DDE ORG SYSTEMS Pvt. Ltd., Baroda V. The ACIT., TDS Circle, Baroda

ITA 490/AHD/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1957 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-12-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 15-02-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M MATHIVANANDR
• Keywords: TDS
• Section: 10(14); 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH BAHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM DDE ORG SYSTEMS (P) LTD. (NOW PART OF ORG INFORMATICS LTD.), DR. VIKRAM SARABHAI MARG, WADI WADI, VADODARA. V/S . ASSTT. CIT, TDS CIRCLE, BARODA. PAN NO.AACCS 9395K (APPELLANT) .. (RESPONDENT) SARABHAI ELECTRONICS LTD.(NOW PART OF ORG INFORMATICS LTD.), DR. VIKRAM SARABHAI MARG, WADI WADI, VADODARA. V/S . INCOME-TAX OFFICER, TDS WD-1, BARODA. PAN NO.AACCS9395 K (APPELLANT) .. (RESPONDENT) ASSESSEES BY :- SHRI SANJAY R. SHAH, AR REVENUE BY:- SHRI M. MATHIVANAN,DR O R D E R A.N. PAHUJA: THESE APPEALS BY THE TWO ASSESSEES, DIRECTED AGAIN ST TWO SEPARATE ORDERS DATED 24.11.2004 & 29.11.2004 FOR THE ASSESSMENT YEAR 2002-03 AND ORDERS DATED 7.9.2005 & 9.9.2005 FOR TH E ASSESSMENT YEAR 2003-04 OF THE LD. CIT(A)-V,BARODA, RAISE THE FOL LOWING GROUNDS. ITA NO.490&491/AHD/2005[AY 2002-03]: 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED A SSESSING OFFICERS ACTION OF NOT ACCEPTING APPELLANTS CONTENTION THAT AMOUNT OF RS.3,31,971/- IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. RS.45,929/- IN SARABHAI ELECTRONICS LTD.) PAID TOWARDS ATTIRE ALLOWANCE OUGHT NOT TO CONSTITUTE AS SUM CHARGEABLE TO TAX UNDER THE PROVISIONS OF THE INCOME-TAX ACT, 1961 (THE ACT). ITA NOS.490 & 2571/AHD/2005 ASST. YEARS:2002-03 & 2003-04 ITA NO.491&2572/AHD/2005 ASST. YEARS:2002-03 & 2003-04 ITA NOS.490-91 & 2571-7/AHD/2005 2 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED A SSESSING OFFICERS ACTION OF HOLDING THAT THE APPELLANT HAS ERRED IN N OT DEDUCTING TAX ON THE AMOUNT OF RS.3,31,971/-/- IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. RS.45,929/- IN SARABHAI ELECTRO NICS LTD.) REIMBURSED/PAID TO EMPLOYEES TOWARDS ATTIRE ALLOWANCE. 3. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED A SSESSING OFFICERS ACTION OF NOT ACCEPTING APPELLANTS CONTENTION THAT AMOUNT OF RS.1,32,764/ IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. 11500/- IN SARABHAI ELECTRONICS LTD.) PAID TOWARD S WASHING ALLOWANCE OUGHT NOT TO CONSTITUTE AS SUM CHARGEABLE TO TAX UNDER THE ACT. 4. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED A SSESSING OFFICERS ACTION OF HOLDING THAT THE APPELLANT HAS ERRED IN N OT DEDUCTING TAX ON THE AMOUNT OF RS.1,32,764/-/ IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. 11500/- IN SARABHAI ELECTRONICS LTD.) REIMBURSED/PAID TO EMPLOYEES TOWARDS WASHING ALLOWA NCE. YOUR APPELLANT PRAYS FOR LEAVE TO ADD,ALTER AND/OR AMEND THE GROUND OF APPEAL ADDUCED ABOVE. ITA NO.2571& 2572/AHD/2005[AY 2003-04]: 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED ASSE SSING OFFICERS ACTION OF NOT ACCEPTING APPELLANTS CONTENTION THAT AMOUNT OF RS.2,80,803/- IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. RS.35,957/- IN SARABHAI ELECTRONICS LTD.) PAID TOWARDS ATTIRE ALLOWANCE OUGHT NOT TO CONSTITUTE AS SUM CHARGEABLE TO TAX UNDER THE PROVISIONS OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED A SSESSING OFFICERS ACTION OF HOLDING THAT THE APPELLANT HAS ERRED IN N OT DEDUCTING TAX ON THE AMOUNT OF RS.2,80,803/-/- IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. RS.35,957/- IN SARABHAI ELECTRONICS LTD .) REIMBURSED/PAID TO EMPLOYEES TOWARDS ATTIRE ALLOWAN CE. 3. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED ASSESSING OFFICERS ACTION OF NOT ACCEPTING APPELLANTS CONTENTION THAT AMOUNT OF RS.4,10,298/- IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. 47,831/- IN SARABHAI ELECTRONICS LTD.) PAID TOWA RDS WASHING ALLOWANCE OUGHT NOT TO CONSTITUTE AS SUM CHARGEABLE TO TAX UNDER THE ACT. 4. THE LD. CIT(A) HAS ERRED IN CONFIRMING LEARNED ASSESSING OFFICERS ACTION OF HOLDING THAT THE APPELLANT HAS ERRED IN N OT DEDUCTING TAX ON THE AMOUNT OF RS.4,10,298/- IN THE CASE OF DDE ORG SYSTEMS (P) LTD(RS. 47,831/- IN SARABHAI ELECTRONICS LTD.) REIMBURSED/PAID TO EMPLOYEES TOWARDS WASHING ALLOWA NCE. 5. THE LD. CIT(A) HAS ERRED IN HOLDING THAT SIMUL TANEOUS EXEMPTION UNDER RULE 2BB AND RULE 3 CANNOT BE GRANTED. ITA NOS.490-91 & 2571-7/AHD/2005 3 YOUR APPELLANT PRAYS FOR LEAVE TO ADD, ALTER AND/OR AMEND THE GROUND OF APPEAL ADDUCED ABOVE. 2. ADVERTING FIRST TO GROUND NOS. 1 TO 4 IN THESE A PPEALS FOR THE AY 2002- 03 & 2003-04, FACTS, IN BRIEF, AS PER RELEVANT ORDE RS ARE THAT A SURVEY U/S 133A OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] WAS UNDERTAKEN ON 3.9.2002 IN THE ACCOUNTS OFFICE OF THESE ASSESS EES, PUBLIC LIMITED COMPANIES ENGAGED IN MANUFACTURING AND TRADING OF E LECTRONIC ITEMS (NOW PART OF ORG INFORMATICS LTD.),IN ORDER TO VERIFY CO MPLIANCE OF VARIOUS PROVISIONS OF TAX DEDUCTED AT SOURCE[TDS]. DURING T HE COURSE OF SURVEY, ON VERIFICATION OF PAY SLIPS AND FORM NO. 16 IN RESPEC T OF FEW TOP EXECUTIVES, IT WAS FOUND THAT THESE ASSESSEES PAID ATTIRE ALLOWAN CE TO THEIR EMPLOYEES EXCEPT PEONS. THE ASSESSEE EXPLAINED THAT THE SAME WAS UNIFORM ALLOWANCE AND, THEREFORE, NOT INCLUDED IN THE SALA RY CHARGEABLE TO TAX, BEING EXEMPT. IT WAS NOTICED DURING THE COURSE OF SURVEY THAT EMPLOYEES WERE NOT WEARING ANY UNIFORM WHILE THE AMOUNT WAS PAID IN LU MP SUM UP TO A SPECIFIED LIMIT. THE AMOUNT WAS REIMBURSED TO EMPLOYEES ON TH E STRENGTH OF DECLARATIONS FILED BY THEM. THE SR. FINANCE MANAGER OF THE COMPANY IN REPLY TO QUESTION NO. 4 & 5 OF HIS STATEMENT INFORMED THA T ALL THE OFFICERS AND STAFF OTHER THAN PEONS WERE ENTITLED FOR REIMBURSEMENT OF CLOTHES, SHOES, BAGS AND PERSONAL EFFECTS UP TO A SPECIFIED AMOUNT AND THE S AID AMOUNT WAS CLAIMED TO BE EXEMPT. IN FACT, NO UNIFORM WAS PRESCRIBED FOR T HE EXECUTIVES AND THE STAFF EXCEPT FOR PEONS. WHILE REFERRING TO PROVISIONS OF SEC. 10(14) OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT THE SAID SECTION ST IPULATES EXEMPTION OF ANY SPECIAL ALLOWANCE OR BENEFIT GRANTED TO MEET THE EX PENSES, WHOLLY, NECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORM ANCE OF THE DUTIES OF OFFICE AND THE EXEMPTION IS TO LIMITED TO THE ACTUAL EXPE NDITURE INCURRED FOR THE PURPOSE. FURTHER WHILE REFERRING TO RULE 2BB(1)(F) OF THE IT RULES, 1962, THE AO OBSERVED THAT THE SAID RULE FOR THE PURPOSE OF S EC. 10(14)(I) OF THE ACT PRESCRIBED THAT THE EXPENDITURE INCURRED ON PURCHA SE OR MAINTENANCE OF UNIFORM FOR WEAR DURING THE PERFORMANCE OF DUTIES O F AN OFFICE OR EMPLOYMENT OF PROFIT ALONE , IS EXEMPT. SINCE THE ASSESSEE FA ILED TO ESTABLISH THAT EXPENDITURE WAS INCURRED ON ANY UNIFORM AND HAD BEE N INCURRED WHOLLY, NECESSARILY AND EXCLUSIVELY FOR THE PURPOSE OF PERF ORMANCE OF THE DUTIES , THE AO TREATED THE ASSESSEE IN DEFAULT FOR THE PURPOSE OF PROVISIONS OF SEC. ITA NOS.490-91 & 2571-7/AHD/2005 4 201(1) OF THE ACT. THE AO FURTHER NOTICED THAT WAS HING ALLOWANCE WAS BEING PAID TO MOST OF EMPLOYEES ON THE FIXED RATE BASIS, IRRESPECTIVE OF THE FACT THAT UNIFORM WAS PROVIDED TO THEM OR NOT. IN SUCH CASES WHERE UNIFORM ALLOWANCE WAS NOT GRANTED TO THE EMPLOYEE, THE QUESTION OF GR ANTING WASHING ALLOWANCE DID NOT ARISE, THE AO CONCLUDED. ACCORDINGLY. THE A O HELD THAT WASHING ALLOWANCE WAS NOTHING BUT PART OF SALARY AND HENCE HE TREATED THE SAME AS TAXABLE AND THEREFORE, LIABLE TO TDS PROVISIONS. 3. ON APPEAL, THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE ASSESSING OFFICER, CONTENDED THAT ATTIRE ALLOWANCE IS EXEMPT U/S 10(14) OF THE ACT OF THE R.W.RULE 2BB OF THE IT RULES, 1962. WHI LE REFERRING TO PROVISIONS OF RULE 2BB(1)(F), IT WAS ARGUED ATTIRE ALLOWANCE IS NOTHING BUT UNIFORM ALLOWANCE. THE ASSESSEE PAID ATTIRE ALLOWANCE TO TH E SPECIFIED CATEGORY OF THE EMPLOYEES I.E. MANAGERS, ASSTT. MANAGERS, SPECIALIS TS-CUSTOMER SUPPORT, SPECIALISTS-SOFTWARE ETC TO ENSURE THAT THEIR EMPLO YEES LOOKED PRESENTABLE IN THE BUSINESS COMMUNITY. IT WAS FURTHER ADDED THAT N OWHERE IN THE IT ACT UNIFORM HAS BEEN DEFINED AND THE PAYMENT BY THE ASSESSEE BE TREATED AS PAYMENT MADE TOWARDS UNIFORM AND ACCORDINGLY, IS C OVERED WITHIN THE AMBIT OF SECTION 10(14) R.W.RULE 2BB. HOWEVER, THE LD. CI T(A) UPHELD THE FINDINGS OF THE AO IN FOLLOWING TERMS IN HIS ORDER IN THE CASE OF DDE ORG SYSTEM PVT. LTD. FOR THE AY 2002-03::- 3.4 I HAVE CONSIDERED THE ARGUMENT TAKEN BY THE AP PELLANT. FIRSTLY, IT IS UNDISPUTED FACT THAT THE APPELLANT IS NOT PAYING UN IFORM ALLOWANCE BUT IS PAYING ATTIRE ALLOWANCE. THE APPELLANT WANTS TO T REAT IT AS UNIFORM ALLOWANCE AND HAS THUS CONTENDED THAT IT IS COVERED WITHIN AM BIT OF SECTION 10(14) R.W.RULE 2BB. FROM PERUSAL OF RULE 2BB(1)(F) IT IS NOTICED THAT EXPENDITURE INCURRED ON PURCHASE OR MAINTENANCE OF UNIFORM FOR WEARING DURING THE PERFORMANCE OF THE DUTIES OF A OFFICE OR AN EMPLOYM ENT, IS COVERED IN AFORESAID SUB-CLAUSE OF RULE 2BB. ADMITTEDLY, THE E XPENDITURE HAS TO BE ON PURCHASE OF UNIFORM AND THAT UNIFORM SHOULD BE FOR WEARING DURING THE PERFORMANCE OF THE DUTIES. WORD UNIFORM HAS NOT B EEN DEFINED IN THE IT ACT. ACCORDINGLY, WE HAVE TO GO BY THE NORMAL COMMON MEA NING OF THE WORD UNIFORM. UNIFORM MEANS DISTINCT AND SPECIFIC DRES S HAVING DEFINITE DESIGN/COLOUR/TEXTURE. 3.5. IT IS QUITE CLEAR THAT THE EMPLOYEES SHOULD WE AR A SIMILAR TYPE OF DRESS WHICH HAS BEEN PRESCRIBED OR SPECIFIED AS UNIFORM A ND THOSE DRESS ALONE CAN BE CALLED AS UNIFORM. MOREOVER, THE EMPLOYEES SHOUL D WEAR THIS UNIFORM FOR ITA NOS.490-91 & 2571-7/AHD/2005 5 THE PERFORMANCE OF THE DUTY, AS MENTIONED IN RULE 2 BB(1)(F). HOWEVER, IT HAS BEEN NOTICED BY THE ASSESSING OFFICER AND HAS ALSO BEEN NOT DISPUTED BY THE APPELLANT THAT THESE EMPLOYEES WERE NOT WEARING ANY SPECIFIC SIMILAR DRESS, I.E. UNIFORM AND THEY WERE WEARING DRESS OF DIFFERE NT COLOUR, DIFFERENT DESIGN AND TEXTURE, ACCORDING TO THEIR OWN CHOICE. IN VIEW OF THESE FACTS, IT IS QUITE CLEAR THAT THIS PAYMENT OF ALLOWANCE MADE BY THE AP PELLANT IS NOT FOR PURCHASE OR MAINTENANCE OF UNIFORM TO BE PUT ON DURING THE P ERFORMANCE OF THE DUTY, AS REQUIRED UNDER RULE 2BB(F). CONSIDERING THESE FACTS , THE ACTION OF THE ASSESSING OFFICER IN TREATING THE AFORESAID AMOUNT AS NOT EXEMPT 10(14) R.W.RULE 2BB AND TREATING IT AS PART OF THE SALARY OF EMPLOYEE CHARGEABLE TO TAX, ON WHICH TDS IS REQUIRED TO BE DEDUCTED, IS UP HELD. 4. SIMILAR FINDINGS WERE RECORDED IN THE AY 2003- 04 AS ALSO IN THE CASE OF OTHER ASSESSEE IN THE AFORESAID TWO ASSESSMENT YEAR S. IN THE LIGHT OF HIS AFORESAID FINDINGS , THE LD. CIT(A) FURTHER CONCLUD ED THAT WASHING ALLOWANCE PAID TO VARIOUS EMPLOYEES WAS ALSO NOT EXEMPT. 5. THE AFORESAID TWO ASSESSEES ARE NOW IN APPEA L BEFORE US. THE LD. AR ON BEHALF OF THE ASSESSEE WHILE REITERATING THEIR CONT ENTIONS BEFORE THE LOWER AUTHORITIES SUBMITTED THAT DURING THE COURSE OF EA RLIER HEARING IN BARODA CAMP, THE TRIBUNAL HAD DIRECTED TO SUBMIT EVIDENCE IN RESPECT OF ACTUAL REIMBURSEMENT OF THE AMOUNT. ACCORDINGLY, THE ASSES SEE PLACED ON RECORD FEW EVIDENCE ON SAMPLE BASIS IN SUPPORT OF THEIR CL AIM. THEREFORE, THE LD. AR PLEADED THAT ATTIRE ALLOWANCE HAVING BEEN ACTUALLY PAID SHOULD BE EXEMPTED. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE VEHEMENTLY OPPOSED THE SUBMISSIONS OF THE LD. AR AND SUPPORTED THE ORD ERS OF LOWER AUTHORITIES. THE LD. DR ADDED THAT THE ASSESSING OFFICER DURING THE SURVEY FOUND THAT THE EMPLOYEES WERE NOT WEARING ANY UNIFORM AND INSTEAD WERE WEARING DRESS OF DIFFERENT COLOUR, DIFFERENT DESIGN AND TEXTURE ACCO RDING TO THEIR OWN CHOICE. THEREFORE, THE ASSESSING OFFICER RIGHTLY TREATED T HE ASSESSEE IN DEFAULT IN TERMS OF THE PROVISIONS OF 201(1) OF THE ACT, THE A FORESAID ATTIRE ALLOWANCE AND WASHING ALLOWANCE BEING NOT EXEMPT U/S 10(14) OF TH E ACT. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. BEFORE PROCEEDING FURTHER WE MAY HAVE A LOOK AT THE RELEVANT PROVISIONS OF SEC. 10(14)(I) OF THE ACT, WHICH READ AS UNDER: ITA NOS.490-91 & 2571-7/AHD/2005 6 10. INCOMES NOT INCLUDED IN TOTAL INCOME. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL N OT BE INCLUDED- . (14) (I) ANY SUCH SPECIAL ALLOWANCE OR BENEFIT, NO T BEING IN THE NATURE OF A PERQUISITE WITHIN THE MEANING OF CLAUSE (2) OF SECTION 17, SPECIFICALLY GRANTED TO MEET EXPENSES WHOLLY, NECES SARILY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF THE DUTI ES OF AN OFFICE OR EMPLOYMENT OF PROFIT, AS MAY BE PRESCRIBED, TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED FOR THAT PURPOSE; 6.1 THE RELEVANT RULE 2BB(1)(F) OF THE IT RULE S, 1962 READS AS UNDER: 2BB. PRESCRIBED ALLOWANCES FOR THE PURPOSES OF CLAUSE ( 14) OF SECTION 10. (1) FOR THE PURPOSES OF SUB-CLAUSE (I) OF CLAUSE (1 4) OF SECTION 10, PRESCRIBED ALLOWANCES, BY WHATEVER NAME CALLED, SHA LL BE THE FOLLOWING, NAMELY:--- (F) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE I NCURRED ON THE PURCHASE OR MAINTENANCE OF UNIFORM FOR WEAR DUR ING THE PERFORMANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMEN T OF PROFIT. 6.2 UNDISPUTEDLY, NONE OF THE EMPLOYEES EXCEPT PEONS WERE FOUND TO BE WEARING ANY UNIFORM DURING THE SURVEY TO WHOM TH E ATTIRE ALLOWANCE HAS BEEN PAID. ACCORDING TO SR. MANGER FINANCE, THE SAI D ALLOWANCE IS PAID TO ALL THE OFFICERS AND STAFF OTHER THAN PEONS BY WAY OF R EIMBURSEMENT OF CLOTHES, SHOES, BAGS AND PERSONAL EFFECTS UP TO A SPECIFIED AMOUNT AND THE SAID AMOUNT WAS CLAIMED TO BE EXEMPT . EVEN BEFORE THE A O ,IN RESPONSE TO SHOW CAUSE NOTICE AND LATER BEFORE THE LD. CIT(A) , THES E ASSESSEES CLAIMED THE AMOUNT OF ATTIRE ALLOWANCE AND WASHING ALLOWANCE EX EMPT U/S 10(14)(I) READ WITH RULE 2BB(1)(F) OF THE IT RULES, 1962. THE SAI D RULE 2BB(1)(F)STIPULATES THAT EXPENDITURE INCURRED ON PURCHASE OR MAINTENANC E OF UNIFORM FOR WEARING DURING THE PERFORMANCE OF THE DUTIES OF AN OFFICE O R AN EMPLOYMENT OF PROFIT, IS EXEMPT .THE LD. CIT(A) AFTER EXAMINING THE FACTS ON RECORD CONCLUDED THAT THE EXPENDITURE HAS TO BE ON PURCHASE OF UNIFORM AND TH AT UNIFORM SHOULD BE FOR WEARING DURING THE PERFORMANCE OF THE DUTIES. IN TH E CASE BEFORE US, THE ITA NOS.490-91 & 2571-7/AHD/2005 7 ASSESSING OFFICER FOUND AND UNDISPUTEDLY THESE EMPL OYEES WERE NOT WEARING ANY SPECIFIC SIMILAR DRESS, I.E. UNIFORM AND THEY W ERE WEARING DRESS OF DIFFERENT COLOUR, DIFFERENT DESIGN AND TEXTURE, ACC ORDING TO THEIR OWN CHOICE. SINCE THERE IS NOTHING TO SUGGEST THAT THE EXPENDIT URE WAS INCURRED TOWARDS EITHER PROVIDING UNIFORM OR THAT SAID ATTIRE/WASHI NG ALLOWANCE OR BENEFIT, WAS SPECIFICALLY GRANTED TO MEET EXPENSES WHOLLY, NECES SARILY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF THE DUTIES OF AN OFF ICE OR EMPLOYMENT OF PROFIT, THE AFORESAID AMOUNT IS APPARENTLY NOT EXEMPT U/ S 10(14)(I) R.W.RULE 2BB(1)(F) OF THE IT RULES, 1962. IN VIEW OF THE FOR EGOING AND THERE BEING NO MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE WITH THE AFORESAID FINDINGS OF THE LD. CI T(A) IN HOLDING THAT TDS WAS REQUIRED TO BE DEDUCTED ON THE AFORESAID AMOUNT OF ATTIRE ALLOWANCE AND WASHING ALLOWANCE. THUS, GROUND NOS. 1 TO 4 IN THES E FOUR APPEALS ARE DISMISSED. 7. GROUND NO. 5 IN THE TWO APPEALS FOR THE AY 2003- 04 RELATE TO CLAIM FOR SIMULTANEOUS EXEMPTION UNDER RULE 2BB AND RULE 3 IN RESPECT OF CONVEYANCE REIMBURSEMENT OF RS.5,72,720/- TO CERTAIN EMPLOYEES , WHO WERE USING THEIR OWN CARS FOR OFFICIAL AS WELL AS PRIVATE PURPOSES A ND WERE ALSO CLAIMING EXEMPTION OF RS.800/- PER MONTH AS TRANSPORT ALLOWA NCE UNDER SECTION 10(14) R.W. RULE 2BB(2)(10). DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT CERTAIN EMPLOYEES WERE CLAIMING EXEMPTION OF TRANSPORT ALLO WANCE OF RS.800/- PER MONTH BESIDES CLAIMING EXEMPTION OF RS. 1800 ON ACC OUNT OF REIMBURSEMENT FOR USE OF PERSONAL CARS FOR OFFICE & PERSONAL PUR POSES. THE SR. MANAGER FINACE SUBMITTED THAT AMOUNT OF RS. 800 WAS CLAIMED EXEMPT U/S 10(14)(II) OF THE ACT WHILE AN AMOUNT OF RS. 1,800 HAS BEEN PAID FOR USE OF PERSONAL CARS FOR OFFICIAL AND PERSONAL PURPOSES.. THE ASSESSING OFFICER WAS OF THE VIEW THAT EXEMPTION OF ALLOWANCE OF RS. 800 UNDER RULE 2BB CA NNOT BE GRANTED TO EMPLOYEES WHO WERE USING THEIR PERSONAL CARS FOR OF FICIAL AND PERSONAL PURPOSES AND WERE BEING REIMBURSED THE ACTUAL EXP ENDITURE. ACCORDINGLY, THE AO HELD THE ASSESSEE IN DEFAULT IN TERMS OF PRO VISIONS OF SEC. 201(1) OF THE ACT WHILE HOLDING THAT THE AMOUNT PAID TOWARDS CONVEYANCE REIMBURSEMENT WAS LIABLE TO TAX AND ALLOWED EXEMPTI ON OF TRANSPORT ALLOWANCE. ITA NOS.490-91 & 2571-7/AHD/2005 8 8. ON APPEAL, THE ASSESSEE ARGUED THAT NEITHER IN RULE 2BB NOR IN RULE 3 THERE IS ANY REFERENCE, WHICH MAY LEAD ONE TO BELIE VE THAT SIMULTANEOUS EXEMPTION UNDER BOTH THE RULES CANNOT BE GRANTED. S ECTION 10(14) OF THE INCOME-TAX ACT READ WITH RULE 2BB (ITEM NO.10 OF SU B RULE 2) IMPLIES EXEMPTION OF RS.800/- PER MONTH TO AN EMPLOYEE TO M EET HIS EXPENDITURE FOR THE PURPOSE OF COMMUTING BETWEEN THE PLACE OF HIS R ESIDENCE AND PLACE OF HIS DUTY. RULE 3 ON THE OTHER HAND IS FOR VALUATION OF PERQUISITES IN RESPECT OF EXPENDITURE INCURRED BY EMPLOYER OR EMPLOYEES WHERE MOTOR CAR IS PARTLY USED FOR OFFICIAL AND PARTLY FOR PERSONAL PURPOSE. THE ONLY ITEM TO BE DEDUCTED FROM THE ACTUAL AMOUNT OF EXPENDITURE INCURRED BY T HE EMPLOYER IS THE AMOUNT SPECIFIED IN RULE 3 I.E. RS.1,200/- (PLUS RS.600/- IF CHAUFFEUR IS PROVIDED) WHERE THE CUBIC CAPACITY OF ENGINE DOES NOT EXCEED 1.6 LITERS. IT WAS PLEADED THAT UNDER RULE 3 THERE IS NO MENTION OF DEDUCTION OF THE SUM ALLOWED AS EXEMPT UNDER SECTION 10(14) READ WITH RULE 2BB I.E. RS.800/- PER MONTH. HOWEVER, THE LD. CIT(A) DID NOT ACCEPT THE PLEA OF THESE ASSESSEES AND AFTER ANALYZING THE PROVISIONS OF SEC. 10(14(II) READ WIT H RULE 2BB(2),ITEM 10, DIRECTED THE AO TO TAX THE TRANSPORT ALLOWANCE IN THE CASE OF EMPLOYEES WHO ARE PAID BOTH CONVEYANCE REIMBURSEMENT AND TRANSPOR T ALLOWANCE AND ACCORDINGLY TREATED THE ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX ON SUCH ALLOWANCE U/S 201(1) OF THE ACT AS REGARDS COMPUTA TION OF PERQUISITE IN TERMS OF RULE 3 OF THE IT RULES, 1921, THE LD. CIT(A) DIR ECTED THE AO TO EXAMINE WHETHER OR NOT PERQUISITE VALUE AS PROVIDED IN RULE 3 HAS BEEN TAXED IN CASES OF SUCH EMPLOYEES AND IF NOT, WORK OUT EMPLOYERS L IABILITY UNDER SEC. 201(1) OF THE ACT. 9. THE TWO ASSESSES ARE NOW IN APPEAL BEFORE US. BE FORE US THE LD. AUTHORISED REPRESENTATIVE REITERATED THEIR SUBMISSI ONS BEFORE THE LOWER AUTHORITIES. ON THE OTHER HAND, THE LD. DEPARTMENTA L REPRESENTATIVE RELIED ON THE ORDER OF FIRST APPELLATE AUTHORITY. 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. THE RELEVANT PROVISIONS OF SEC. 10(14)(II) OF THE A CT AND RULE 2BB(2) ,ITEM 10 HAVE ALREADY BEEN REPRODUCED IN THE IMPUGNED ORDERS . WE FIND THAT IN LINE ITA NOS.490-91 & 2571-7/AHD/2005 9 WITH FACILITY PROVIDED TO CENTRAL GOVERNMENT EMPLOY EES, THE CBDT PRESCRIBED GUIDELINES FOR THE PURPOSE OF CLAUSES (I ) AND (II) OF SECTION 10(14) VIDE NOTIFICATION NO.SO617(E) DATED 7TH JULY, 1995 (F.NO.142/9/95- TPL)WHICH HAS BEEN AMENDED VIDE NOTIFICATION SO NO. 403(E) DATED 24.4.2000 (F.NO.142/34/99- TPL) . THE TRANSPORT ALLOWANCE GRANTED TO AN EMPLOYEE, OTHER THAN WHO USE OFFICIAL CARS, TO MEE T HIS EXPENDITURE FOR THE PURPOSE OF COMMUTING BETWEEN THE PLACE OF HIS RESID ENCE AND THE PLACE OF DUTY ,IS TREATED AS EXEMPT TO THE EXTENT OF RS.800 PER MONTH VIDE NOTIFICATION S.O.NO. 395(E) DATED 13.5.98 AND AS PROVIDED IN I TEM 10 OF RULE 2BB(2) OF THE IT RULES, 1962. KEEPING IN VIEW THE SPIRIT BEHI ND THESE PROVISIONS, IT IS APPARENT THAT TRANSPORT ALLOWANCE FOR THE PURPOSE OF COMMUTING BETWEEN THE PLACE OF HIS RESIDENCE AND THE PLACE OF DUTY IS PRO VIDED TO ONLY THOSE EMPLOYEES WHO ARE NOT USING OFFICIAL CARS. IF AN EM PLOYEE IS USING HIS OWN CAR FOR OFFICIAL PURPOSES AS ALSO FOR COMMUTING BETWEEN THE PLACE OF HIS RESIDENCE AND THE PLACE OF DUTY, FOR THE SAME EXPENDITURE, EX EMPTION CAN NOT BE PROVIDED TWICE-ONCE UNDER ITEM 10 OF RULE 2BB(2) AN D THEN IN RESPECT OF ACTUAL EXPENDITURE REIMBURSED TO THE EMPLOYEE WHILE DETERMINING PERQUISITE IN TERMS OF RULE 3 OF THE IT RULES, 1962. IF AN EMPLO YEE USES HIS OWN CAR BOTH FOR PERSONAL AND OFFICIAL PURPOSES, INCLUDING FOR C OMMUTING TO OFFICE, PERQUISITE VALUE HAS TO BE DETERMINED IN TERMS OF RULE 3 OF TH E IT RULES, 1962. THE LD. CIT(A) WHILE DIRECTING THE AO TO TAX THE TRANSPORT ALLOWANCE IN THE CASE OF EMPLOYEES WHO ARE PAID BOTH CONVEYANCE REIMBURSEMEN T AND TRANSPORT ALLOWANCE FURTHER ASKED THE AO TO EXAMINE WHETHER O R NOT PERQUISITE VALUE AS PROVIDED IN RULE 3 HAS BEEN TAXED IN CASES OF SUCH EMPLOYEES AND IF NOT, WORK OUT EMPLOYERS LIABILITY UNDER SEC. 201(1) OF THE ACT. THE LD. AR APPEARING BEFORE US DID NOT REFER US TO ANY MATERIA L SO AS TO ENABLE US TO TAKE DIFFERENT VIEW IN THE MATTER. IN VIEW OF THE FOREGOING, WE DO NOT FIND ANY INFIRMITY IN THE AFORESAID DIRECTIONS OF THE LD. CI T(A). THEREFORE, GROUND NO.5 IN THESE TWO APPEALS IS DISMISSED. 11. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERM S OF THE RESIDUARY GROUND, ACCORDINGLY, THE SAID GROUND IN THESE APPEALS, IS D ISMISSED. ITA NOS.490-91 & 2571-7/AHD/2005 10 12. IN THE RESULT, THESE FOUR APPEALS ARE DISMISS ED SD/- SD /- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED :31/12/2009 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEES,NOW PART OF ORG INFORMATICS LTD.) ,. 2 ASSTT. CIT, TDS CIRCLE, BARODA. 3. THE CIT(APPEALS)-V,BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ORDER PRONOUNCED IN OPEN COURT ON31/12 /2009