THE RENT ACTUALLY PAYABLE BY T HE ASSESSEE FOR THE PERIOD HIS OCCUPATION DURING THE RELEVANT PREVI OUS YEAR. FROM PERUSAL OF THESE RULES, IT IS CLEAR THAT THESE INDICATE THE DIFFERENCE IN TREATMENT BETWEEN THE GOVERNMENT SERV ANT AND OTHERS. IN THE CASE OF GOVT. SERVANTS, THE RENT FR EE ACCOMMODATION IN VALUED AT THE STANDARD RENT. CONSE QUENTLY, IT ACCOMMODATION IS PROVIDED AT STANDARD RENT, THERE W ILL BE NO PERQUISITE BECAUSE THE ACTUAL RENT PAID WILL NOT BE LESS THAN THE VALUE AT THE RENT FREE ACCOMMODATION BOTH BEING STA NDARD RENTS. IN THE CASE OF OTHER EMPLOYEES RENT FREE, ACCOMMODA TION IS BEING TAKEN AT 10% A.O. PRESUMED THAT THAT DIFFERE NCE RENT PAID AND 10% OF SALARY IS THE VALUE OF PERQUISITE E NJOYED BY 15 EMPLOYEE. SUB RULE (B0 IS APPLICABLE WHEN THE ACCO MMODATION IS PROVIDED AS A CONCESSIONAL RENT. THEREFORE, THE A.O SHOULD HAVE FIRST ESTABLISHED THAT THE ACCOMMODATION HAS B EEN PROVIDED BY THE ASSESSEE TO ITS EMPLOYEES AT A CONC ESSIONAL RENT. ONLY THEN THE DIFFERENCE BETWEEN ACTUAL RENT RECOVE RED AND 10% OF SALARY CAN BE ADDED. FROM THE ORDER PASSED BY THE A.O, IT IS CLEAR THAT THERE IS NO MATERIAL BEFORE HIM TH AT RENT OF THE ACCOMMODATION ALLOTTED WAS MORE THAN RENT RECOVERED . THE EMPLOYER WHO IS A NON PROFIT INSTITUTION UNIVERSIT Y WHEN ALLOTTED ACCOMMODATION TO ITS EMPLOYEES, IT IS VERY DIFFICULT TO SAY THAT ANY CONCESSION HAS BEEN GIVEN TO THE EMPLO YEES IN PROVIDING ACCOMMODATION. THE EMPLOYEES WERE PUT IN UNIVERSITY CAMPUS SO THAT THEY CAN CONVENIENTLY BE AVAILABLE. ONLY IF AN EMPLOYEE PAY LESS THAN WHAT THE OTHER EM PLOYEES WOULD HAVE PAID FOR SIMILAR ACCOMMODATION. IN OUR VIEW, THERE CAN BE ANY CONCESSION. WHEN ALL THE EMPLOYEES ARE TREATED ALIKE AND THE RENT IS BEING CHARGED BY THE UNIVERSI TY IN ACCORDANCE WITH THE RULES FRAMED, THERE CANNOT BE A NY CONCESSION. LOOKING TO THE FACTS OF THE CASE, IN O UR CONSIDERED OPINION, THE CASE IS FULLY COVERED BY THE RATIO OF THE DECISION IN THE CASE OF OFFICERS ASSOCIATION. BHILAI STEEL PLA NT (SUPRA) WHERE IT WAS EVEN POINTED OUT THAT OF RULE 3 WERE T O BE CONSTRUED AS DEEMING THE DIFFERENCE BETWEEN THE ACT UAL RENT PAID AND 10 % OF THE SALARY AS RECEIPT OF CONCESSIO N IT WILL GO BEYOND THE RULE MAKING POWER U/S 295(2) AND BE INVA LID. FOLLOWING THE RATIO OF THE SAID DECISION, WE ARE OF THE FIRM VIEW THAT NO ADDITION CAN BE MADE BY THE A.O. TDS IN I NCOME OF 16 THE EMPLOYEES WHILE SCRUTINIZING FORM 24 FILED BY T HE ASSESSEE FOR THE PURPOSE OF TDS U/S 192. OUR AFORESAID VIE W IS SUPPORTED BY THE DECISION IN THE CASE OF STEEL EXEC UTIVE ASSOCIATION VS. RASHTRIYA ISPAT NIGAM LTD. 241 ITR 20 (A.P). THE ORDERS PASSED BY THE A.O U/S 201(1)/201(1A) ARE , THEREFORE, QUASHED 9. THE RULES PRIOR TO 2001 WERE BASED ON FAIR RENTA L VALUE OF THE ACCOMMODATION AND, THEREFORE, ASSESSING OFFICER WAS REQUIRED TO DETERMINE THE FAIR MARKET VALUE OF ACCOMMODATION BEFORE ARRIV ING AT A CONCLUSION THAT THE EMPLOYER HAS GIVEN ANY PERQUISITE TO THE EMPLOY EES. THIS CONCEPT OF FAIR RENTAL VALUE OF THE ACCOMMODATION HAS BEEN GIVEN TH E GOBY, IN VIEW OF PRACTICAL DIFFICULTIES REALIZED BY THE REVENUE AND THE NEW SET OFF OF AMENDED RULES 2001 HAS BEEN PROVIDED IN PLACE OF FAIR RENTA L, MARKET RENT, STANDARD RENT AND REASONABLE RENT. THE ITO(TDS) IN THE PRESE NT CASE HAS APPLIED RULE 3(1) SR. NO. 2(II) OF THE TABLE EXTRACTED SUPRA. IT CAME TO OUR NOTICE THAT VIRES THIS RULE WAS CHALLENGED BY THE EMPLOYEES OF TATA I RON & STEEL CO. LTD. BEFORE THE HON'BLE JHARKHAND HIGH COURT AT RANCHI A ND SIMILARLY COAL MINES ASSOCIATION OF INDIA HAS ALSO CHALLENGED THE CONSTITUTION VALIDITY OF THIS RULE BEFORE THE HON'BLE CALCUTTA HIGH COURT . THE DISPUTE ULTIMATELY TRAVELED UP TO THE HON'BLE SUPREME COURT IN THE CAS E OF ARUN KUMAR VS. UNION OF INDIA REPORTED IN 286 ITR 89. AN APPREHEN SION WAS RAISED BEFORE 17 THE HON'BLE HIGH COURT THAT IN THE AMENDED RULE, TH E CONCEPT OF FAIR RENTAL VALUE ON THE BASIS OF THE NORMAL RENT OR ON THE BAS IS OF MARKET RENT AVAILABLE IN THE LOCALITY OR ON THE BASIS OF THE MUNICIPAL VA LUATION IS NO MORE AVAILABLE. THE OLD RULE 3 PROVIDES A MECHANISM THAT IN CASE WHERE THE ASSESSEE CLAIMED, AND ASSESSING OFFICER WAS SATISFI ED THAT THERE WAS NO CONCESSION GIVEN BY THE EMPLOYER WHICH CAN BE TERME D AS A PERQUISITE THEN ASSESSEE WAS NOT LIABLE TO PAY TAX. IT WAS POINTED OUT THAT THE AMENDED RULE HAS TAKEN AWAY THE RIGHT OF THE ASSESSEE TO CLAIM T HAT THERE WAS NO CONCESSION AS ENVISAGED BY SECTION 17(2)(II) OF THE ACT AND HENCE RULE 3 HAD NO APPLICATION. ACCORDING TO THE APPLICANTS, THIS A MENDED RULE TOOK AWAY THE POWER OF THE ASSESSING OFFICER TO HELD THAT THERE W AS NO CONCESSION EVEN IF HE IS SATISFIED ABOUT THE ABSENCE OF CONCESSION. ON THESE PREMISES, IT WAS CONTENDED THAT THIS RULE IS DISCRIMINATORY, ARBITRA RY AND ULTRA-VIRES OF ARTICLE 14 OF THE CONSTITUTION. HON'BLE SUPREME COURT HAS U PHELD THE VALIDITY OF THE RULE BUT OBSERVED THAT COMPUTATION OF PERQUISITE VA LUE AS PER RULE 3 WOULD COME IN PICTURE ONCE IT IS HELD THAT THERE IS A CON CESSION IN THE MATTER OF RENT IN RESPECT OF ANY ACCOMMODATION PROVIDED BY AN EMPL OYER TO HIS EMPLOYER. HON'BLE SUPREME COURT HAS LAID DOWN THE IMPLICATION OF THE RULES AND THE OBSERVATIONS OF THE HON'BLE SUPREME COURT AVAILABLE ON PAGE 121 OF THE JOURNAL ARE WORTH TO NOTE. THEY READ AS UNDER: 18 78. FROM THE ABOVE DECISIONS, IT IS CLEAR THAT EXISTEN CE OF JURISDICTIONAL FACT IS SINE QUA NON FOR THE EXERCISE OF POWER. IF THE JURISDICTIONAL FACT EXISTS, THE AUTHORITY CAN PROCE ED WITH THE CASE AND TAKE AN APPROPRIATE DECISION IN ACCORDANCE WITH LAW . ONCE THE AUTHORITY HAS JURISDICTION IN THE MATTER ON EXISTEN CE OF JURISDICTIONAL FACT, IT CAN DECIDE THE FACT IN ISSUE OR ADJUDI CATORY FACT. A WRONG DECISION ON FACT IN ISSUE OR ON ADJUDICATORY FAC T WOULD NOT MAKE THE DECISION OF THE AUTHORITY WITHOUT JURISDICTION OR VULNERABLE PROVIDED ESSENTIAL OR FUNDAMENTAL FACT AS TO EXISTE NCE OF JURISDICTION IS PRESENT. 79. IN OUR OPINION, THE SUBMISSION OF MR. SALVE IS WEL L FOUNDED AND DESERVES TO BE ACCEPTED THAT 'CONCESSION' UNDER CLA USE ( II ) OF SUB- SECTION (2) OF SECTION 17 OF THE ACT IS A JURISDIC TIONAL FACT. IT IS ONLY WHEN THERE IS A CONCESSION IN THE MATTER OF RENT RESPECTING ANY ACCOMMODATION PROVIDED BY AN EMPLOYER TO HIS EMPLOY EE THAT THE MODE, METHOD OR MANNER AS TO HOW SUCH CONCESSION CA N BE COMPUTED ARISES. IN OTHER WORDS, CONCESSION IS A JURISDICTI ONAL FACT; METHOD OF FIXATION OF AMOUNT IS FACT IN ISSUE OR ADJUDICATO RY FACT. IF THE ASSESSEE CONTENDS THAT THERE IS NO CONCESSION, TH E AUTHORITY HAS TO DECIDE THE SAID QUESTION AND RECORD A FINDING AS TO WHETHER THERE IS CONCESSION AND THE CASE IS COVERED BY SECTION 17( 2)( II ) OF THE ACT. ONLY THEREAFTER THE AUTHORITY MAY PROCEED TO CALCUL ATE THE LIABILITY OF THE ASSESSEE UNDER THE RULES. IN OUR CONSIDERED OPI NION, THEREFORE, IN SPITE OF THE LEGAL POSITION THAT RULE 3 IS INTRA VIRES, VALID AND IS NOT INCONSISTENT WITH THE PROVISIONS OF THE PARENT ACT UNDER SECTION 17(2)( II ) OF THE ACT, IT IS STILL OPEN TO THE ASSESSEE TO C ONTEND THAT THERE IS NO CONCESSION IN THE MATTER OF ACCOMMODATION P ROVIDED BY THE 19 EMPLOYER TO THE EMPLOYEE AND HENCE THE CASE DID NOT FALL WITHIN THE MISCHIEF OF SECTION 17(2)( II ) OF THE ACT. 80. THERE IS YET ANOTHER ASPECT OF THE MATTER WHICH IS IMPORTANT AND HAVING A BEARING ON THE QUESTION. WE HAVE EXTRACTED SECTION 17(2)( II ) IN THE EARLIER PART OF THE JUDGMENT. IT DOES NOT CO NTAIN ANY DEEMING CLAUSE THAT ONCE IT IS ESTABLISHED THAT AN EMPLOYE E IS PAYING RENT LESS THAN 10 PER CENT OF HIS SALARY IN CITIES HAVING POP ULATION OF FOUR LAKHS OR 7.5 PER CENT IN OTHER CITIES, IT SHOULD BE DEEME D TO BE A CONCESSION WITHIN THE MEANING OF THE ACT AND SUCH EMPLOYEE MUS T BE DEEMED TO RECEIVE A CONCESSION IN THE FORM OF PERQUISITE IN THE PAYMENT OF RENT. AN EMPLOYER MAY PROVIDE RESIDENTIAL ACCOMMODA TION TO HIS EMPLOYEES FOR SEVERAL REASONS. IT IS ALSO POSSIBLE THAT FOR MAKING AVAILABLE STAFF QUARTERS COLONIES ACCOMMODATIONS, S TATE GOVERNMENTS OR CENTRAL GOVERNMENT MAY PROVIDE LAND TO PUBLIC SE CTOR UNDERTAKINGS/ COMPANIES/CORPORATIONS AT A CONCESSIO NAL RATE IMPOSING APPROPRIATE CONDITIONS INCLUDING AMOUNT OF RENT, IF ANY, TO BE RECOVERED BY THE EMPLOYER. MR. SALVE ALSO INVITE D OUR ATTENTION TO CERTAIN DECISIONS WHEREIN IT HAD BEEN HELD THAT RES IDENTIAL FACILITY PROVIDED BY THE EMPLOYER TO THE EMPLOYEE WAS NOT HE LD PERQUISITE WITHIN THE MEANING OF INCOME TAX LAWS. 10. IF WE READ THE FINDINGS OF THE ITAT IN THE CASE OF FINANCIAL OFFICER, MAHARISHI DAYANAND UNIVERSITY, ROHTAK, EXTRACTED SU PRA, ALONG WITH THE FINDING OF THE ASSESSING OFFICER IN THE LIGHT OF TH E LAW PROPOUNDED BY THE HON'BLE SUPREME COURT, SUPRA, THEN, IT WOULD REVEAL THAT ASSESSING OFFICER 20 HAS NOWHERE HELD IN THE IMPUGNED ORDER THAT ANY CON CESSION WAS GIVEN BY THE EMPLOYER TO ITS EMPLOYEES AND THEY HAVE PROVIDE D THE ACCOMMODATION ON A CONCESSIONAL RATES. ASSESSING OFFICER STRAIGHT WAY APPLIED RULE 3 WITHOUT FIRST ESTABLISHING THE CASE THAT THE APPELL ANTS HAVE PROVIDED ANY CONCESSION IN THE SHAPE OF ACCOMMODATION TO ITS EMP LOYEES. IN OTHER WORDS, LEARNED ASSESSING OFFICER HAS PUT THE CART BEFORE THE HORSE WHICH IS NOT THE RIGHT COURSE THE ASSESSEES CANNOT BE TREATED IN DEF AULT WITHOUT FACTUALLY ESTABLISHING THAT THEY HAVE EXTENDED ANY CONCESSION TO THEIR EMPLOYEES. LEARNED REVENUE AUTHORITIES HAVE NOT LOOKED INTO TH E DISPUTE WITH THIS ANGLE. LEARNED CIT(APPEALS) HAS NOT COMMENTED UPON THE ORD ER OF THE ITAT IN A CASE OF SIMILAR UNIVERSITY, NAMELY, MAHARISHI DAYAN AND UNIVERSITY ON THE GROUND THAT COMPLETE TEXT OF THE ORDER WAS NOT PLAC ED ON HIS FILE. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW ALL THE APPEALS OF T HE ASSESSEES AND HELD THAT THEY ARE NOT IN DEFAULT UNDER SEC. 201(1) AND 201(1 A) OF THE INCOME-TAX ACT, 1961. DECISION PRONOUNCED IN THE OPEN COURT ON 27.07.20 12 SD/- SD/- ( G.D. AGARWAL ) ( RAJPAL YADAV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 27/07/2012 MOHAN LAL 21 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR