M/s. Life Insurance Corporation Of India, Haveri V. The Income Tax Officer, (TDS) Ward, Davangere

ITA 543/BANG/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7478 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-10-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: CHYTANYA K K
• Keywords: Capital asset; Salary income; Opportunity of being heard; Bonafide belief; Period of limitation; Retrospective amendment; Question of law; Cost of acquisition; Non-deduction of tax; Corroborative evidences; Non compliance; Benefit of exemption; Time period of passing order; TDS; Set aside; Capital Gains
• Section: 10(14); 133A; 133(6); 194C; 201(1); 201; 191; 192; 64; 113; 43; 48; 194J; 194 I; 73; 72; 13; 119; 22; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.507 TO 518/BANG/2020 ASSESSMENT YEAR : 2011-12 TO 2016-17 M/S LIFE INSURANCE CORPORATION OF INDIA, NO.13, JEEVAN JYOTHI BUILDING, MARKET ROAD, SOPPUGUDDE, THIRTHAHALLI-577 432. PAN AAACL 0582 H VS. INCOME TAX OFFICER CR BUILDING DEVRAJ URS LAYOUT, C BLOCK, (TDS) WARD, DAVANGERE-577 066. APPELLANT RESPONDENT ITA NO.519 TO 530/BANG/2020 ASSESSMENT YEAR : 2011-12 TO 2016-17 M/S LIFE INSURANCE CORPORATION OF INDIA DAVANGERE BRANCH, 62D, BRANCH II HARIHAR ROAD, DAVANGERE-577 006. PAN AAACL 0582 H VS. INCOME TAX OFFICER CR BUILDING DEVRAJ URS LAYOUT, C BLOCK, (TDS) WARD, DAVANGERE-577 066. APPELLANT RESPONDENT ITA NO.531 TO 542/BANG/2020 ASSESSMENT YEAR : 2011-12 TO 2016-17 M/S LIFE INSURANCE CORPORATION OF INDIA DIVISIONAL OFFICE, JEEVAN PRAKASH, GOPALAGOWDA EXTENSION, VS. INCOME TAX OFFICER CR BUILDING DEVRAJ URS LAYOUT, C BLOCK, (TDS) WARD, PAGE 2 OF 74 ITA NO.507 TO 566 /BANG/2020 100 FEET ROAD, SHIVAMOGGA-577 205. PAN AAACL 0582 H DAVANGERE-577 066. APPELLANT RESPONDENT ITA NO.543 TO 554/BANG/2020 ASSESSMENT YEAR : 2011-12 TO 2016-17 M/S LIFE INSURANCE CORPORATION OF INDIA HAVERI BRANCH, PUNE BANGALORE ROAD, HAVERI 581 110. PAN AAACL 0582 H VS. INCOME TAX OFFICER CR BUILDING DEVRAJ URS LAYOUT, C BLOCK, (TDS) WARD, DAVANGERE-577 066. APPELLANT RESPONDENT ITA NO.555 TO 566/BANG/2020 ASSESSMENT YEAR : 2011-12 TO 2016-17 M/S LIFE INSURANCE CORPORATION OF INDIA MAIN BRANCH,P.B ROAD, NEAR KSRTC DEPOT, CHITRADURGA 577 501 PAN AAACL 0582 H VS. INCOME TAX OFFICER CR BUILDING DEVRAJ URS LAYOUT, C BLOCK, (TDS) WARD, DAVANGERE-577 066. APPELLANT RESPONDENT APPELLANT BY : CHYTANYA KK, ADVOCATE RESPONDENT BY : SMT. R PREMI, JCIT (DR) DATE OF HEARING : 10/12 /2020 DATE OF PRONOUNCEMENT : 21/01/2021 O R D E R PAGE 3 OF 74 ITA NO.507 TO 566 /BANG/2020 PER BENCH : THE ASSESSEE HAS FILED SIXTY APPEALS CHALLENGING DE MAND RAISED UNDER SECTION 201(1) AD INTEREST LEVIED UNDE R SECTION 201(1A) OF THE ACT, LEVIED BY LD.AO, CONFIRMED BY L D.CIT(A), DAVANGERE, BY ORDER DATED 29/01/2020 FOR ASSESSMENT YEARS 2011-12 TO 2016-17 IN RESPECT OF ALL BRANCHES . GROUNDS RAISED BY ASSESSEE HAVE BEEN ENCAPSULATED B Y WAY OF A CHART REPRODUCED IN THE PARAGRAPH HEREUNDER. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. LD.COUNSEL SUBMITTED THAT ASSESSEE M/S LIFE INSURA NCE CORPORATION OF INDIA HAS BRANCHES AT THEERATHAHALLI , CHITRADURGA, DAVANGEE, SIVAMOGGA AND HARVERI. HE SUBMITTED THAT THE HEAD OFFICE OF ASSESSEE IS IN MU MBAI. LD.AO, IN ORDER TO VERIFY COMPLIANCE TO TDS PROVISI ONS, CONDUCTED SURVEY UNDER SECTION 133A OF THE ACT, FOR THE YEARS UNDER CONSIDERATION AT BRANCH OFFICES MENTION ED HEREINABOVE. ON VERIFICATION, LD.AO OBSERVED THAT, THE ASSESSEE HAS NOT DEDUCTED TDS UNDER SECTION192, IN RESPECT OF CASH MEDICAL BENEFIT PAID TO ITS EMPLOYE ES, PAYMENT MADE TO CHINNU GRAPHICS, PAYMENT TO KULKARN I SERVICES, PAYMENTS TO SODEXO SVC INDIA PVT.LTD., PA YMENT MADE TO HP INDIA SALES PVT.LTD., AND EMDC PROJECTS. LD.AO ALSO OBSERVED THAT THE CASH MEDICAL BENEFIT PAID TO EMPLOYEES WAS CONSIDERED AS EXEMPT UNDER SECTION 10 OF THE ACT IN RESPECT OF CASH MEDICAL BENEFIT. PAGE 4 OF 74 ITA NO.507 TO 566 /BANG/2020 2.1. LD.AO AFTER CONSIDERING SUBMISSIONS OF ASSESSEE, IN RESPECT OF CASH MEDICAL BENEFIT HELD THAT, UNDER TH E ACT, ANY ALLOWANCE RECEIVED BY AN EMPLOYEE IS FULLY TAXA BLE, UNLESS IT IS SPECIFICALLY EXEMPTED BY PROVISIONS OF THE ACT. LD.AO HELD THAT THE DEDUCTOR(ASSESSEE) IS GIVING FI XED MEDICAL BENEFITS TO ITS EMPLOYEES TO MEET MEDICAL EXPENDITURE IRRESPECTIVE OF ACTUAL EXPENDITURE INCU RRED BY THE EMPLOYEE. HE NOTED THAT, EMPLOYEES GET SUCH BEN EFIT WITHOUT FURNISHING ANY PROOF OF HAVING UTILISED THE AMOUNT FOR MEDICAL TREATMENT/EXPENDITURE EITHER FOR THE EM PLOYEE OR ANY OF THE FAMILY MEMBERS AND THEREFORE, FIXED M EDICAL BENEFIT PAID TO THE EMPLOYEES ARE NOT AGAINST THE EXPENDITURE, AND NOT IN THE NATURE OF REIMBURSEMENT . LD.AO ALSO HELD THAT, THERE IS NO PROVISION TO ALLOW THE SAME UNDER SECTION 10 OF THE ACT, AND THE AMOUNT RECEIVED AS F IXED ALLOWANCE IS FULLY TAXABLE IN THE HANDS OF EMPLOYEE AS PERQUISITE. LD.AO ALSO NOTED THAT, THE ASSESSEE DIS CONTINUED THE PRACTICE IN FINANCIAL YEAR 2009-10. LD.AO, THUS IN ALL APPEALS UNDER CONSIDERATION, HELD THE ASSESSEE TO B E ASSESSEE IN DEFAULT AND PASSED ORDERS UNDER SECTI ON 201(1) OF THE ACT FOR YEARS UNDER CONSIDERATION. 2.2. AT THE OUTSET, BOTH SIDES ADMIT THAT, COMMON ISSUES ARE INVOLVED IN ALL 60 APPEALS. LD.COUNSEL SUMMARIZ ED THE DEMAND RAISED UNDER SECTION 201(1) AND INTEREST LEV IED UNDER SECTION 201(1A) OF THE ACT, BY LD.AO, BRANCH WISE, QUA ASSESSMENT YEAR, IN PAPER BOOK AT PAGE 3-6 AS U NDER: PAGE 5 OF 74 ITA NO.507 TO 566 /BANG/2020 THEERTHAHALLI BRANCH CASH MEDICAL BENEFIT U/ S 192 PAYMENT TO CHINNU GR APHICS 194C PAYMENT TO KUL KARNI SERVICES U S 194C TOTAL TDS DEDUCTIBLE INTEREST 201 (1 A ) TDS DEDUCTIBLE INTEREST 201 (1 A ) TDS DEDUCTIBLE INTEREST 201 (1 A ) 2011-12 42 437 35,616 1 033 840 1,152 924 82,002 2012 - 13 31 867 22,896 1,218 864 1 152 792 58 789 2013 - 14 24,456 14,640 1,216 864 1,152 792 43,120 2014 - 15 31,511 15 120 1,278 576 1,152 528 50,165 2015 - 16 32,129 11 556 1,377 440 1,152 414 47 ,068 2016 - 17 1,15,088 27 ,600 1,396 209 768 184 1,45,245 CHITHRADURGA: CASH MEDICAL BENEFIT U/S 192 PAYMENT TO CHINNU GRAPHICS U/S 194C PAYMENT TO SODEXO SVC INDIA PVT LTD U/S. 194C TOTAL TDS DEDUCTIB LE INTEREST U/S 201 (1A) TDS DEDUCTI BLE INTEREST 201(1A) TDS DEDUCTIB LE INTEREST U/S 201(1A) 2011-12 21 , 424 21,828 1,541 1,575 46,368 2012 - 13 35,973 25,848 - 2,329 1,656 65,806 2013-14 41,526 24,900 2,104 1,386 69,916 2014-15 46,243 22,176 2,339 1,380 9,418 4,512 86,06 8 2015 - 16 45,009 16,200 2,250 1,035 64,494 2016-17 1,51,475 36,336 2,167 630 10,299 2,03,255 DAVANGERE: CASH MEDICAL BENEFIT U/S 192 PAYMENT TO CHINNU GRAPHICS U/ S 194C PAYMENT TO SODEXO SVC INDIA PVT LTD U S 194C TOTAL TDS DEDUCTIBLE INTEREST 201(1A) TDS DEDUCTIBLE INTEREST 201(1A) TDS DEDUCTIBL E INTEREST U/S 201 (1A) PAGE 6 OF 74 ITA NO.507 TO 566 /BANG/2020 2011-12 9,645 8,064 - - - - 17,709 2012-13 9,300 6,696 1,207 864 - - 18,067 2013-14 31,003 18,600 - - - - 49,603 2014-15 36,482 17,472 707 350 8,814 4,224 68,049 2015-16 40,020 14,400 1,460 588 - - 56,468 2016-17 1,30,588 31,320 666 156 9,116 2,275 1,74,121 SHIVAMOGGA: CASH MEDICAL BENEFIT U/S 192 PAYMENT TO HP IN LA SALES PVT. LTD. AN MDC PROJECTS U S 194J# TOTAL TDS DEDUCTIBLE INTEREST U/ S 201(1A) TDS DEDUCTIBLE INTEREST U/ S 201(1A) 201 1-12 2, 49,647 2,09,703 - - 4,59,350 2012-13 1,04,870 75,506 21,277 REFER NOTE # - 2,16,972 2013 - 14 1,24,514 85,915 - - 2, 10,429 2014-15 1,40,103 79,859 - - 2, 19,962 2015-16 1,33,322 59,995 - - 1,93,317 2016 - 17 3,70,886 1,22,392 - - 4,93,287 # NOTE : ISSUE WITH RESPECT TO PAYMENT TO HP INDIA SALES PVT. LTD. AND EMDC PROJECTS U/S 194J FOR THE AY 2012-13, APPE AL WAS ALLOWED BY THE LD. CIT(A). HAVERI: CASH MEDICAL BENEFIT U/ S 192 TOTAL TDS DEDUCTIBLE INTEREST U/ S 201 (IA) 2011 - 12 59,053 47,880 1,06,933 2012 - 13 43,690 31,392 75,082 2013 - 14 47 ,725 33,408 81,133 2014 - 15 58,881 28,244 87,125 2015 - 16 48,122 22,136 70,258 2016 - 17 2, 15,082 73,128 2,88,210 PAGE 7 OF 74 ITA NO.507 TO 566 /BANG/2020 AGGRIEVED BY DEMAND RAISED UNDER SECTION 201(1) AND LEVY OF INTEREST UNDER SECTION 201(1A) OF THE ACT, ASSES SEE PREFERRED APPEAL BEFORE LD.CIT(A). 3. LD.CIT(A) UPHELD THE ORDER OF LD.AO BY WAY OF A COM MON ORDER PASSED FOR ALL THE BRANCHES, FOR ALL YEARS UN DER CONSIDERATION, BY OBSERVING AS UNDER: 6. THE SUBMISSION OF THE APPELLANT HAS BEEN CONSID ERED. GROUND OF APPEAL I IS GENERAL IN NATURE AND NOT BEEN ADDRE SSED SPECIFICALLY. AS REGARDS GROUND OF APPEAL 2, THE AP PELLANT HAS NOT SUBSTANTIATED ITS CLAIM THAT ITS REQUEST FOR MORE T IME WAS DECLINED BY THE AO. BESIDES, THE APPELLANT HAS FILED SUBMISS ION DURING THE APPEAL PROCEEDINGS AND THE ARS OF THE APPELLANT AT TENDED THE HEARING AND PRESENTED ARGUMENTS BEFORE THE UNDERSIG NED WHICH ARE DULY CONSIDERED WHILE DISPOSING THIS APPEAL. TH EREFORE, IN MY CONSIDERED VIEW THE GRIEVANCE OF THE APPELLANT HAS BEEN DULY ADDRESSED. 6.1 GROUNDS 3 TO 6 ARE CONTENTIONS RELATING TO THE DECISION OF THE AO TO HOLD THAT CASH MEDICAL BENEFIT GIVEN TO THE E MPLOYEES OF THE DEDUCTOR IS FULLY TAXABLE AND THE DEDUCTOR WAS LIAB LE TO EFFECT IDS ON THE SAID PAYMENT AND THE FAILURE ON THE PART OF THE DEDUCTOR ATTRACTS THE PROVISIONS OF SECTION AND 201(1A) OF T HE ACT. THE SUBMISSION OF THE APPELLANT HAS DULY BEEN CONSIDERE D. THE PROVISIONS OF SECTION 17(1) OF THE ACT DEFINES THE TERM 'SALARY' TO INCLUDE THE VALUE OF ANY PERQUISITE ALLOWED OR AMEN ITY PROVIDED BY EMPLOYER TO ITS EMPLOYEE IN LIEU OF OR IN ADDITI ON TO ANY SALARY OR WAGES. FURTHER, AS PER SECTION 17(2) OR THE ACT, THE TERM 'PERQUISITE' INCLUDES THE VALUE OF ANY OTHER FRINGE BENEFIT AMENITY AS MAY BE PRESCRIBED UNDER THE RULES. THE PROVISO L AYS DOWN THE DETAILS RELATING TO MEDICAL FACILITIES PROVIDED TO AN EMPLOYEE OR REIMBURSEMENT OR RNCDICAL EXPENSES INCURRED BY HIM WHICH WILL NOT BE CONSIDERED AS PERQUISITES. CLAUSE (V) OF THE PROVISO SPECIFIES AS UNDER: (V) ANY SUM PAID BY THE EMPLOYER: IN RESPECT OF ANY EXPENDITURE ACTUALLY INCURRED .BY THE EMPLOYEE ON H IS, MEDICAL TREATMENT OR TREATMENT OF ANY-MEMBER OF HI S FAMILY [OTHER THAN THE TREATMENT REFERRED TO IN CLA USE (I) AND (II)]; SO HOWEVER, THAT SUCH SUM DOES NOT EXCEE D (FIFTEEN) THOUSAND RUPEES IN THE PREVIOUS YEAR; PAGE 8 OF 74 ITA NO.507 TO 566 /BANG/2020 FROM THE ABOVE IT IS CLEAR THAT ON SATISFYING SPECI FIC CONDITIONS SUCH EXPENDITURE WILL NOT BE CONSIDERED AS A PERQUI SITE IN THE HANDS OF THE-EMPLOYEE, WHICH ARE AS UNDER: I) EMPLOYEE SHOULD HAVE SPENT THE AMOUNT ON MEDIC AL TREATMENT: II) THE AMOUNT SHOULD HAVE BEEN SPENT ON HIS OWN OR HIS FAMILY MEMBERS ' TREATMENT III) SUCH AMOUNT SHOULD BE REIMBURSED BY THE EMPLOYER. IV) AMOUNT REIMBURSED BY THE EMPLOYER DOES NOT EXCEED RS15000 IN THE FINANCIAL YEAR: 6.2 IN CASE OF THE APPELLANT, THE AO HAS RECORDED FINDING THAT FIXED CASH MEDICAL BENEFIT GIVEN TO ITS EMPLOYEES I RRESPECTIVE OF THE ACTUAL EXPENDITURE INCURRED BY THE EMPLOYEE. THE EMPLOYEE IS NOT REQUIRED TO FURNISH ANY PROOF FOR H AVING UTILIZED THE AMOUNT FOR THE PURPOSE OF MEDICAL TREATMENT/EXPENDITURE. THUS THE FIXED MEDICAL BENEF IT IS NOT PAID TO THE EMPLOYEE AS REIMBURSEMENT AGAINST THE A CTUAL EXPENDITURE INCURRED. THESE FACTS REMAIN UNCONTROVE RTED AND THE APPELLANT ARGUES THAT MEDICAL ALLOWANCE WHETHER FIXED COMPONENT OR NOT IS ALLOWABLE U/S17(2) IF LIC (DEDU CTOR) SATISFIES ITSELF THAT EXPENDITURE IS ACTUALLY INCUR RED OR TO BE INCURRED BY THE EMPLOYEE IN THE YEAR ON HIS MEDICAL TREATMENT OR FOR TREATMENT OF MEMBER OF HIS FAMILY. HOWEVER, THE ABOVE CONTENTION OF THE APPELLANT IS NOT IN ACC ORDANCE WITH THE PROVISION OF LAW. AS MENTIONED EARLIER AMO UNT UPTO RS 15,000/- REIMBURSED BY THE EMPLOYER IN RESPECT O F EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE ON HI S MEDICAL TREATMENT OR TREATMENT OF ANY MEMBER OF HIS FAMILY IS EXEMPT FROM BEING CONSIDERED AS PERQUISITE. THER EFORE, AS THE FIXED AMOUNT IS BEING PAID AS CASH MEDICAL BENE FIT TO THE EMPLOYEES WHICH IS UNCONNECTED TO THE ACTUAL EXPEND ITURE, IF ANY, INCURRED BY THE EMPLOYEES, THIS EXPENDITURE CANNOT BE CONSIDERED AS EXEMPT FROM BEING TAXED AS PERQUISITE . 6.3 THE CONTENTION OF THE APPELLANT AS REGARDS LETT ER DATED 20/05/2002 FROM CBDT HAS BEEN CONSIDERED. THE SAID LETTER MENTIONS THAT CBDT HAS NO OBJECTION IN EXTEN DING BENEFIT OF EXEMPTION UNDER PROVISO (V) OF SECTION T 7(2) 10 THE EMPLOYEES OF LIC DRAWING PAYMENT OF RS 2500/- P ER ANNUM FOR MEDICAL TREATMENTS PROVIDED LIC SATISFIES ITSELF THAT THE EXPENDITURE IS ACTUALLY INCURRED OR TO BE INCURRED BY THE EMPLOYEE IN THE YEAR FOR MEDICAL TREATMENT. THE REQUEST LETTER OF LLC TO CBDT DATED 29/08/2001 FILED BY THE APPELLANT MENTIONS DETAILS OF THE CATEGORIES OF EMP LOYEES AND THE AMOUNT OF CMB GIVEN TO THEM. IT IS ALSO MEN TIONED PAGE 9 OF 74 ITA NO.507 TO 566 /BANG/2020 IN THAT LETTER THAT THE LIC HAS SOUGHT AND OBTAINED SUCH PERMISSION FROM CBDT FROM TIME TO TIME I.E. 02/01/1 991 AND 17/03/1994 WHICH APPARENTLY INDICATES THAT WITH CHANGE OF CATAGORIES OF EMPLOYEES OR/AND REVISION O F PAY AND CHANGE IN AMOUNT OF CMB, THE LIC HAS BEEN SEEKI NG SUCH APPROVAL-FROM CBDT. THE APPELLANT CLAIMS THAT DUE TO REVISION OF PAY THE PRESENT AMOUNT OF CMB HAS CHANG ED. THEREFORE, IT WAS INCUMBENT UPON THE TO SACK SUCH A PPROVAL OF CBDT AS IT HAS DONE IN THE PAST. BUT, NO SUCH AP PROVAL HAS BEEN TAKEN FOR THE RELEVANT PERIOD. THEREFORE, THE CONTENTIONS OF THE APPELLANT CANNOT BE ACCEPTED. 6.4 THE APPELLANT HAS ALSO ARGUED THAT LAX CANNOT B E RECOVERED FROM THE EMPLOYER ON ACCOUNT OF SHORT DED UCTION OF TAX IF A BONAFIDE ESTIMATE OF SALARY TAXABLE IN THE HANDS OF THE EMPLOYEES HAS BEEN MADE BY THE EMPLOYER. IT IS OBSERVED THAT WHEN (HE PROVISION IS VERY CLEAR THAT ONLY REIMBURSEMENT FOR THE EXPENDITURE INCURRED BY THE EMPLOYEE TO AN AMOUNT OF RS 15000 IS EXEMPT FROM BE ING TREATED AS PERQUISITE, THERE IS NO SCOPE FOR ANY AS SUMPTION OR PRESUMPTION FOR THE EMPLOYER AS REGARDS DECIDING THE TAXABILITY OR FIXED CASH MEDICAL BENEFIT GIVEN TO E MPLOYEES. BESIDES THE APPELLANT HAS NOT BROUGHT ANY MATERIAL ON RECORD EITHER BEFORE ITO(TDS) OR BEFORE THE UNDERSI GNED TO SUPPORT ITS CONTENTION THAT ESTIMATES HAVE BEEN FIL ED BY THE INDIVIDUAL EMPLOYEES WITH REGARD TO THEIR TAX LIABI LITY IN RESPECT OF INCOME RECEIVED BY THEM. IN ABSENCE OF A NY EVIDENCE TO CONCLUDE THAT THE DEDUCTOR(LIC) HAS BAS ED DEDUCTION OF TAX AT SOURCE ON THE ESTIMATION PROVID ED BY THE EMPLOYEES, THE CLAIM OF BONAFIDE ESTIMATE BY THE AP PELLANT WILL NOT MUSTER ANY CREDENCE. IT IS NOT THE CASE OF THE APPELLANT THAT EMPLOYEES HAVE INCLUDED CASH EQUIVAL ENT OF CMB AS PART OF THE INCOME OR PROVIDED THE ACCOUNTAN T'S CERTIFICATE TO PROVE THAT THIS INCOME HAS BEEN OFFE RED FOR TAX AS MANDATED IN THE PROVISO TO SEC.201. IN FACT THE AO HAS NOTED THAT THE EMPLOYEES HAVE CLAIMED THE AMOUNT OF CMB AS EXEMPT. U/S.10 OF THE ACT. THEREFORE, THE CLAIM OF THE APPELLANT TO JUSTIFY ITS ACTION OF NON COMPLIANCE W ITH THE TDS PROVISION AS AN HONEST AND BONAFIDE ESTIMATE, I S NOT MAINTAINABLE. 6.5 IN VIEW OF ABOVE, THE AMOUNT OF CASH MEDICAL BE NEFIT (CMB) PAID TO ITS EMPLOYEES IS HELD TO BE LIABLE FOR TDS BY THE DEDUCTOR. FOR THE FAILURE TO .EFFECT TDS BY THE DED UCTOR, THE AO WAS RIGHT IN INVOKING THE PROVISIONS OF SECTION 201 (1) AND CHARGING INTEREST U/S.201(1A) OF THE ACT. THE RELEV ANT GROUNDS OF THE APPELLANT STAND DISMISSED. PAGE 10 OF 74 ITA NO.507 TO 566 /BANG/2020 6. IN GROUND OF APPEAL 7, THE APPELLANT HAS SUBMITTED THAT THE AO HAS RAISED DEMAND U/S 201(1) AND U/S 201(1A) FOR NON DEDUCTION OF TAX IN RESPECT OF PAYMENT TO M/S CHINN U GRAPHICS. THE APPELLANT HAS SUBMITTED THAT THE SAID PARTY HAS ASSURED TO FILE CERTIFICATE FROM CHARTED ACCOUNTANT TO CONFIRM THAT THE AMOUNT RECEIVED FROM LIC IS INCLUDED IN CO MPUTATION INCOME AND HAS REQUESTED THE CIT(A) TO CONSIDER THE CERTIFICATE. IF PRODUCED WITHIN A. WEEK. HOWEVER, IT IS OBSERVED THAT NO SUCH CERTIFICATE HAS BEEN FILED BY THE APPELLANT. 7.1 RULE 31 ACB OF IT RULES PROVIDE THAT THE CERTIF ICATE FROM AN ACCOUNTANT IN FORM 26 SHALL BE FURNISHED TO THE DGIT (SYSTEMS) OR THE PERSON AUTHORIZED BY THE DGIT(SYSTEMS) IN ACCORDANCE WITH PROCEDURE, FORMAT AND STANDARDS SPE CIFIED UNDER SUB RULE 2. FORM NO. 26A IS REQUIRED, TO BE FURNISHED BY THE PERSON RESPONSIBLE FOR MAKING PAYMENT WITHOU T TDS. THE PERSON IS ALSO REQUIRED TO FURNISH THE DETAILS OF INTEREST PAYMENT FOR NON DEDUCTION/ SHORT DEDUCTION OF TAX U NDER SECTION (1A) OF SECTION 201 OF THE ACT. THE CERTIFI CATE FROM THE ACCOUNTANT IS TO BE FURNISHED AS ANNEXURE A TO FORM NO 26A. SINCE THE APPELLANT HAS NOT FURNISHED THIS CERTIFIC ATE, THE CONTENTION IS FOUND TO BE DEVOID OF ANY BASIS. THE GROUND OF APPEAL IS DISMISSED. 8. AS REGARDS PAYMENT TO KULKARNI SERVICES, THE-APP ELLANT HAS CONTENDED THAT PAYMENT WAS IN THE NATURE OF REN T FOR HIRING MACHINERY (GENERATOR) AND NOT CONTRACT PAYME NT U/S 194C AS HELD BY THE AO. HOWEVER NO SUPPORTING EVIDE NCE HAS BEEN BROUGHT ON RECORD BY THE APPELLANT TO SUBSTANT IATE ITS CLAIM. THEREFORE IN ABSENCE OF ANY EVIDENCE THE CON TENTION OF THE APPELLANT CANNOT BE ACCEPTED. IN THE RESULT, THE APPEALS OF THE APPELLANT FOR YS. 2011-12 TO 2016-17, ARE DISMISSED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US NOW. 4. LD.COUNSEL BEFORE US FILED SUMMARY OF GROUNDS PERTAINING TO THE YEARS UNDER CONSIDERATION AT PAGE 7-15 OF THE PAPER BOOK AS UNDER: PAGE 11 OF 74 ITA NO.507 TO 566 /BANG/2020 PAGE 12 OF 74 ITA NO.507 TO 566 /BANG/2020 THE IMPUGNED ORDER PASSED UNDER SECTION 201 IS BARRED BY THE LIMITATION. 2011-12 4 4 4 4 4 2012-13 4 4 4 4 4 2013-14 4 4 4 4 4 2014-15 4 4 4 4 4 2015-16 4 4 4 4 4 2016-17 NA NA NA NA NA THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN PASSING THE ORDER UNDER SECTION 201(1)/201(1A) WITHOUT GIVING A SUFFICIENT OPPORTUNITY OF BEING HEARD TO PRODUCE REQUISITE DOCUMENTS. 2011-12 5 5 5 5 5 2012-13 5 5 5 5 5 2013-14 5 5 5 5 5 2014-15 5 5 5 5 5 2015-16 5 5 5 5 5 2016-17 4 4 4 4 4 - - - - - - AS REGARDS TDS ON CASH MEDICAL BENEFIT - - - - - - THE LOWER AUTHORITIES HAVE ERRED IN TREATING THE APPELLANT AS 'ASSESSEE-INDEFAULT' UNDER SECTION 201(1) OF THE IT ACT BY HOLDING THAT THE APPELLANT HAS FAILED TO DEDUCT TAX UNDER SECTION 192 OF THE IT ACT WITH RESPECT TO MEDICAL REIMBURSEMENT PROVIDED TO THE EMPLOYEES. 2011-12 6.1 6.1 6.1 6.1 6.1 2012-13 6.1 6.1 6.1 6.1 6.1 2013-14 6.1 6.1 6.1 6.1 6.1 2014-15 6.1 6.1 6.1 6.1 6.1 2015-16 6.1 6.1 6.1 6.1 2016-17 5.1 5.1 5.1 5.1 5.1 PAGE 13 OF 74 ITA NO.507 TO 566 /BANG/2020 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT MEDICAL REIMBURSEMENT IS NOT A 'PERQUISITE' UNDER SECTION 17(2) OF THE IT ACT READ WITH RULE 3 OF THE IT RULES AND HENCE NOT CHARGEABLE TO TAX AT ALL . 2011-12 6.2 6.2 6.2 6.2 6.2 2012-13 6.2 6.2 6.2 6.2 6.2 2013-14 6.2 6.2 6.2 6.2 6.2 2014-15 6.2 6.2 6.2 6.2 6.2 2015-16 6.2 6.2 6.2 6.2 6.2 2016-17 5.2 5.2 5.2 5.2 5.2 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT SUM PAID TO ITS EMPLOYEES, NOT EXCEEDING RS. 15,000, IN RESPECT OF EXPENDITURE ON MEDICAL TREATMENT IS NOT A 'PERQUISITE' UNDER CLAUSE (V) OF THE PROVISO TO SECTION 17 (2) OF THE IT ACT. 2011-12 6.3 6.3 6.3 6.3 6.3 2012-13 6.3 6.3 6.3 6.3 6.3 2013-14 6.3 6.3 6.3 6.3 6.3 2014-15 6.3 6.3 6.3 6.3 6.3 2015-16 6.3 6.3 6.3 6.3 6.3 2016-17 5.3 5.3 5.3 5.3 5.3 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE APPELLANT HAS NOT BEEN DEDUCTING TAX AT SOURCE UNDER SECTION 192 ON MEDICAL REIMBURSEMENTS RELYING ON THE CBDT'S LETTER DATED 20.05.2002. 2011-12 6.4 6.4 6.4 6.4 6.4 2012-13 6.4 6.4 6.4 6.4 6.4 2013-14 6.4 6.4 6.4 6.4 6.4 2014-15 6.4 6.4 6.4 6.4 6.4 2015-16 6.4 6.4 6.4 6.4 6.4 2016-17 5.4 5.4 5.4 5.4 5.4 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT IN THE IMPUGNED FINANCIAL YEAR, THE 2011-12 6.5 6.5 6.5 6.5 6.5 2012-13 6.5 6.5 6.5 6.5 6.5 PAGE 14 OF 74 ITA NO.507 TO 566 /BANG/2020 APPELLANT WAS NOT OBLIGED TO OBTAIN EVIDENCE OR PROOF OF MEDICAL EXPENDITURE FROM THE EMPLOYEES SINCE SECTION 192(2D) WHICH WAS INSERTED BY THE FINANCE ACT, 2015 WAS APPLICABLE WITH EFFECT FROM AY 2015-16 AND EVEN OTHEMVISE SECTION 192(2D) READ WITH RULE 26C IS NOT APPLICABLE TO REIMBURSEMENT OF MEDICAL EXPENSES. 2013-14 6.5 6.5 6.5 6.5 6.5 2014-15 6.5 6.5 6.5 6.5 6.5 2015-16 6.5 6.5 6.5 6.5 6.5 2016-17 5.5 5.5 5.5 5.5 5.5 THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN REJECTING THE CONTENTION OF THE APPELLANT ON SURMISES AND CONJECTURES AND ON MISTAKEN FACT THAT THE APPELLANT DISCONTINUED ITS PRACTICE IN FY 2009-10 2011-12 6.6 6.6 6.6 6.6 6.6 2012-13 6.6 6.6 6.6 6.6 6.6 2013-14 6.6 6.6 6.6 6.6 6.6 2014-15 6.6 6.6 6.6 6.6 6.6 2015-16 6.6 6.6 6.6 6.6 6.6 2016-17 5.6 5.6 5.6 5.6 5.6 WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE APPELLANT HAS NOT DEDUCTED TDS ON THE MEDICAL REIMBURSEMENT BASED ON THE SIGNED DECLARATIONS BY THE EMPLOYEES. 2011-12 6.7 6.7 6.7 6.7 6.7 2012-13 6.7 6.7 6.7 6.7 6.7 2013-14 6.7 6.7 6.7 6.7 6.7 2014-15 6.7 6.7 6.7 6.7 6.7 2015-16 6.7 6.7 6.7 6.7 6.7 2016-17 5.7 5.7 5.7 5.7 5.7 THE LOWER AUTHORITIES HAVE GROSSLY ERRED IN CHARGING ENTIRE OF AMOUNT MEDICAL REIMBURSEMENT 2011-12 6.8 6.8 6.8 6.8 6.8 2012-13 6.8 6.8 6.8 6.8 6.8 PAGE 15 OF 74 ITA NO.507 TO 566 /BANG/2020 WITHOUT PREJUDICE TO THE ABOVE, THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT NO ORDER U/ S 201 (1) / 201(1A) OF THE IT ACT CAN BE PASSED AGAINST THE APPELLANT SINCE THE EMPLOYEES HAVE FILED 2011-12 6.11 6.11 6.11 6.11 6.11 2012-13 6.11 6.11 6.11 6.11 6.11 2013-14 6.11 6.11 6.11 6.11 6.11 2014-15 6.11 6.11 6.11 6.11 6.11 2015-16 6.11 6.11 6.11 6.11 6.11 PAID BY THE APPELLANT TO ITS EMPLOYEES UNDER THE HEAD SALARY AND TREATING THE APPELLANT AS 'ASSESSEE-IN-DEFAULT' UNDER SECTION 201(1) OF THE IT ACT WITHOUT EVEN ASCERTAINING THE EXPENDITURE ACTUALLY INCURRED BY THEM ON THE MEDICAL TREATMENT OF THE EMPLOYEE AND THEIR FAMILY MEMBERS. 2013-14 6.8 6.8 6.8 6.8 6.8 2014-15 6.8 6.8 6.8 6.8 6.8 2015-16 6.8 6.8 6.8 6.8 6.8 2016-17 5.8 5.8 5.8 5.8 5.8 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (APPEALS) HAS FAILED TO APPRECIATE THAT NO TAX CAN BE RECOVERED FROM THE EMPLOYER ON ACCOUNT OF SHORT DEDUCTION OF TAX AT SOURCE UNDER SECTION 192 IF A BONA FIDE ESTIMATE OF SALARY TAXABLE IN THE HANDS OF THE EMPLOYEE IS MADE BY THE EMPLOYER . 2011-12 6.9 6.9 6.9 6.9 6.9 2012-13 6.9 6.9 6.9 6.9 6.9 _ 2013-14 6.9 6.9 6.9 6.9 6.9 2014-15 6.9 6.9 6.9 6.9 6.9 2015-16 6.9 6.9 6.9 6.9 6.9 2016-17 5.9 5.9 5.9 5.9 5.9 THE LEARNED CIT (APPEALS) HAS FAILED TO APPRECIATE THAT WHEN THE APPELLANT TOOK A PLAUSIBLE LEGAL STAND ON EXEMPTION OF MEDICAL REIMBURSEMENT, IT SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT. 2011-12 6.10 6.10 6.10 6.10 6.10 2012-13 6.10 6.10 6.10 6.10 6.10 2013-14 6.10 6.10 6.10 6.10 6.10 2014-15 6.10 6.10 6.10 6.10 6.10 2015-16 6.10 6.10 6.10 6.10 6.10 2016-17 5.10 5.10 5.10 5.10 5.10 PAGE 16 OF 74 ITA NO.507 TO 566 /BANG/2020 THEIR RESPECTIVE RETURNS OF INCOME REFLECTING THEIR INCOMES UNDER THE HEAD 'SALARIES'. 2016-17 5.11 5.11 5.11 5.11 5.11 AS REGARDS TDS ON PAYMENT TO CHINNU GRAPHICS WITH RESPECT TO PRINTING WORKS THE LOWER AUTHORITIES HAVE ERRED IN TREATING THE APPELLANT AS 'ASSESSEE- INDEFAULT' UNDER SECTION 201(1) OF THE IT ACT BY HOLDING THAT THE APPELLANT HAS FAILED TO DEDUCT TAX UNDER SECTION 194C OF THE IT ACT WITH RESPECT TO PRINTING WORKS 2011-12 7.1 NA 7.1 NA NA 2012-13 7.1 NA NA 7.1 2013-14 7.1 NA 7.1 NA NA 2014-15 7.1 NA 7.1 NA 7.1 2015-16 7.1 NA 7.1 NA 7.1 2016-17 6.1 NA 6.1 NA 6.1 THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT NO ORDER U/S 201(1) / 201(1A) OF THE IT ACT CAN BE PASSED AGAINST THE APPELLANT SINCE THE PAYEE HAS FILED THE RETURN OF INCOME AND OFFERED THE SAME TO TAX. 2011-12 7.2 NA 7.2 NA NA 2012-13 7.2 NA NA NA 7.2 2013-14 7.2 NA 7.2 NA NA 2014-15 7.2 NA 7.2 NA 7.2 2015-16 7.2 NA 7.2 NA 7.2 2016-17 6.2 NA 6.2 NA 6.2 THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN FAILING TO SEEK INFORMATION WITH RESPECT TO RETURN FILED BY THE PARTY BY EXERCISING POWERS UNDER SECTION 133(6) OF THE IT ACT BEFORE TREATING THE APPELLANT AS ASSESSEE-IN-DEFAULT UNDER SECTION 201(1) OF THE IT ACT 2011-12 7.3 NA 7.3 NA NA 2012-13 7.3 NA NA NA 7.3 2013-14 7.3 NA 7.3 NA NA 2014-15 7.3 NA NA NA NA 2015-16 6.3 NA 6.3 NA 6.3 PAGE 17 OF 74 ITA NO.507 TO 566 /BANG/2020 AS REGARDS TDS ON PAYMENTS TO KULKARNI SERVICES WITH RESPECT TO RENTING OF GENERATORS THE LOWER AUTHORITIES HAVE TREATED APPELLANT AS ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE IT ACT BY HOLDING THAT THE APPELLANT HAS FAILED TO DEDUCT TAX UNDER SECTION 194C OF THE IT ACT WITH RESPECT TO RENTING OF GENERATORS. 2011-12 8.1 NA NA NA NA 2012 - 13 8.1 NA NA NA NA 2013 - 14 8.1 NA NA NA NA 2014 - 15 8.1 NA NA NA NA 2015-16 8.1 NA NA NA NA 2016-17 7.1 NA NA NA NA PAGE 18 OF 74 ITA NO.507 TO 566 /BANG/2020 THE LEARNED CIT (APPEALS) 2011-12 NA NA NA NA NA THE LOWER AUTHORITIES HAVE ERRED IN TREATING THE PAYMENT OF RENT TOWARDS HIRING OF GENERATORS AS PAYMENT TO CONTRACTORS UNDER SECTION 194C WHEN THE SAME IS IN THE NATURE OF RENTING OF MACHINE/PLAT/EQUIPMENT UNDER SECTION 194 I AND THE APPELLANT IS NOT ABLE TO DEDUCT TAX ON THE PAYMENT OF RENT TOWARDS GENERATORS UNDER SECTION 1941 SINCE THE AMOUNT PAID TO THE PAYEE DOES NOT EXCEED THE THRESHOLD LIMIT PRESCRIBED. 2011-12 8.2. NA NA NA NA 2012-13 8.2. NA NA NA NA 2013-14 8.2. NA NA NA NA 2014-15 8.2. NA NA NA NA 2015-16 8.2. NA NA NA NA 2016-17 8.2. NA NA NA NA 2011-12 7.2. NA NA NA NA AS REGARDS TDS ON LOWER RATE ON PAYMENT TO SODEXO SVC INDIA PVT. LTD. THE LOWER AUTHORITIES HAVE ERRED IN TREATING THE APPELLANT AS 'ASSESSEE-INDEFAULT' UNDER SECTION 201(1) OF THE IT ACT BY HOLDING THAT THE APPELLANT HAS DEDUCTED TAX AT SOURCE AT A LOWER RATE WITH RESPECT TO PAYMENT TO SODEXO SVC INDIA PVT. LTD. 2011-12 NA NA NA NA NA 2012-13 NA NA 7.1 NA NA 2013-14 NA NA NA NA NA 2014-15 NA NA 8.1 NA 8.1 2015-16 NA NA NA NA NA 2016-17 NA NA 7.1 NA 7.1 THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE APPELLANT HAS DEDUCTED THE TAX AT SOURCE AT THE RATES SPECIFIED IN THE CERTIFICATE ISSUED UNDER SECTION 197 OF IT ACT 2011-12 NA NA NA NA NA 2012-13 NA NA 7.2 NA NA 2013-14 NA NA NA NA NA 2014-15 NA NA 8.2 NA NA 2015-16 NA NA NA NA NA 2016-17 NA NA 7.1 NA NA PAGE 19 OF 74 ITA NO.507 TO 566 /BANG/2020 HAS FAILED TO APPRECIATE THAT NO ORDER U/ S 201 (1)/201(1A) OF THE IT ACT CAN BE PASSED AGAINST THE APPELLANT SINCE THE PAYEE HAS FILED THE RETURN OF INCOME AND OFFERED THE SAME TO TAX. 2012-13 NA NA 7.3 NA NA 2013-14 NA NA NA NA NA 2014-15 NA NA 8.3 NA 8.3 2015-16 NA NA NA NA NA 2016-17 NA NA 7.3 NA 7.3 THE LEARNED CIT (APPEALS) IS NOT JUSTIFIED IN FAILING TO SEEK INFORMATION WITH RESPECT TO CERTIFICATE UNDER SECTION 197 OBTAINED BY SODEXO SVC INDIA PVT. LTD BY EXERCISING POWERS UNDER SECTION 133 (6) OF THE IT ACT BEFORE TREATING THE APPELLANT AS ASSESSEE- INDEFAULT' UNDER SECTION 201 (1) OF THE IT ACT. 2011-12 NA NA NA NA NA 2012-13 NA NA 7.4 NA NA 2013-14 NA NA NA NA NA 2014-15 NA NA 8.4 NA 8.4 2015-16 NA NA NA NA NA 2016-17 NA NA 7.4 NA 7.4 4.1. REFERRING TO THE ABOVE TABLE, LD.COUNSEL SUBMITTED THAT GROUND NO.1 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 4.2. LD.COUNSEL FURTHER SUBMITTED THAT PAYMENTS MADE TO CHINNU GRAPHICS IN THEERATHAHALLI BRANCH, CHITRADUR GA BRANCH AND DAVANGERE BRANCH ARE NOT PRESSED. ACCORDINGLY, FOLLOWING GROUNDS THAT ARE NOT PRESSED : GROUND NO. 3, 5, 6.3 (FOR ASSESSMENT YEARS 2011-12 TO 2015-16) AND GROUND NO.5.3 (ASSESSMENT YEAR 2016-17); GROUND NO. 6.8 (FOR ASSESSMENT YEAR 2011-12 TO 2015-16) AND GROUND NO. 5.8 (FOR ASSESSMENT YEAR 2016-17); GROUND PAGE 20 OF 74 ITA NO.507 TO 566 /BANG/2020 NO. 6.11 FOR ASSESSMENT YEAR 2011-12 TO 2015-16) AND GROUND NO. 5.11 (FOR ASSESSMENT YEAR 2016-17); GROUND NO. 7.1 (FOR ASSESSMENT YEARS 2011-12 TO 2015-16 PERTAINING TO THEERATHAHALLI, CHITRADURGA AND DAVEN GERE) AND GROUND NO.6.1 (FOR ASSESSMENT YEAR 2016-17 PERTAINING TO THEERATHAHALLI, CHITRADURGA AND DAVENGERE); GROUND NO. 7.2 (FOR ASSESSMENT YEARS 2011-12 TO 2015-16 PERTAINING TO THEERATHAHALLI, CHITRADURGA AND DAVENGERE) AND GROUND NO.6.2 (FOR ASSESSMENT YEAR 2016-17 PERTAINING TO THEERATHAHALLI, CHITRADURGA AND DAVENGERE); GROUND NO.8.1 (FOR ASSESSMENT YEARS 2011-12 TO 2015-16 PERTAINING TO THEERATHAHALLI, CHITRADURGA AND DAVEN GERE) AND GROUND NO.7.1 (FOR ASSESSMENT YEAR 2016-17 PERTAINING TO THEERATHAHALLI); GROUND NO. 8.2 (FOR ASSESSMENT YEARS 2011-12 TO 2015-16 PERTAINING TO THEERATHAHALLI, CHITRADURGA AND DAVEN GERE) AND GROUND NO.7.2 (FOR ASSESSMENT YEAR 2016-17 PERTAINING TO THEERATHAHALLI) FURTHER, LD.COUNSEL SUBMITTED THAT GROUND NO.7.1-7.2 FOR ASSESSMENT YEAR 2012-13 PERTAINING TO CHITRADURGA A LSO IS NOT PRESSED. 4.3. LD.COUNSEL IN GROUND NO.2 , IN RESPECT OF ALL BRANCHES, CHALLENGES VALIDITY OF NOTICE BY ALLEGING THAT, IMP UGNED NOTICES HAVE BEEN ISSUED BY NON JURISDICTIONAL OFFI CER AND THEREFORE ARE BAD IN LAW AND WITHOUT ANY JURISDICTI ON. PAGE 21 OF 74 ITA NO.507 TO 566 /BANG/2020 4.4. IN GROUND NO.4 , FOR ASSESSMENT YEARS 2011-12 TO 2015-16, FOR ALL BRANCHES, IT IS ALLEGED THAT, THE ORDERS PASSED BY LD.AO UNDER SECTION 201 OF THE ACT IS BAR RED BY LIMITATION. 4.5. ON MERITS, ONLY ISSUE THAT REMAINS TO BE ADJUDICATE D IS IN RESPECT OF FOLLOWING PAYMENTS FOR SHORT DEDUCTIO N OF TDS, AND THAT ASSESSEE SHOULD NOT BE TREATED AS, ASSESS EE IN DEFAULT: 1. CASH MEDICAL BENEFIT TO ITS EMPLOYEES 2. SODEXO SVC INDIA PVT.LTD, 4.6. THUS FOLLOWING ISSUES ARISES FOR OUR CONSIDERAT ION: 4.6.1. ISSUE I: LD.COUNSEL SUBMITTED THAT, NOTICE ISSUED AND THE IM PUGNED ORDER PASSED ARE BAD AND WITHOUT JURISDICTION. LD.COUNSEL SUBMITTED THAT VIDE NOTIFICATION NO. F N O. 74/JURDN/CIT(TDS)/BANG/2014-15 DATED 15/11/2014, ADDITIONAL CIT/JCIT, (TDS) HUBLI, HAS JURISDICTION OVER HAVERI, SHIMOGA, DAVANGERE AND CHITRADURGA DISTRICT S. IT HAS BEEN SUBMITTED THAT ALL IMPUGNED ORDERS PASSESV UNDER SECTION 201(1) AND 201(1A) OF THE ACT, HAS BEEN PAS SED BY ITO,(TDS) WARD, DAVANGERE. HE SUBMITTED THAT, THERE IS NO COMMUNICATION REGARDING TRANSFER OF JURISDICTION, P LACED ON RECORD IN SUPPORT OF THE CONTENTION BY REVENUE. PAGE 22 OF 74 ITA NO.507 TO 566 /BANG/2020 4.6.2. ISSUE II: IMPUGNED ORDERS PASSED UNDER SECTION 201(1) AND 201 (1A) OF THE ACT FOR ASSESSMENT YEARS UNDER CONSIDERATION ARE BARRED BY LIMITATION. LD.COUNSEL THAT IMPUGNED ORDERS PASSED BY LD.AO UND ER SECTION 201 FOR ASSESSMENT YEARS 2011-12 TO 2015-16 , IT HAS BEEN SUBMITTED THAT THE SAME IS BARRED BY LIMIT ATION FOR FOLLOWING REASONS: LD.COUNSEL SUBMITTED THAT TIME LIMIT TO PASS ORDER UNDER THE LAW THAT PREVAILED DURING THE RELEVANT PE RIOD WAS 2 YEARS FROM THE END OF THE FINANCIAL ARRANGEME NTS THE STATEMENT UNDER SECTION 200 WAS FILED. HE SUBMITTED THAT THE ORDERS WITH RESPECT TO FINANCIAL YEAR 10-11 (ASSESSMENT YEAR 2011-12) AND Q1 TO Q3 FINANCIAL YEAR 2011-12 (ASSESSMENT YEAR 2012-13) IS BARRED BY LIMITATION UNDER UNAMENDED SECTION AND TH E SAME CANNOT BE REVIVED. LD.COUNSEL FURTHER SUBMITTED THAT AS CLAUSE(3) TO SECTION 201 CAME INTO EFFECT FROM 01/10/2014, IT IS NOT APPLICABLE FOR FINANCIAL YEAR 2012-13 AND 2013-14, RELEVANT TO ASSESSMENT YEAR 2013-14 AND 2014-15. LD.COUNSEL SUBMITTED THAT AMENDED TIME LIMIT IS NOT APPLICABLE TO FINANCIAL YEAR 2014-15, RELEVANT TO ASSESSMENT YEAR 2015-16, SINCE THE FINANCIAL YEAR COMMENCED BY THE TIME THE AMENDMENT CAME INTO PAGE 23 OF 74 ITA NO.507 TO 566 /BANG/2020 EFFECT ON 01/10/2014, BY WAY OF FINANCE (NO.2) ACT, 2014. LD.COUNSEL PLACED RELIANCE ON WRITTEN SUBMISSIONS O N BOTH THE ISSUE AT PAGE 16-67 OF PAPER BOOK. 4.6.3. ISSUE III& IV: ASSESSEE HAS BEEN TREATED TO BE, ASSESSEE IN DEFAUL T FOR SHORT DEDUCTION OF TDS ON PAYMENTS MADE TO EMPLOYEE S TOWADS CASH MEDICAL BENEFITS AND PAYMENTS MADE TO SODEXO SVC LTD. 4.7. CASH MEDICAL BENEFITS TO EMPLOYEES: ON MERITS, LD.COUNSEL REBUTTED OBJECTIONS OF AUTHOR ITES BELOW BY FOLLOWING SUBMISSIONS: OBSERVATIONS BY LD. AO/LD. CIT (A) IN IMPUGNED ORDERS REBUTTALS WAGE REVISION HAS HAPPENED IN THE ORGANISATION OF ASSESSEE AND LETTER FILED BY ASSESSEE BEFORE CBDT IS DATED 28/08/2001. IT HAS BEEN SUBMITTED THAT THERE HAS NOT BEEN ANY CHANGE IN LAW OR FACT SINCE 29/08/2001. AND THERE IS NO MATERIAL DIFFERENCE BECAUSE OF THE WAGE REVISION. CBDT LETTER DATED 20/05/2002 SUGGESTS EXEMPTION UNDER SECTION 17 (2), WHEREAS EMPLOYEES IT HAS BEEN SUBMITTED THAT AS LONG AS THE LETTER PERMITS EXEMPTION UNDER SECTION 17 (2) THE MANNER IN WHICH PAGE 24 OF 74 ITA NO.507 TO 566 /BANG/2020 CLAIMED THE EXEMPTION UNDER SECTION 10, WHICH IS NOT ALLOWABLE FOR THE REASONS SPECIFIED IN PARA 3, 4, 5 OF ASSESSMENT ORDER. EXEMPTION HAS BEEN CLAIMED BY THE EMPLOYEES UNDER WRONG HEAD DOES NOT MATTER. IN GRANTING EXEMPTION UNDER SECTION 17 (2), THERE IS NO SPECIFIC INSTRUCTION FOR THE PERIOD FOR WHICH THE BOARD HAS ACCEPTED THE REQUEST AND ALLOWED THE EXEMPTION SOUGHT BY ASSESSEE. THE VERY FACT THAT CBDT DID NOT SPECIFY THE PERIOD INDICATES THAT THE LETTER IS OPEN-ENDED AND AUTHORITIES BELOW CANNOT DECIDE TO APPLY IT OR IGNORE IT FOR ANY PARTICULAR YEAR AT HIS IPSE DIXIT. EVEN IF THE LETTER IS ACCEPTABLE THE SAME CAN BE ACCEPTED FOR THE RELEVANT YEAR FOR WHICH THEY HAVE APPLIED FOR BASED ON WAGE REVISION DURING THAT PERIOD AND NOT FOR INDEFINITE PERIOD FOR THE AMOUNTS OF CMB. IT HAS BEEN SUBMITTED THAT THE ASSUMPTION THAT APPLICATION DATED 29/08/2001 WAS BASED ON WAGE REVISION IS NOT CORRECT. LETTER FILED BY ASSESSEE DATED 29/08/2001 CLEARLY STATES THAT UNTIL THE PREVIOUS YEAR RELEVANT TO FINANCIAL YEAR 2001-02, CLASS I OFFICERS WERE ELIGIBLE FOR MEDICAL BENEFIT AS PER PAGE 25 OF 74 ITA NO.507 TO 566 /BANG/2020 THE REIMBURSEMENT OF MEDICAL EXPENSES SCHEME 1980. AND THAT, DURING THE RELEVANT FINANCIAL YEAR BEING 2001-02, THE WAGE AGREEMENT WAS REPLACED BY CASH MEDICAL BENEFIT AT THE RATES SPECIFIED. AUTHORITIES BELOW NOTICE THAT EXEMPTION WAS NOT CLAIMED BY ASSESSEE DURING FINANCIAL YEAR 2009-10. AUTHORITIES BELOW THUS OBSERVED THAT EITHER EMPLOYEES HAVE NOT CLAIMED THE EXEMPTION DURING THE YEAR OR THEY HAVE NOT RECEIVED THE CMB FOR THE PERIOD. IT SHOWS THAT LIC ITSELF DISCONTINUED THE PRACTICE AT SOME POINT OF TIME. IT HAS BEEN SUBMITTED THAT SUCH OBSERVATION IS FACTUALLY INCORRECT AND IS BASED ON SURMISES AND CONJUNCTURES. LD. COUNSEL RELIED ON FORM 16 ISSUED TO ITS EMPLOYEES FOR FINANCIAL YEAR 2009-10 WHICH IS PLACED AT PAGE 223 OF PAPER BOOK FILED BEFORE US. MEDICAL ALLOWANCE IS A FIXED COMPONENT THAT EMPLOYEE RECEIVES AS PART OF SALARY, IT HAS BEEN SUBMITTED THAT APPLICATION OF ASSESSEE BEFORE CBDT DATED PAGE 26 OF 74 ITA NO.507 TO 566 /BANG/2020 THAT IS TAXABLE AS SALARY INCOME. NO BILLS ARE REQUIRED TO BE SUBMITTED FOR TAKING THIS ALLOWANCE THAT IS WHAT HAPPENED IN THE INSTANT CASE. 29/08/2001 AND SUBSEQUENT APPROVAL BY CBDT DATED 20/05/2002 CLEARLY STATES THAT WHAT WAS GIVEN WAS A FIXED MEDICAL ALLOWANCE. THE CBDT APPROVAL ALSO HAS BEEN ISSUED WITH THE UNDERSTANDING THAT THE ALLOWANCE RECEIVED BY EMPLOYEES ARE IN THE NATURE OF FIXED MEDICAL ALLOWANCE. APPROVAL OF CBDT ONLY REQUIRES ASSESSEE TO BE SATISFIED ABOUT THE CLAIM WHICH THE ASSESSEE DULY COMPLIED BY OBTAINING DECLARATIONS FROM ITS EMPLOYEES. IT HAS BEEN SUBMITTED THAT THE DECLARATIONS OF THE EMPLOYEES SUBMITTED BEFORE AUTHORITIES BELOW HAVE NOT BEEN DOUBTED. ASSESSEE HAS NOT PRODUCED THERE IS NO REQUIREMENT O F PAGE 27 OF 74 ITA NO.507 TO 566 /BANG/2020 ANY RENEWAL LETTER OF THE EXEMPTION FOR RELEVANT PERIOD FOR WHICH THE PROCEEDINGS WERE PENDING BEFORE THE AUTHORITIES BELOW. ANNUAL RENEWAL. THIS IS CLEAR FROM RECEIPT IN PRACTICE WHICH IS EVIDENT FROM APPROVALS DATED 02/01/1991, 17/03/1994 AND 25/05/2002 AS OBSERVED BY LD.CIT(A) IN HIS ORDER. LIC IS NOT FURNISH ANY PROOF IN SUPPORT OF ITS CLAIM THAT AMOUNTS ARE ACTUALLY SPENT FOR MEDICAL TREATMENT OF ITS EMPLOYEES. IT HAS BEEN SUBMITTED THAT THE VERY REASON FOR MAKING APPLICATION DATED 29/08/2001 BEFORE CBDT WAS DUE TO ADMINISTRATIVE DIFFICULTIES FACED BY ASSESSEE IN GETTING PROOF IN SUPPORT OF ITS CLAIM OF MEDICAL EXPENDITURE. THE LETTER CLEARLY EXPRESSES THE WORK INVOLVED IN PROCESSING AND MAKING PAYMENT OF MEDICAL BILLS WHICH IS AN ONEROUS EXERCISE FOR DISBURSING THE SMALL AMOUNTS FOR PURPOSE OF ALLOWING THE SAME AS NON- PAGE 28 OF 74 ITA NO.507 TO 566 /BANG/2020 TAXABLE PERQUISITE UNDER SECTION 17 (2) OF THE ACT. CONSIDERING THE SIZE OF EMPLOYEE STRENGTH IN THE ORGANISATION ASSESSEE PHASED ADMINISTRATIVE DIFFICULTY IN VERIFYING INDIVIDUAL CLAIMS WITH BILLS AND EVIDENCES. THIS WAS THE SOLE REASON FOR ITS APPLICATION AND THE SUBSEQUENT APPROVAL RECEIVED FROM CBDT. IT IS ALSO BEEN STATED THAT THE CONDITION PRECEDED AND REGARDING SCIENTIFIC FACTION WITH THE CLAIM OF MEDICAL EXPENDITURE WAS COMPLIED WITH BY ASSESSEE ON TEST CHECKS AND OBTAINING DECLARATIONS FROM ALL CLAIMANTS. 4.7.1. LD.COUNSEL THUS SUBMITTED THAT, ASSESSEE CANNOT BE TREATED TO BE ASSESSEE IN DEFAULT FOR FOLLOWING R EASONS: PAGE 29 OF 74 ITA NO.507 TO 566 /BANG/2020 IT HAS BEEN SUBMITTED THAT CBDT VIDE LETTER DATED 21/01/1991, 17/03/1994, 06/02/2002 AND 20/05/2002 EXTENDED THE EXEMPTION TO ASSESSEE. THAT THE ASSESSEE FOR YEARS UNDER CONSIDERATION DID NOT DEDUCT TDS ON MEDICAL REIMBURSEMENTS RELYING ON THE CBDT LETTER DATED 20/05/2002; THAT ASSESSEE HAS MADE BONA FIDE ESTIMATE OF SALARY AND HAS TOOK A POSSIBLE VIEW ON EXEMPTION OF MEDICA L REIMBURSEMENT BASED ON DECLARATION FILED BY THE EMPLOYEES. RELIANCE IS ALSO BEEN PLACED ON CIRCULAR 15 DATED 08/05/1969 ISSUED BY CBDT FOR PURPOSES OF CALCULATION OF TAX DEDUCTIBLE AT SOURCE UNDER SECTI ON 192 BASED ON SELF CERTIFICATION ON THE PART OF EMPL OYEE. THAT ASSESSEE IS NOT OBLIGED TO OBTAIN EVIDENCE OR PROOF OF MEDICAL EXPENDITURE FROM ITS EMPLOYEES, AS PER T HE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS ITI LTD REPORTED IN (2009) 183 TAXMANN 219 AND CIT VS LARSEN AND TOUBRO LTD REPORTED IN (2009) 313 ITR 1. IT IS ALSO SUBMITTED THAT, EVEN AFTER INSERTION OF CLAUSE (2D) TO SECTION 192, ASSESSEE IS NOT OBLIGED TO DED UCT TDS AS RULE 26C DOES NOT INCLUDE MEDICAL REIMBURSEMENT. THAT ASSESSEE DID NOT DEDUCT TDS ON MEDICAL REIMBURSEMENTS BASED ON THE DECLARATION OBTAINED PAGE 30 OF 74 ITA NO.507 TO 566 /BANG/2020 FROM THE EMPLOYEES. HE PLACED RELIANCE ON FOLLOWING DECISION IN SUPPORT OF THIS CONTENTION: CIT VS ASEA BROWN BOWERI LTD, IN ITA NO. 263/2002 (KARNATAKA HIGH COURT). SLP BY REVENUE WAS DISMISSED IN SLP (C ) NO. 24259 OF 2004, REPORTED IN (STATUTES) 2005 VOLUME 277 OF INCOME TAX REPORTS PAGE 2. CIT VS LARSEN AND TOUBRO LTD REPORTED IN (2009) 313 ITR 1 (SC); STATE BANK OF INDIA VS ADDL, CIT REPORTED IN 2020-TIOL-871-ITAT-BANG HONBLE GUJARAT HIGH COURT IN CASE OF CIT VS OIL AND NATURAL GAS CORPORATION LTD., REPORTED IN 2020-TIOL-954-HC-AHM-IT KS CHOWDHRI AND OTHERS VS LIC OF INDIA REPORTED IN (2018) 409 ITR 258 (DELHI) ACIT VS INFOSYS BPO LTD REPORTED IN (2013) 37 TAXMANN.COM 53 , ACIT (TDS) VS ORACLE INDIA LTD REPORTED IN (2013) 37TAXMANN.COM327 , KARNATAKA POWER TRANSMISSION CORPORATION LTD VS ITO (TDS) REPORTED IN (2019) 102 TAXMANN.COM 245 , AND ACIT(TDS) VS SAP LABS INDIA(P.)LTD REPORTED IN (2013) 36 TAXMANN.COM 200 PAGE 31 OF 74 ITA NO.507 TO 566 /BANG/2020 DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS SYMPHONY MARKETING SOLUTIONS INDIA PVT.LTD., REPORTED IN (2016) 388 ITR 457 HE ALSO SUBMITTED THAT ASSESSEE HAS BEEN GRANTING MEDICAL REIMBURSEMENT FROM DECADES TOGETHER, INITIALLY AS PER REIMBURSEMENT OF MEDICAL EXPENSES SCHEME 1980 WHICH WAS SUBSEQUENTLY REPLACED BY CASH MEDICAL BENEFIT AT A PARTICULAR RATES APPLICAB LE FOR CLASS I OFFICERS AND CLASS III & IV EMPLOYEES. I T HAS BEEN SUBMITTED THAT ASSESSEE HAS BEEN PAYING CASH MEDICAL BENEFITS TO ITS EMPLOYEES (CLASS III & IV) FOR OVER THREE DECADES AT VARYING RATE. 4.8. LD.COUNSEL FILED DETAILED WRITTEN SUBMISSION IN SUP PORT OF HIS CONTENTION ON ABOVE ISSUES PLACED AT PAGE 1- 174 OF PAPER BOOK. HE PLACES RELIANCE ON THE SAME. LD.COU NSEL THUS SUBMITTED THAT, ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT FOR THE REASON THAT AMENDMENT BROUGHT IN BY FINANCE ACT 2015 BY INSERTING SUB SEC TION (2D) TO SECTION 192 OF THE ACT, W.E.F. 01/06/2015, WAS NOT APPLICABLE FOR THE RELEVANT PERIOD FOR WHICH APPEAL S HAVE BEEN FILED BEFORE THIS TRIBUNAL . IT WAS REITERATED THAT ASSESSEE ESTIMATED THE SALARY OF ITS EMPLOYEES BASE D ON THE APPROVAL GRANTED BY CBDT DATED 20/05/2002. IT IS AL SO BEEN SUBMITTED THAT ASSESSEE HAS BEEN DEDUCTING TAX ON THE BASIS OF EMPLOYEES DECLARATION SINCE 1991. PAGE 32 OF 74 ITA NO.507 TO 566 /BANG/2020 4.9. IT IS FINALLY BEING SUBMITTED BY LD.COUNSEL THAT, ASSESSEE BEING A STATUTORY CORPORATION, CANNOT BE P RESUMED TO ACT MALAFIDE. IN SUPPORT HE PLACED RELIANCE ON F OLLOWING DECISIONS OF COORDINATE BENCH OF THIS TRIBUNAL : ACIT VS INFOSYS BPO LTD IS REPORTED IN (2014) 150 IT D 132 (BANG) ACIT (TDS) VS ORACLE INDIA LTD REPORTED IN (2013) 37TAXMANN.COM327, KARNATAKA POWER TRANSMISSION CORPORATION LTD VS ITO (TDS) REPORTED IN (2019) 102 TAXMANN.COM 245, AND ACIT(TDS) VS SAP LABS INDIA(P.)LTD REPORTED IN (2013 ) 36 TAXMANN.COM 200 5. ON THE CONTRARY, LD.SR.DR SUBMITTED AS UNDER: THE RESPONDENT MOST RESPECTFULLY SUBMITS AS FOLLOW S : 2. IN THIS CASE, THE ORDERS UNDER SECTION 201 (1 )/ 201(1A) OF THE L.T.ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') WERE PASSED FOR THE ASSESSMENT YEARS 2011-12 TO 2016-17. THE APPELLANT HAS RAISED THE ISSUE THAT IT IS COMBINED AND WITHOUT APPLICATION OF MIND. IN THIS REGARD, IT IS SUBMITTE D THAT THE ORDER U/S.201 OF THE ACT WAS PASSED SEPARATELY FOR EACH F INANCIAL YEAR AND THEY ARE NOT COMBINED WHEREAS THE FORMAL L ETTER U/S 129 OF THE ACT REGARDING CHANGE IN INCUMBENT OF THE OFFICE, WAS SENT COMBINED. 3. ON THE ISSUE OF LIMITATION, THE FOLLOWING POINTS ARE SUBMITTED FOR KIND CONSIDERATION OF THE HON'BLE BENCH. 'SUB SECTION 3 AND SUBSECTION 4 OF SECTION 201 OF T HE ACT WERE INSENED BY THE FINANCE ACT 2009 W.E.F.01.04.20 10. SUB SECTION 3 WAS SUBSTITUTED W.E.F 01.10.2014 WHICH RE ADS AS UNDER: NO ORDER SHALL BE MADE UNDER SUBSECTION (1) DEEMIN G A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA, AT ANY TIME AFTER THE EXPIRY OF SEVEN YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH PAYMENT IS MADE OR CREDIT IS GIVEN. PAGE 33 OF 74 ITA NO.507 TO 566 /BANG/2020 3.1. IN VIEW OF THE ABOVE, FOR THE A. Y .2010-11, T HE ORDER COULD BE PASSED BEFORE 31 03.2018. SINCE THE ORDER IS PAS SED ON 23.03 2018, THERE IS NO DELAY IN PASSING THE ORDER AS CONTENDED BY THE APPELLANT. 4. THE FOLLOWING ARE SUBMITTED IN RESPECT OF THE ME RITS OF THE CASE I.E. THE APPLICABILITY OF TDS ON CASH MEDICAL BENEFITS (CMB) PROVIDED BY THE EMPLOYER. THE CASH MEDICAL BENEFITS IS THE FIXED AMOUNT GIVEN BY THE EMPLOYER TO THE EMPLOYEE TO MEE T THE MEDICAL EXPENDITURE WHICH IS NOT EXEMPT FROM INCOME TAX U/S.10 OF THE ACT AS MENTIONED IN FORM 16 ISSUED BY THE DE DUCTOR. IT IS EXEMPT IF THE SAME IS SPENT FOR A MEDICAL TREATMENT , WHEREAS IN THIS CASE THE EMPLOYEES ARE NOT SUPPOSED TO FILE AN Y DECLARATION FOR HAVING SPENT THE CMB THE EMPLOYEES ALSO HAVE NO T DECLARED THIS AS INCOME AND PAID THE TAXES AND IT WAS CLAIME D AS EXEMPT AND THE SAME WAS OBSERVED BY THE CIT (A) IN PARA 6. 4 OF THE ORDER. 4.1 THE CMB WAS GIVEN AS A FIXED ALLOWANCE TO THE E MPLOYEES IRRESPECTIVE OF THE ACTUAL EXPENDITURE INCURRED BY THE EMPLOYEES. SO IT FORMS PART OF THE SALARY AND IT IS THE OBLIGATION OF THE EMPLOYER TO DEDUCT TDS AS PER SECTION 192(1) OF THE ACT WHICH WAS NOT DONE BY THE APPELLANT. 4.2. EVEN IN THE APPELLANTS OWN CASE, ON THE SAME I SSUE, THE HONOURBLE ITAT CUTTACK (UNREPORTED DECISION OF LIC OF INDIA ,ROURKELA VS ITO(TDS) ITA 219/CTK/2019 DATED 17.02 2020), HAS DECIDED THE ISSUE AGAINST THE ASSESSEE FOR THE REASON THAT IT IS THE FIXED PAY COMPONENT AND THERE IS NO SPECI FIC EXEMPTION GIVEN IN THE ACT IN RESPECT OF THE SAME AS THE AMOU NT IS PAID AS A COMPONENT OF THE MONTHLY PAYMENT, IT IS TO BE CON SIDERED AS THE SALARY AND THE REASONING IS THE SAME THAT THE P AYMENT SHOULD NOT PRECEDE THE ACTUAL INCURRING OF THE EXPE NDITURE AND IT SHOULD BE BY WAY OF REIMBURSEMENT. 5. HENCE, IT IS RESPECTFULLY SUBMITTED THAT THE SAM E DECISION MAY BE FOLLOWED AS THE SAME IS ON THE CONTENDED ISSUE I N THE APPELLANT'S OWN CASE. 5.1. LD.SR.DR PLACED RELIANCE ON THE DECISION OF HONBLE CUTTACK BENCH IN CASE OF BRANCH MANAGER, LIC OF INDIA VS. ITO(TDS) REPORTED IN (2020) 119 TAXMANN.CO 380 6. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. WE HAVE ALSO CON SIDERED DETAILED WRITTEN SUBMISSIONS FILED BY LD.COUNSEL AN D PAGE 34 OF 74 ITA NO.507 TO 566 /BANG/2020 LD.SR.DR ALONG WITH CATENA OF DECISIONS SUPPORTING THE PROPOSED ARGUMENTS BY RESPECTIVE REPRESENTATIVES. 6.1. ISSUE I(GROUND NO,2) WE NOTE THAT PLEA REGARDING JURISDICTION OF LD.AO, IN ISSUING NOTICE HAS NOT BEEN RAISED BEFORE LD.CIT(A). HOWEV ER, ASSESSMENT ORDER REFERS TO CHANGE IN THE INCUMBENT OFFICE U/S 129 ON 24/11/2017. FURTHER WE NOTE THAT ASSESSE E PARTICIPATED IN THE ASSESSMENT PROCEEDINGS WITHOUT RAISING ANY OBJECTION. HENCE WE ARE UNABLE TO APPRECIATE TH E SUBMISSION OF LD. COUNSEL. WE ACCORDINGLY DISMISS THIS GROUND RAISED BY ASSESS EE. 6.2. ISSUE II(GROUND NO.4): LD.COUNSEL SUBMITTED THAT, ORDERS PASSED BY LD.AO U NDER SECTION 201 OF THE ACT FOR ASSESSMENT YEARS 2011-12 TO 2015-16 IS BARRED BY LIMITATION. 6.2.1 IT HAS BEEN SUBMITTED THAT ASSESSEE FILED TDS RETUR NS FOR VARIOUS BRANCHES UNDER CONSIDERATION AS PER FOL LOWING DETAILS: THIRATHAHALLI BRANCH: ASSESSMENT YEAR 2011-12: 1 ST QUARTER ENDED ON 30 TH OF JUNE DATE OF FILING OF QUARTERLY RETURNS NOT AVAILABLE WITH ASSESSEE. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN NOT AVAILABLE WITH ASSESSEE. 3 RD QUARTER ENDED ON 31 DECEMBER, DATE OF FILING OF RE TURN NOT AVAILABLE WITH ASSESSEE. PAGE 35 OF 74 ITA NO.507 TO 566 /BANG/2020 4 TH QUARTER ENDED ON 31 MARCH AND QUARTERLY RETURN WAS FILED ON 28/06/2011. ASSESSMENT YEAR 2012-13: 1 ST QUARTER ENDED ON 30 TH OF JUNE, DATE OF FILING OF QUARTERLY RETURNS IS 26/08/2011. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN IS 09/09/2011. 3 RD QUARTER ENDED ON 31 DECEMBER, DATE OF FILING OF QU ARTERLY RETURN IS 06/02/2012. 4 TH QUARTER ENDED ON 31 MARCH AND DATE OF FILING OF QU ARTERLY RETURN IS 15/05/2012. DAVANGERE: ASSESSMENT YEAR 2011-12: 1 ST QUARTER ENDED ON 30 TH OF JUNE DATE OF FILING OF QUARTERLY RETURNS NOT AVAILABLE WITH ASSESSEE. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN NOT AVAILABLE WITH ASSESSEE. 3 RD QUARTER ENDED ON 31 DECEMBER, DATE OF FILING OF RE TURN NOT AVAILABLE WITH ASSESSEE. 4 TH QUARTER ENDED ON 31 MARCH DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. ASSESSMENT YEAR 2012-13: 1 ST QUARTER ENDED ON 30 TH OF JUNE, DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. PAGE 36 OF 74 ITA NO.507 TO 566 /BANG/2020 3 RD QUARTER ENDED ON 31 ST DECEMBER, DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. 4 TH QUARTER ENDED ON 31 ST MARCH DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. CHITRADURGA ASSESSMENT YEAR 2011-12: 1 ST QUARTER ENDED ON 30 TH OF JUNE DATE OF FILING OF QUARTERLY RETURNS NOT AVAILABLE WITH ASSESSEE. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN NOT AVAILABLE WITH ASSESSEE. 3 RD QUARTER ENDED ON 31 DECEMBER, DATE OF FILING OF RE TURN NOT AVAILABLE WITH ASSESSEE. 4 TH QUARTER ENDED ON 31 MARCH DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. ASSESSMENT YEAR 2012-13: 1 ST QUARTER ENDED ON 30 TH OF JUNE, DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. 3 RD QUARTER ENDED ON 31 ST DECEMBER, DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. 4 TH QUARTER ENDED ON 31 ST MARCH DATE OF FILING OF RETURN NOT AVAILABLE WITH ASSESSEE. SHIVAMOGA: ASSESSMENT YEAR 2011-12: PAGE 37 OF 74 ITA NO.507 TO 566 /BANG/2020 1 ST QUARTER ENDED ON 30 TH OF JUNE DATE OF FILING OF QUARTERLY RETURN IS 07/07/2010. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN IS 04/10/2010. 3 RD QUARTER ENDED ON 31 DECEMBER, DATE OF FILING OF QU ARTERLY RETURN IS 08/01/2011. 4 TH QUARTER ENDED ON 31 MARCH DATE OF FILING OF QUARTE RLY RETURN IS 28/04/2011. ASSESSMENT YEAR 2012-13: 1 ST QUARTER ENDED ON 30 TH OF JUNE, DATE OF FILING OF QUARTERLY RETURN IS 04/07/2011. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN IS 10/10/2011. 3 RD QUARTER ENDED ON 31 ST DECEMBER, DATE OF FILING OF QUARTERLY RETURN IS 10/01/2012. 4 TH QUARTER ENDED ON 31 ST MARCH DATE OF FILING OF QUARTERLY RETURN IS 18/04/2012. HAVERI ASSESSMENT YEAR 2011-12: 1 ST QUARTER ENDED ON 30 TH OF JUNE DATE OF FILING OF QUARTERLY RETURN IS 06/12/2010. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN IS 06/12/2010. 3 RD QUARTER ENDED ON 31 DECEMBER, DATE OF FILING OF QU ARTERLY RETURN IS 28/01/2011. PAGE 38 OF 74 ITA NO.507 TO 566 /BANG/2020 4 TH QUARTER ENDED ON 31 MARCH DATE OF FILING OF QUARTE RLY RETURN IS 21/07/2011. ASSESSMENT YEAR 2012-13: 1 ST QUARTER ENDED ON 30 TH OF JUNE, DATE OF FILING OF QUARTERLY RETURN IS 26/07/2011. 2 ND QUARTER ENDED ON 30 TH SEPTEMBER, DATE OF FILING OF QUARTERLY RETURN IS 13/10/2011. 3 RD QUARTER ENDED ON 31 ST DECEMBER, DATE OF FILING OF QUARTERLY RETURN IS 12/01/2012. 4 TH QUARTER ENDED ON 31 ST MARCH DATE OF FILING OF QUARTERLY RETURN IS 11/04/2012. 6.2.2. IT IS SUBMITTED BY LD.COUNSEL THAT, TIME LIMIT TO P ASS ORDERS UNDER SECTION 201 FOR FINANCIAL YEAR 2010-11 (ASSESSMENT YEAR 2011-12) AND 1 ST THREE QUARTERS FOR FINANCIAL YEAR 2011-12 (ASSESSMENT YEAR 2012-13), E XPIRED ON 31/03/2014 UNDER UNAMENDED SECTION 201 (3)(I) OF THE ACT. IT WAS SUBMITTED THAT, CLAUSE (3) BY WAY OF IN SERTION OF TO SECTION 201 WAS INSERTED BY WAY OF FINANCE (NO.2 ) ACT, 2014 AND THEREFORE NOT APPLICABLE TO THESE ASSESSME NT YEAR. 6.2.3. HE SUBMITTED THAT, THERE IS NO DISPUTE TO THE FACT THAT, ASSESSEE FILED TDS RETURNS. ONLY APPREHENSION IS REGARDING THE DATE OF FILING IN RESPECT OF FIRST TH REE QUARTERS FOR ASSESSMET YEARS 2011-12 AND 2012-13, IN RESPECT OF DAVANGERE AND CHITRADURGA BRANCHES, WHICH ASSESSEE IS NOT ABLE TO ASCERTAIN. IT WAS SUBMITTED THAT, DATE OF FILING OF Q1 Q3 TDS RETURNS FOR THIRTHAHALLI BRANCH IS NOT PAGE 39 OF 74 ITA NO.507 TO 566 /BANG/2020 ASCERTAINABLE. THEREFORE, WE HAVE TO PROCEED ON THE BASIS THAT IN ASSESSEE'S CASE, THE STATEMENTS OF TDS HAVE BEEN FILED. 6.2.4. KEEPING THE AFORESAID FACTUAL POSITION IN VIEW IT I S NECESSARY TO EXAMINE THE RELEVANT STATUTORY PROVISI ONS. SECTION 201 LAYS DOWN THE CONSEQUENCES OF FAILURE T O DEDUCT TAX AT SOURCE OR HAVING DEDUCTED NOT REMITTED TO TH E GOVERNMENT ACCOUNT, IN ITS ORIGINAL FORM, DID NOT P ROVIDE ANY TIME LIMIT FOR PASSING THE ORDER UNDER SUB-SECT ION (1) OF SECTION 201. LOOKING AT THE DISPUTE ARISING OUT OF PROCEEDINGS BEING TAKEN UP AND COMPLETED AFTER LAPS E OF SUBSTANTIAL TIME IN THE ABSENCE OF A TIME LIMIT, LE GISLATURE THROUGH FINANCE ACT, 2009, INTRODUCED SUB- SECTION (3) TO SECTION 201 PROVIDING LIMITATION PERIOD OF TWO YEAR S FOR PASSING THE ORDER UNDER SECTION 201(1) FROM THE END OF THE FINANCIAL YEAR IN WHICH STATEMENT OF TDS IS FILED B Y THE DEDUCTOR. AND IN A CASE WHERE NO STATEMENT IS FILED THE LIMITATION WAS EXTENDED TO BEFORE EXPIRY OF FOUR YE ARS FROM THE END OF FINANCIAL YEAR IN WHICH THE PAYMENT WAS MADE OR CREDIT GIVEN. THE AFORESAID AMENDMENT WAS MADE EFFE CTIVE FROM 1ST APRIL 2010. 6.2.5. SUBSEQUENTLY, BY FINANCE ACT, 2012, SUB-SECTION (3) OF SECTION 201 WAS AGAIN AMENDED WITH RETROSPECTIVE EFFECT FROM 1ST APRIL 2010. THE AFORESAID AMENDED PROVISIO N READS AS UNDER: PAGE 40 OF 74 ITA NO.507 TO 566 /BANG/2020 '(3) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) D EEMING A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA, AT ANY TIME AFTER THE EXPIRY OF (I) TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH THE STATEMENT IS FILED IN A CASE WHERE THE STATEMENT RE FERRED TO IN SECTION 200 HAS BEEN FILED; (II) SIX YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH PAYMENT IS MADE OR CREDIT IS GIVEN, IN ANY OTHER CASE: PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMME NCING ON OR BEFORE THE 1ST DAY OF APRIL 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE THE 31ST DAY OF MARCH 2011.' AS COULD BE SEEN FROM A READING OF THE AFORESAID PR OVISION, ONLY CHANGE THAT WAS EFFECTED FROM THE EARLIER PROV ISION WAS, THE LIMITATION PERIOD OF FOUR YEARS, IN CASE OF A D EDUCTOR WHO DID NOT FILE TDS STATEMENT. IN SUCH CASE, THE LIMIT ATION WAS EXTENDED TO SIX YEARS FROM FOUR YEARS. WHEREAS, IN CASE OF A DEDUCTOR WHO FILED TDS STATEMENT, THE LIMITATION PE RIOD OF TWO YEARS REMAINED UNCHANGED. (EMPHASIS SUPPLIED) 6.2.6. AFORESAID SUB-SECTION (3) OF SECTION 201 WAS AGAIN AMENDED BY FINANCE ACT, 2014, W.E.F. 1ST OCTOBER 20 14 BY SUBSTITUTING THE EARLIER PROVISION AS UNDER: '(3) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) D EEMING A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA, AT ANY TIME AFTER THE EXPIRY OF SEVEN YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH PAYMENT IS MADE OR CREDIT IS GIVEN.' THUS, AS COULD BE SEEN FROM THE AFORESAID AMENDED PROVISION, A UNIFORM LIMITATION PERIOD OF SEVEN YEA RS FROM THE END OF RELEVANT FINANCIAL YEAR WHEREIN PAYMENTS MADE OR CREDIT GIVEN WAS MADE APPLICABLE. PAGE 41 OF 74 ITA NO.507 TO 566 /BANG/2020 THE ISSUE BEFORE US IS, WHETHER THE UN-AMENDED SUB- SECTION (3) WHICH EXISTED BEFORE INTRODUCTION OF AMENDED SU B- SECTION (3) BY FINANCE ACT, 2014, WILL APPLY TO ASS ESSEE'S CASE FOR ASSESSMENT YEARS UNDER CONSIDERATION OR NO T. 6.2.7. IT IS THE CASE OF THE ASSESSEE THAT, SINCE, CLAUSE (I) OF SUB-SECTION (3) OF SECTION 201 IS APPLICABLE TO THE ASSESSEE AND LIMITATION PERIOD OF TWO YEARS EXPIRED BY THE T IME PROVISION WAS AMENDED BY FINANCE ACT, 2014, THE EXT ENDED PERIOD OF LIMITATION OF SEVEN YEARS AS PER THE AMEN DED PROVISION WILL NOT APPLY. WHEREAS, IT IS THE CASE O F THE REVENUE THAT THE AMENDED SUB-SECTION (3) BROUGHT IN TO THE STATUTE BY FINANCE ACT, 2014, WILL APPLY RETROSPECT IVELY, HENCE, ORDERS PASSED BY LD.AO UNDER SECTION 201 OF THE ACT, ARE WITHIN THE PERIOD OF SEVEN YEARS, AND ARE VALID. 6.2.8. IT IS A FACT ON RECORD THAT, BY THE TIME THE AMENDE D PROVISIONS OF SUB-SECTION (3) WAS INTRODUCED BY FIN ANCE ACT, 2014, THE LIMITATION PERIOD OF TWO YEARS AS PER CLA USE (I) OF SUB- SECTION (3) OF SECTION 201 (THE UN-AMENDED PRO VISION) ALREADY EXPIRED. LD.SR.DR SUBMITTED THAT THE AMENDE D PROVISION OF SUB-SECTION (3) OF SECTION 201 BY REFE RRING TO THE OBJECT FOR MAKING SUCH AMENDMENT AND ON THE REASONI NG THAT THE SAID PROVISION BEING A MACHINERY PROVISION WILL APPLY RETROSPECTIVELY. HOWEVER, ON A CAREFUL PERUSA L OF THE OBJECT FOR INTRODUCTION OF THE AMENDED PROVISION OF SUB- SECTION (3), WE DO NOT FIND ANY MATERIAL TO HOLD TH AT THE LEGISLATURE INTENDED TO BRING SUCH AMENDMENT WITH PAGE 42 OF 74 ITA NO.507 TO 566 /BANG/2020 RETROSPECTIVE EFFECT. IF THE LEGISLATURE INTENDED T O APPLY THE AMENDED PROVISION OF SUB-SECTION (3) RETROSPECTIVEL Y IT WOULD DEFINITELY HAVE PROVIDED SUCH RETROSPECTIVE EFFECT EXPRESSING IN CLEAR TERMS WHILE MAKING SUCH AMENDMENT. THIS VI EW GETS SUPPORT FROM THE FACT THAT, WHILE AMENDING SUB -SECTION (3) OF SECTION 201 BY FINANCE ACT, 2012, BY EXTENDI NG THE PERIOD OF LIMITATION UNDER SUB-CLAUSE (II) TO SIX Y EARS, THE LEGISLATURE GAVE IT RETROSPECTIVE EFFECT FROM 1/4/ 2010. SINCE, NO SUCH RETROSPECTIVE EFFECT WAS GIVEN BY TH E LEGISLATURE WHILE AMENDING SUB-SECTION (3) BY FINAN CE ACT, 2014, IT HAS TO BE CONSTRUED THAT THE LEGISLATURE I NTENDED THE AMENDMENT MADE TO SUB-SECTION (3) TO TAKE EFFEC T FROM 1/10/2014, ONLY AND NOT PRIOR TO THAT. 6.2.9. HON'BLE SUPREME COURT IN VATIKA TOWNSHIP PVT. LTD. REPORTED IN 367 ITR 466 , WHILE EXAMINING THE PRINCIPLE CONCERNING RETROSPECTIVITY OF AN AMENDMEN T BROUGHT BY STATUTORY PROVISIONS, HONBLE COURT OBSERVED THAT, UNLESS A CONTRARY INTENTION APPEARS, A LEGISL ATION IS PRESUMED NOT TO BE WITH RETROSPECTIVE OPERATION. HON'BLE COURT OBSERVED, LEGISLATIONS WHICH MODIFIED ACCRUED RIGH TS OR WHICH IMPOSE OBLIGATIONS OR IMPOSES NEW DUTIES O R ATTACH A NEW DISABILITY HAVE TO BE TREATED AS PROSPECTIVE UNLESS THE LEGISLATIVE INTENT IS CLEARLY TO GIVE THE ENACTMENT A RETROSPECTIVE EFFECT. IT WAS ALSO OBSERVED, IF A PR OVISION IS NOT FOR THE BENEFIT OF ASSESSEE, BUT, IMPOSES SOME BURD EN OR LIABILITY, THE PRESUMPTION WOULD BE THAT, IT WILL A PPLY PAGE 43 OF 74 ITA NO.507 TO 566 /BANG/2020 PROSPECTIVELY. THE RULE AGAINST RETROSPECTIVE OPERA TION IS A FUNDAMENTAL RULE OF LAW THAT NO STATUTE SHALL BE CO NSTRUED TO HAVE RETROSPECTIVE OPERATION UNLESS SUCH A CONST RUCTION APPEARS VERY CLEARLY IN THE TERMS OF THE ACT, OR AR ISES BY NECESSARY AND DISTINCT IMPLICATION. 6.2.10. THIS VIEW IS SUPPORTED BY FOLLOWING DECISIONS: HONBLE ITAT MUMBAI IN CASE OF SODEXO SVC INDIA PVT. LTD REPORTED IN (2018 92 TAXMANN.COM 260 ACIT VS.ACER INDIA PVT.LTD IN ITA NO. 2570 TO 2572/BANG/2017 FOR ASSESSMENT YEAR 2009-10 TO 2011- 12 BY ORDER DATED 14/09/2019. 6.2.11. HON'BLE GUJARAT HIGH COURT , IN CASE OF TATA TELESERVICES VS.UOI REPORTED IN (2016) 385 ITR 497 , ON IDENTICAL ISSUE EXTENSIVELY DEALT ON THE ISSUE OF R ETROSPECTIVE APPLICABILITY OF THE PROVISIONS BY APPLYING PRINCIP LES LAID DOWN BY HON'BLE SUPREME COURT IN NUMBER OF CASES. HONBLE GUJRAT HIGH COURT HELD AS UNDER: '15.00. CONSIDERING THE LAW LAID DOWN BY THE HON'BL E SUPREME COURT IN THE AFORESAID DECISIONS, TO THE FACTS OF T HE CASE ON HAND AND MORE PARTICULARLY CONSIDERING THE FACT THAT WHI LE AMENDING SECTION 201 BY FINANCE ACT, 2014, IT HAS BEEN SPECI FICALLY MENTIONED THAT THE SAME SHALL BE APPLICABLE W.E.F. 1/10/2014 AND EVEN CONSIDERING THE FACT THAT PROCEEDINGS FOR F.Y. 2007-08 AND 2008-09 HAD BECOME TIME BARRED AND/OR FOR THE AFORE SAID FINANCIAL YEARS, LIMITATION UNDER SECTION 201(3)(I) OF THE AC T HAD ALREADY EXPIRED ON 31/3/2011 AND 31/3/2012, RESPECTIVELY, M UCH PRIOR TO THE AMENDMENT IN SECTION 201 AS AMENDED BY FINANCE ACT, 2014 AND THEREFORE, AS SUCH A RIGHT HAS BEEN ACCRUED IN FAVOUR OF THE ASSESSEE AND CONSIDERING THE FACT THAT WHEREVER LEG ISLATURE WANTED TO GIVE RETROSPECTIVE EFFECT SO SPECIFICALLY PROVIDED WHILE AMENDING SECTION 201(3) (II) OF THE ACT AS WAS AMEN DED BY FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 1/4/2010, IT IS TO BE HELD PAGE 44 OF 74 ITA NO.507 TO 566 /BANG/2020 THAT SECTION 201(3), AS AMENDED BY FINANCE ACT NO.2 OF 2014 SHALL NOT BE APPLICABLE RETROSPECTIVELY AND THEREFORE, NO ORDER UNDER SECTION 201(I) OF THE ACT CAN BE PASSED FOR WHICH L IMITATION HAD ALREADY EXPIRED PRIOR TO AMENDED SECTION 201(3) AS AMENDED BY FINANCE ACT NO.2 OF 2014. UNDER THE CIRCUMSTANCES, THE IMPUGNED NOTICES/SUMMONSES CANNOT BE SUSTAINED AND THE SAME DESERVE TO BE QUASHED AND SET ASIDE AND WRIT OF PROHIBITION, A S PRAYED FOR, DESERVES TO BE GRANTED.' NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD.SR.DR. 6.2.12. THEREFORE, CONSIDERING THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN VARIOUS DECISIONS, AS WELL AS, RATIO LAID DOWN BY HON'BLE GUJARAT HIGH COURT(SUPRA) IN THE DECISIONS REFERRED TO ABOVE AND DECISIONS OF COORDINATE BENCH OF THIS TRIBUNAL AS WELL AS HONBLE MUMBAI ITAT, WHICH ARE DIRECTLY ON THE ISSUE, WE HOLD THAT ORDER S PASSED BY LD.AO UNDER SECTION 201(1) AND 201(1A) FOR FINAN CIAL YEAR 2010-11 (ASSESSMENT YEAR 2011-12) AND 1 ST THREE QUARTERS FOR FINANCIAL YEAR 2011-12 (ASSESSMENT YEA R 2012- 13), EXPIRED ON 31/03/2014 UNDER UNAMENDED SECTION 201 (3)(I) OF THE ACT. SUCH ORDERS HAVING BEEN PASSED A FTER EXPIRY OF TWO YEARS FROM THE FINANCIAL YEAR WHEREIN TDS ST ATEMENTS WERE FILED BY THE ASSESSEE UNDER SECTION 200 OF THE ACT, IS THEREFORE BARRED BY LIMITATION, HENCE, HAS TO BE DE CLARED AS NULL AND VOID. ACCORDINGLY GROUND NO.4 RAISED BY ASSESSEE FOR ASSESSMENT YEARS 2011-12 AND 2012-13 STANDS ALLOWED . AS WE HAVE QUASHED AND SET ASIDE THE IMPUGNED ORDER S FOR ASSESSMENT YEARS 2011-12 AND 2012-13, THE DEMAND RA ISED PAGE 45 OF 74 ITA NO.507 TO 566 /BANG/2020 U/S.201(1) AND INTEREST LEVIED UNDER SECTION201(1A) , BY LD.AO FOR ASSESSMENT YEARS 2011-12 & 2012-13 STANDS DELETED. ACCORDINGLY, APPEALS FILED BY ASSESSEE FOR ASSESSME NT YEARS 2011-12 AND 2012-13 STANDS ALLOWED ON LEGAL ISSUE RAISED. 6.2.13. NOW COMING TO ASSESSMENT YEARS 2013-14 AND 2014-15, LD.COUNSEL SUBMITTED THAT, FINANCIAL YEAR FOR THESE PERIOD ENDED BEFORE INSERTION OF CLAUSE (3) T O SECTION 201 OF THE ACT. IN OUR UNDERSTANDING ASSESSMENT YE AR 2013-14 AND 2014-15 WOULD ALSO STAND COVERED BY THE UNAMENDED PROVISION BEING 201(3)(I), BASED ON OUR OBSERVATION HEREIN ABOVE. ACCORDINGLY GROUND NO.4 RAISED BY ASSESSEE FOR ASSESSMENT YEARS 2013-14 AND 2014-15 STANDS ALLOWED . AS WE HAVE QUASHED AND SET ASIDE THE ASSESSMENT ORD ERS FOR ASSESSMENT YEARS 2013-14 AND 2014-15, THE DEMAND RA ISED U/S.201(1) AND INTEREST LEVIED UNDER SECTION201(1A) , BY LD.AO FOR ASSESSMENT YEARS BY LD.AO FOR THESE YEARS STANDS DELETED. ACCORDINGLY, APPEALS FILED BY ASSESSEE FOR ASSESSME NT YEARS 2013-14 AND 2014-15 STANDS ALLOWED ON LEGAL ISSUE RAISED. 6.2.14. HOWEVER SAME VIEW CANNOT BE APPLIED FOR ASSESSMENT YEAR 2015-16 SINCE THE AMENDMENT WAS WIT H EFFECT FROM 01/06/2015. PAGE 46 OF 74 ITA NO.507 TO 566 /BANG/2020 WE THEREFORE DISMISS GROUND 4 FOR ASSESSMENT YEAR 2015-16 ASSESSMENT YEAR 2015-16 &2016-17 6.3. AT THE OUTSET, THE LD.COUNSEL SUBMITTED THAT, FOR ASSESSMENT YEARS 2015-16 & 2016-17, GROUNDS PERTAIN ING TO PAYMENT MADE TO CHINNU GRAPHICS FOR THEERTHAHALL I, CHITRADURGA AND DAVANGERE AND PAYMENT MADE TO KULKA RNI SERVICES FOR THEERTHAHALLI, BRANCH STANDS NOT PRESS ED BY ASSESSEE. ACCORDINGLY THESE GROUNDS ARE DISMISSED AS NOT PRES SED. ISSUE III PAYMENT MADE TOWARDS CASH MEDICAL BENEFIT (GROUND NO. 6.1-6.2, 6.4-6.7,6.9-6.10 AND 5.1-5.2, 5.4- 5.7, 5.9-5.10 FOR ASSESSMENT YEARS 2015-16 & 2016- 17 RESPECTIVELY) : ON MERITS, LD.COUNSEL SUBMITTED THAT, THE ASSESSEE CANNOT BE CONSIDERED AS ASSESSEE IN DEFAULT FOR NON DEDU CTION OF TDS ON PAYMENTS MADE TO EMPLOYEES TOWARDS CASH MEDI CAL BENEFIT IN RESPECT OF ALL BRANCHES. 6.3.1. ADMITTEDLY, IT HAS BEEN SUBMITTED THAT: PAYMENT HAS BEEN MADE BY ASSESSEE WITHOUT ANY BILLS . IT IS ALSO SUBMITTED THAT, PAYMENTS MADE TO EMPLOYE ES ARE LESS THAN THE LIMIT PRESCRIBED UNDER SECTION 17(2) PROVISO (V) OF THE ACT. PAGE 47 OF 74 ITA NO.507 TO 566 /BANG/2020 FURTHER, IT IS SUBMITTED THAT THE EMPLOYEES HAVE SUBMITTED SELF ATTESTED DECLARATION OF EXPENSES HAV ING INCURRED, PLACED AT PAGE 224 -228 OF PAPERBOOK. THAT TDS WAS NOT DEDUCTED BY RELYING ON CBDT LETTER DATED 20/05/2002, PLACED AT PAGE 118-121 OF PAPERBOOK. IT IS ALSO SUBMITTED THAT AUTHORITIES BELOW ERRED I N OBSERVING THAT ASSESSEE DISCONTINUED THE PRACTICE I N FINANCIAL YEAR 2009-10. THE DISPUTE IN THESE APPEALS ARE REGARDING OBLIGATI ON OF ASSESSEE TO DEDUCT TAX AT SOURCE ON CASH MEDICAL BE NEFIT PAID TO ITS EMPLOYEES. 6.3.2. ADMITTEDLY, AMOUNTS PAID AS MEDICAL BENEFITS IN THE NATURE OF PERQUISITE FALLING WITHIN THE DEFINITION GIVEN UNDER SECTION 17 (2) (IV) PROVISO (V) OF THE ACT. SECTION 192(1) OF THE ACT CASTS OBLIGATION ON THE PART OF PERSON RESPONSI BLE FOR PAYING INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' TO DEDUCT TAX AT SOURCE, AT THE TIME OF PAYMENT. SECTI ON 192 (1) OF THE ACT READS AS UNDER: '192. SALARY.(1) ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' SHALL, AT THE TIME OF PAYMENT, DEDUCT INCOME-TAX ON THE AMOUNT PAYABLE AT THE AVER AGE RATE OF INCOME-TAX COMPUTED ON THE BASIS OF THE RATES IN FO RCE FOR THE FINANCIAL YEAR IN WHICH THE PAYMENT IS MADE ON THE ESTIMATED INCOME OF THE ASSESSEE UNDER THIS HEAD FOR THAT FIN ANCIAL YEAR.' 6.3.3. A PERUSAL OF SECTION 192 OF THE ACT, INDICATES THAT THE PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' SHALL BE LIABLE TO DEDUCT TAX A T SOURCE AT PAGE 48 OF 74 ITA NO.507 TO 566 /BANG/2020 THE TIME OF PAYMENT ON AN ESTIMATE BASIS. ITEMS OF INCOME THAT ARE CHARGEABLE TO TAX UNDER THE HEAD INCOME FR OM 'SALARIES' ARE LAID DOWN IN SECTION15 TO 17 OF THE ACT. 6.3.4. SECTION 15 OF THE ACT PROVIDES THAT INCOME DESCRIBE D THEREIN SHALL BE CHARGEABLE TO TAX UNDER THE HEAD ' SALARIES', AND INCOME DESCRIBED THEREIN CONSISTS OF SALARY FRO M THE EMPLOYER OR FORMER EMPLOYER FALLING IN THREE CATEGO RIES. SECTION16 OF THE ACT CONTAINS DEDUCTIONS TO BE MADE FROM SALARIES. AND, SECTION 17 OF THE ACT IS INCLUSIVE DEFINITION OF 'SALARY' FOR PURPOSES OF SECTION 15, SECTION 16 AND SECTION 17 OF THE ACT WHICH, ALONG WITH OTHER ITEMS, INCLUDES 'PERQUI SITE' AND THESE TERMS ARE ALSO SEPARATELY DEFINED THEREIN. SEC.17 OF THE ACT, THAT DEFINES 'SALARY', 'PERQUISI TE' AND 'PROFITS IN LIEU OF SALARY' AS UNDER: 'FOR THE PURPOSES OF SECTIONS 15 AND 16 AND OF THIS SECTION -(1) 'SALARY' INCLUDES- .. (IV) ANY FEES, COMMISSIONS, PERQUISITES OR PROFITS IN LIEU OF OR IN ADDITION TO ANY SALARY OR WAGES; . (2) 'PERQUISITE' INCLUDES- .. (IV) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF ANY OBLIGATION WHICH BUT FOR SUCH PAYMENT, WOULD HAVE BEEN PAYABLE BY TH E ASSESSEE; AND PROVIDED THAT NOTHING IN THIS CLAUSE SHALL APPLY TO,- . (V) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF ANY EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE ON HIS MEDICAL TR EATMENT OR TREATMENT OF ANY MEMBER OF HIS FAMILY OTHER THAN TH E TREATMENT PAGE 49 OF 74 ITA NO.507 TO 566 /BANG/2020 REFERRED TO IN CLAUSES (I) AND (II); SO, HOWEVER, T HAT SUCH SUM DOES NOT EXCEED FIFTEEN THOUSAND RUPEES IN THE PREVIOUS YEAR. 6.3.5. IN PRESENT APPEALS BEFORE US, MEDICAL REIMBURSEMENT IS PAID BY ASSESSEE TO ITS EMPLOYEE FOR MEDICAL TRE ATMENT OF THE EMPLOYEE OR HIS FAMILY MEMBERS. IT IS STATED TH AT, THE PAYMENTS TO EMPLOYEES BY ASSESSEE INCLUDE A COMPONE NT TOWARDS MEDICAL EXPENDITURE THAT ARE PAID EVERY MON TH. THIS SUM, WHEN PAID IS CONSIDERED AS PART OF TAXABL E SALARY BY ASSESSEE. SECTION 192(1) OF THE ACT, REQUIRES TA X TO BE DEDUCTED AT AVERAGE RATE OF INCOME-TAX IN FORCE ON ESTIMATED INCOME UNDER THE HEAD SALARIES. THE PERSON MAKING PAYMENT HAS TO MAKE AN HONEST ESTIMATION OF INCOME UNDER THE HEAD SALARY, PAYABLE BY HIM TO HIS EMPLOYEE A T THE TIME OF PAYMENT. THE PERSON MAKING THE PAYMENT HAS TO TA KE INTO CONSIDERATION VARIOUS DEDUCTIONS PERMITTED UND ER THE ACT UNDER CHAPTER VIA OF THE ACT, AS ALSO EXEMPT IN COME UNDER SEC.10 OF THE ACT. 6.3.6. THE CASE OF LD.AO IS THAT, MEDICAL REIMBURSEMENT SHOULD BE PAID AT THE TIME THE EXPENDITURE IS INCUR RED OR AFTER THE EXPENDITURE IS INCURRED BY WAY OF REIMBUR SEMENT AND NOT AT AN EARLIER POINT OF TIME. IF IT IS SO PA ID, THEN, EVEN THOUGH THE PAYMENT WOULD NOT FORM PART OF TAXABLE S ALARY OF AN EMPLOYEE, THE EMPLOYER HAS TO DEDUCT TAX AT SOUR CE TREATING IT AS PART OF SALARY. THE CASE OF ASSESSEE IS THAT, ITS OBLIGATION IS TO MAKE AN 'ESTIMATE' OF THE INCOME U NDER THE PAGE 50 OF 74 ITA NO.507 TO 566 /BANG/2020 HEAD 'SALARIES' AND SUCH ESTIMATE HAS TO BE A BONA FIDE ESTIMATE. NO TAX CAN BE RECOVERED FROM THE EMPLOYER ON ACCOUN T OF SHORT DEDUCTION OF TAX AT SOURCE UNDER SECTION 192( 1), IF A BONA FIDE ESTIMATE OF SALARY TAXABLE IN THE HANDS O F THE EMPLOYEE IS MADE BY THE EMPLOYER. LD.COUNSEL REFERR ED TO AND RELIED ON CLAUSE (1) OF SECTION 192, REPRODUCED HEREIN ABOVE. SUCH IS THE RATIO OF LAID DOWN IN FOLLOWING DECISIONS. ACIT(TDS) VS. SAP LABS INDIA PVT.LTD REPORTED IN (2 013) 36 TAXMANN.COM 200(BANG.TRIB.) CIT V. NICHOLAS PIRAMAL INDIA LTD., REPORTED IN (20 08) 169 TAXMAN 233 (BOM.); CIT V. SEMICONDUCTOR COMPLEX LTD.. REPORTED IN (200 7) 160 TAXMAN 384 (PUNJ. & HAR.) CIT V. HCL INFO SYSTEM LTD. (2005) 146 TAXMAN 227 ( DELHI) CIT V. OIL AND NATURAL GAS CORPN. LTD. (2002) 254 I TR 121/125 TAXMAN 698 GUJ) ITO V. GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. (2000) 113 TAXMAN 586 (GUJ.) CIT V. NESTLE INDIA LTD. (2000) 109 TAXMAN 403 (DEL HI) GWALIOR RAYON SILK CO. LTD. V. CIT (1983) 14 TAXMAN 99 (MP) ITO V G. D. GOENKA PUBLIC SCHOOL (NO. 2) (2008) 23 SOT 77 (DELHI) USHA MARTIN INDUSTRIES LTD. V. ASSTT. CIT (2004) 86 TTJ 574 (KOL.) NESTLE INDIA LTD. V. ASSTT. CIT (1997) 61 ITD 444 ( DELHI) INDIAN AIRLINES LTD. V ASSTT. CIT (1996) 59 ITD 353 (MUM). 6.3.7. FURTHER WE NOTE THAT, ASSESSEE RELIED ON LETTER ISS UED BY CBDT DATED 20/05/2002 GRANTING EXEMPTION, PLACE D AT PAGE 219 OF PAPERBOOK. IT IS VERY CLEAR FROM THE LE TTER THAT CBDT CLEARLY UNDERSTOOD THE CASH MEDICAL BENEFIT, T O BE IN THE NATURE OF FIXED MEDICAL ALLOWANCE, AND THAT, TH E FIXED MEDICAL ALLOWANCE IS FOR THE EXPENDITURE, WHICH IS BOTH ACTUALLY INCURRED OR TO BE INCURRED. THE LETTER ALS O STATES PAGE 51 OF 74 ITA NO.507 TO 566 /BANG/2020 THAT, AS LONG AS ASSESSEE IS SATISFIED THAT THE EXP ENDITURE IS ACTUALLY INCURRED, CBDT DO NOT HAVE ANY OBJECTION I N EXTENDING THE EXEMPTION UNDER SECTION 17(2), PROVISO (V) OF THE ACT. THE SAID LETTER WAS ISSUED BY CBDT IN RESP ONSE TO THE SUBMISSIONS MADE BY ASSESSEE VIDE LETTER DATED 29/08/2001, PLACED AT PAGE 216-218 OF PAPERBOOK. UN DER SUCH CIRCUMSTANCES IT WAS NOT RIGHT ON PART OF AUTH ORITIES BELOW TO REJECT THE CONTENTION OF ASSESSEE FOR THE REASON THAT MEDICAL ALLOWANCE EXTENDED BY ASSESSEE TO ITS EMPLO YEE WAS FIXED COMPONENT AS A PART OF SALARY AGAINST WHICH N O BILLS WERE SUBMITTED. IN OUR VIEW, BASIS FOR REJECTING TH E CONTENTION OF ASSESSEE IS CONTRARY TO THE CBDT APPR OVAL GRANTED TO ASSESSEE. 6.3.8. IT IS SUBMITTED NOTE THAT, THE SATISFACTION OF ASSESSEE IS BASED ON DECLARATION GIVEN BY ITS EMPLOYEES. SE CTION 192 AS IT STOOD DURING RELEVANT PERIOD READS AS UNDER: B.DEDUCTION AT SOURCE SALARY. 192. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' SHALL, AT THE TIME OF PAYMENT, DEDUCT INCOME-TAX ON THE AMOUNT PAYABLE AT THE AVERAGE RATE OF INCOME-TAX COMPUTED ON THE BASIS OF THE FOR THE FINANCIAL YEAR IN WHICH THE PAYMENT IS MADE, ON THE ESTIMATED INCOME OF THE ASSESSEE UNDER THIS HEAD FOR THAT FIN ANCIAL YEAR. (1A) WITHOUT PREJUDICE TO THE PROVISIONS CONTAINED IN SUB-SECTION (1), THE PERSON RESPONSIBLE FOR PAYING ANY INCOME I N THE NATURE OF A PERQUISITE WHICH IS NOT PROVIDED FOR BY WAY OF MONETARY PAYMENT, REFERRED TO IN CLAUSE (2) OF SECTION 17, M AY PAY, AT HIS OPTION, TAX ON THE WHOLE OR PART OF SUCH INCOME WIT HOUT MAKING ANY DEDUCTION THEREFROM AT THE TIME WHEN SUCH TAX W AS OTHERWISE DEDUCTIBLE UNDER THE PROVISIONS OF SUB-SE CTION (1). PAGE 52 OF 74 ITA NO.507 TO 566 /BANG/2020 (1B) FOR THE PURPOSE OF PAYING TAX UNDER SUB-SECTIO N (1A), TAX SHALL BE DETERMINED AT THE AVERAGE OF INCOME-TAX CO MPUTED ON THE BASIS OF THE RATES IN FORCE FOR THE FINANCIAL Y EAR, ON THE INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' INCLUDI NG THE INCOME REFERRED TO IN SUB-SECTION (1A), AND THE TAX SO PAYABLE SHALL BE CONSTRUED AS IF IT WERE, A TAX DEDUCTIBLE AT SOURCE, FROM THE INCOME UNDER THE HEAD 'SALARIES' AS PER THE PRO VISIONS OF SUB-SECTION (1), AND SHALL BE SUBJECT TO THE PROVIS IONS OF THIS CHAPTER. 6.3.9. THE INCOME-TAX ACT, BY VIRTUE OF SUB-SECTION (1) OF SECTION 89, EMPOWERED LD.AO TO GRANT RELIEF, IN CAS ES WHERE PAYMENT OF SALARY AND OTHER DUES WAS RECEIVED BY AN EMPLOYEE IN ANY ONE FINANCIAL YEAR, FOR MORE THAN T WELVE MONTHS. THE SAID SUB-SECTION READS AS FOLLOWS : '89. RELIEF WHEN SALARY, ETC., IS PAID IN ARREARS O R IN ADVANCE.(1) WHERE, BY REASON OF AN ASSESSEES SALARY BEING PAID IN ARREARS OR IN ADVANCE OR BY REASON OF HIS HAVING RECEIVED IN ANY ONE FINANCIAL YEAR SALARY FOR MORE THAN TWELVE MONTHS OR A PAYMEN T WHICH UNDER THE PROVISIONS OF CLAUSE (3) OF SECTION 17 IS A PRO FIT IN LIEU OF SALARY, HIS INCOME IS ASSESSED AT A RATE HIGHER THAN THAT A T WHICH IT WOULD OTHERWISE HAVE BEEN ASSESSED, THE INCOME-TAX OFFICE R SHALL, ON AN APPLICATION MADE TO HIM IN THIS BEHALF, GRANT SUCH RELIEF AS MAY BE PRESCRIBED.' 6.3.10. THIS SUB-SECTION REQUIRED AN EMPLOYEE TO MOVE AN APPLICATION BEFORE THE ITO TO GRANT SUCH RELIEF AS MAY BE PRESCRIBED WHILE THE PRESCRIPTION OF THE RELIEF HAS BEEN MADE UNDER RULE 21A(2) OF THE INCOME-TAX RULES, WHICH CA ME TO BE INSERTED BY I.T. (AMENDMENT) RULES, 1972 WITH EF FECT FROM APRIL 1, 1971. THIS SITUATION CREATED GREAT HA RDSHIP AND HARASSMENT FOR THE EMPLOYEES AND ENTAILED AN UNNECESSARY EXERCISE. THE LEGISLATURE, THEREFORE, I N ITS WISDOM, INSERTED NEW SUB-SECTION (2A) IN SECTION 19 2 WITH PAGE 53 OF 74 ITA NO.507 TO 566 /BANG/2020 EFFECT FROM JUNE 1, 1987 INCORPORATING THEREIN THE RELIEF PERMISSIBLE IN SECTION 89(1) TO BE GRANTED BY THE E MPLOYER. 6.3.11. SECTION 192(2A) PERMITS THE EMPLOYER TO GRANT RELIE F UNDER THE PROVISIONS OF SECTION 89(1), READS AS FOL LOWS : (2A) WHERE THE ASSESSEE, BEING A GOVERNMENT SERVANT OR AN EMPLOYEE IN A [COMPANY, CO-OPERATIVE SOCIETY, LOCAL AUTHORITY, UNIVERSITY, INSTITUTION, ASSOCIATION OR BODY] IS EN TITLED TO THE RELIEF UNDER SUB-SECTION (1) OF SECTION 89, HE MAY FURNISH TO THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT REFERRED TO IN SUB- SECTION (1), SUCH PARTICULARS, IN SUCH FORM AND VER IFIED IN SUCH MANNER AS MAY BE PRESCRIBED, AND THEREUPON THE PERS ON RESPONSIBLE AS AFORESAID SHALL COMPUTE THE RELIEF O N THE BASIS OF SUCH PARTICULARS AND TAKE IT INTO ACCOUNT IN MAKING THE DEDUCTION UNDER SUB-SECTION (1). 6.3.12. THIS SECTION 192(2A) WAS APPLICABLE FOR RELEVANT ASSESSEMENT YEARS UNDER CONSIDERATION. ASSESSEE HAS TO SATISFY ITSELF REGARDING INCURRING OF MEDICAL EXPEN SES BY THE EMPLOYEE OR FOR THE FAMILY MEMBERS OF THE EMPLOYEES . 6.313. SUBSEQUENTLY, VIDE FINANCE ACT 2015, W.E.F. 01/06/2015 INSERTED NEW CLAUSE (2D) TO SECTION 192, THAT READS AS UNDER: (2D) THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT REFERRED TO IN SUB-SECTION (1) SHALL, FOR THE PURPOSES OF ESTIM ATING INCOME OF THE ASSESSEE OR COMPUTING TAX DEDUCTIBLE UNDER SUB- SECTION (1), OBTAIN FROM THE ASSESSEE THE EVIDENCE OR PROOF OR P ARTICULARS OF PRESCRIBED CLAIMS (INCLUDING CLAIM FOR SET-OFF OF L OSS) UNDER THE PROVISIONS OF THE ACT IN SUCH FORM AND MANNER AS MA Y BE PRESCRIBED. 6.3.14. ABOVE CLAUSE (2D) REQUIRES EMPLOYER TO OBTAIN EVIDENCE OF PROOF OR PARTICULARS OF PRESCRIBED CLAI MS UNDER THE PROVISIONS OF THE ACT FROM THE EMPLOYEE IN SUCH FORM PAGE 54 OF 74 ITA NO.507 TO 566 /BANG/2020 AND MANNER AS MAY BE PRESCRIBED FOR ESTIMATING INCO ME OF THE EMPLOYEE. 6.3.15. THE MEMORANDUM EXPLAINING INSERTION OF CLAUSE (2D) TO SECTION 192 BY FINANCE BILL 2015, READS AS UNDER: RATIONALISATION OF PROVISIONS RELATING TO TAX DEDUC TION AT SOURCE (TDS) AND TAX COLLECTION AT SOURCE (TCS) UNDER CHAPTER XVII-B OF THE ACT, A PERSON IS REQUIR ED TO DEDUCT TAX ON CERTAIN SPECIFIED PAYMENT AT THE SPECIFIED R ATE IF THE PAYMENT EXCEEDS THE SPECIFIED THRESHOLD. THE PERSON DEDUCTING TAX ('THE DEDUCTOR') IS REQUIRED TO FILE A QUARTERL Y TAX DEDUCTION AT SOURCE (TDS) STATEMENT CONTAINING THE DETAILS OF DE DUCTION OF TAX MADE DURING THE QUARTER BY THE PRESCRIBED DUE DATE. SIMILARLY, UNDER CHAPTER XVII-BB OF THE ACT, A PERSON IS REQUI RED TO COLLECT TAX ON CERTAIN SPECIFIED RECEIPTS AT THE SPECIFIED RATES. THE PERSON COLLECTING TAX ('THE COLLECTOR') ALSO IS REQUIRED T O FILE A QUARTERLY TAX COLLECTION AT SOURCE (TCS) STATEMENT CONTAINING THE DETAILS OF COLLECTION OF TAX MADE DURING THE QUARTER BY THE PR ESCRIBED DUE DATE. . UNDER SECTION 192 OF THE ACT, THE PERSON RESPONSIBL E FOR PAYING (DDO) INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' U NDER THE ACT IS AUTHORISED TO ALLOW CERTAIN DEDUCTIONS, EXEMPTIO NS OR ALLOWANCES OR SET-OFF OF CERTAIN LOSS AS PER THE PR OVISIONS OF THE ACT FOR THE PURPOSES OF ESTIMATING INCOME OF THE AS SESSEE OR COMPUTING THE AMOUNT OF THE TAX DEDUCTIBLE UNDER TH E SAID SECTION. THE EVIDENCE/PROOF/PARTICULARS FOR SOME OF THE DEDUCTIONS/EXEMPTIONS/ALLOWANCES/SET-OFF OF LOSS CL AIMED BY THE EMPLOYEE SUCH AS RENT RECEIPT FOR CLAIMING EXEMPTIO N OF HRA, EVIDENCE OF INTEREST PAYMENTS FOR CLAIMING LOSS FRO M SELF OCCUPIED HOUSE PROPERTY ETC. IS GENERALLY NOT AVAILABLE WITH THE DDO. IN THESE CIRCUMSTANCES, THE DDO HAS TO DEPEND UPON THE EVIDENCE/PARTICULARS FURNISHED, IF ANY, BY THE EMPL OYEES IN SUPPORT OF THEIR CLAIM OF DEDUCTIONS, EXEMPTIONS, E TC. AS THE EXISTING PROVISIONS OF THE ACT DO NOT CONTAIN ANY G UIDANCE REGARDING NATURE OF EVIDENCE/DOCUMENTS TO BE OBTAIN ED BY THE DDO, THERE IS NO UNIFORMITY IN THE APPROACH OF THE DDO IN THIS MATTER. IN ORDER TO BRING CLARITY IN THIS MATTER, I T IS PROPOSED TO AMEND THE PROVISIONS OF SECTION 192 OF THE ACT TO P ROVIDE THAT THE PERSON RESPONSIBLE FOR PAYING, FOR THE PURPOSES OF ESTIMATING INCOME OF THE ASSESSEE OR COMPUTING TAX DEDUCTIBLE UNDER SECTION PAGE 55 OF 74 ITA NO.507 TO 566 /BANG/2020 192(1) OF THE ACT, SHALL OBTAIN FROM THE ASSESSEE E VIDENCE OR PROOF OR PARTICULARS OF THE PRESCRIBED CLAIM (INCLUDING C LAIM FOR SET-OFF OF LOSS) UNDER THE PROVISIONS OF THE ACT IN THE PRESCR IBED FORM AND MANNER. .. (EMPHASIS SUPPLIED) 6.3.16. ON COMPARING THE PRE AND POST INSERTION OF SUB CLAUSE(2D), IN CONSONANCE WITH MEMORANDUM OF EXPLANATION, IT IS CLEAR THAT, DURING RELEVANT PERI OD UNDER CONSIDERATION, THE ASSESSEE WAS UNDER A BONAFIDE BE LIEF THAT THERE WAS NO REQUIREMENT FOR EMPLOYER TO COLLECT AN D EXAMINE THE SUPPORTING EVIDENCE TO THE DECLARATION SUBMITTED BY EMPLOYEES. THE LD.COUNSEL SUBMITTED TH AT, ASSESSEE GRANTED EXEMPTION BASED ON CBDT LETTER DAT ED 20/05/2002 AND SELF ATTESTED DECLARATION BY THE EMP LOYEES OF HAVING INCURRED THE EXPENDITURE. 6.3.17. LD.COUNSEL FURTHER SUBMITTED THAT CLAUSE (2D) TO SECTION 192, INSERTED BY FINANCE ACT, 2015, W.E.F.01/06/2015, REFERS TO RULE 26C OF IT RULES AN D FORM NO.12BB. OUR ATTENTION WAS DRAWN TO THE SAID RULES. IT WAS SUBMITTED THAT RULE 26C WAS INSERTED BY NOTIFICATIO N NO.SO 1587(E) [NO.30/2016(F.NO.142/29/2015-TPL)] DATED 29/04/2016, THAT READ AS UNDER: FURNISHING OF EVIDENCE OF CLAIMS BY EMPLOYEE FOR DEDUCTION OF TAX UNDER SECTION 192. 26C. (1) THE ASSESSEE SHALL FURNISH TO THE PERSON RESPON SIBLE FOR MAKING PAYMENT UNDER SUB-SECTION (1) OF SECTION 192 , THE EVIDENCE OR THE PARTICULARS OF THE CLAIMS REFERRED TO IN SUB-RULE (2), IN FORM NO.12BB FOR THE PURPOSE OF ESTIMATING HIS INCOME OR COMPUTING THE TAX DEDUCTION AT SOURCE. PAGE 56 OF 74 ITA NO.507 TO 566 /BANG/2020 (2) THE ASSESSEE SHALL FURNISH THE EVIDENCE OR THE PARTICULARS SPECIFIED IN COLUMN (3), OF THE TABLE BELOW, OF THE CLAIM SPECIFIED IN THE CORRESPONDING ENTRY IN COLUMN (2) OF THE SAI D TABLE: TABLE S.NO. NATURE OF CLAIMS EVIDENCE OR PARTICULARS 1 HOUSE RENT ALLOWANCE NAME, ADDRESS AND PERMANENT ACCOUNT NUMBER OF THE LANDLORD/LANDLORDS WHERE THE AGGREGATE RENT PAID DURING THE PREVIOUS YEAR EXCEEDS RUPEES ONE LAKH 2 LEAVE TRAVEL CONCESSION OR ASSISTANCE EVIDENCE OF EXPENDITURE. 3 DEDUCTION OF INTEREST UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. NAME, ADDRESS AND PERMANENT ACCOUNT NUMBER OF THE LENDER. 4 DEDUCTION UNDER CHAPTER VI-A. EVIDENCE OF INVESTMENT OR EXPENDITURE IT WAS SUBMITTED BY THE LD.COUNSEL THAT EVEN AFTER INSERTION OF CLAUSE (2D) TO SECTION 192, IN THE ABSENCE OF SP ECIFIC REQUIREMENT UNDER RULE 26C TO COLLECT EVIDENCE IN R ESPECT OF MEDICAL EXPENSES, THE EMPLOYER IS NOT OBLIGED TO CO LLECT EVIDENCE/PROOF FROM THE EMPLOYEE WITH RESPECT TO ME DICAL REIMBURSEMENT THAT FALLS UNDER CLAUSE (V) OF PROVISO TO SECTION 17(2). RELIANCE WAS PLACED ON DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS.ITI LTD (SUPRA) AND ACIT VS L&T LTD(SUPRA). PLACING RELIANCE ON FOLLOWING OBSERVATION OF HONBLE SUPREME COURT IN CASE OF ACIT VS. BHARAT V.PATEL REPORTED IN (2018) 92 TAXMANN.COM 336, IT WAS SUBMITTED PAGE 57 OF 74 ITA NO.507 TO 566 /BANG/2020 THAT, IN THE ABSENCE OF SPECIFIC PROVISION, ASSESSE E CANNOT BE SUBJECTED TO TAX. 10. IT IS A MATTER OF RECORD THAT THE RESPONDENT WAS E MPLOYED AS THE CHAIRMAN-CUM-MANAGING DIRECTOR OF THE (P&G) IND IA LTD. AT THE RELEVANT TIME AND THE SAID COMPANY IS THE SUBSIDIAR Y OF (P&G) USA THROUGH RICHARDSON VICKS INC. USA AND THAT (P&G) US A OWNED CONTROLLING EQUITY. IT IS AN UNDISPUTED FACT THAT T HE RESPONDENT WAS WORKING AS A SALARIED EMPLOYEE. THE (P&G) USA WAS T HE COMPANY WHO HAD ISSUED THE STOCK APPRECIATION RIGHTS (SARS. ) TO THE RESPONDENT WITHOUT ANY CONSIDERATION FROM 1991 TO 1 996. THE SAID SARS WERE REDEEMED ON 15.10.1997 AND IN LIEU O F THAT THE RESPONDENT RECEIVED AN AMOUNT OF RS 6,80,40,724/- F ROM (P&G) USA. HOWEVER, WHEN THE RESPONDENT FILED HIS RETURN, HE CLAIMED THIS AMOUNT AS AN EXEMPTION FROM THE AMBIT OF INCOM E TAX. THE ISSUE INVOLVED IN THIS APPEAL IS IN RESPECT OF RS 6 ,80,40,724/- MADE ON ACCOUNT OF AMOUNT RECEIVED ON REDEMPTION OF STOCK APPRECIATION RIGHTS. 11. THE TRIBUNAL WAS OF THE VIEW THAT THE STOCK OPTION S ARE CAPITAL ASSETS AND SUCH ASSETS IN THE INSTANT CASE ACQUIRED FOR CONSIDERATION, HENCE, GAIN ARISING THEREFROM IS LIA BLE TO CAPITAL GAIN TAX. HOWEVER, THE STAND OF THE REVENUE BEFORE THE T RIBUNAL WAS THAT THE AMOUNT IN QUESTION IS TAXABLE AS PERQUISIT E UNDER SECTION 17(2)(III) OF THE IT ACT OR IN ALTERNATIVELY UNDER SECTION 28(IV) OF THE IT ACT INSTEAD OF CAPITAL GAINS. THE HIGH COURT ALS O UPHELD THE VIEW OF THE TRIBUNAL BUT THE HIGH COURT DISAGREED THAT S UCH CAPITAL GAINS AROSE TO THE RESPONDENT ON REDEMPTION OF STOC K APPRECIATION RIGHTS SINCE THERE WAS NO COST OF ACQUISITION INVOL VED FROM THE SIDE OF THE RESPONDENT. THE MEANING OF THE WORD PERQUISI TE FOR THE INSTANT CASE IS GIVEN UNDER SECTION 17(2) OF THE IT ACT. THE REVENUE ALTERNATIVELY CONTENDED THAT THE CASE OF THE RESPON DENT SHOULD COME UNDER THE AMBIT OF SECTION 28(IV) OF THE IT AC T. 12. IT IS APPOSITE TO NOTE HERE THAT, PARTICULARLY, IN ORDER TO BRING THE PERQUISITE TRANSFERRED BY THE EMPLOYER TO THE E MPLOYEES WITHIN THE AMBIT OF TAX, LEGISLATURE BROUGHT AN AMENDMENT UNDER SECTION 17 OF THE IT ACT BY INSERTING CLAUSE (IIIA) IN SECT ION 17(2) OF THE IT ACT THROUGH THE FINANCE ACT, 1999 (27 OF 1999) WITH EFFECT FROM 01.04.2000, WHICH WAS LATER ON OMITTED BY THE FINAN CE ACT, 2000. THE SAID CLAUSE (IIIA) AS IT WAS THEN IS REPRODUCED HEREIN BELOW: '(IIIA) THE VALUE OF ANY SPECIFIED SECURITY ALLOTTE D OR TRANSFERRED, DIRECTLY OR INDIRECTLY, BY ANY PERSON FREE OF COST OR AT CONCESSIONAL RATE, TO AN INDIVIDUAL WHO IS OR HAS BEEN IN EMPLOY MENT OF THAT PERSON: PAGE 58 OF 74 ITA NO.507 TO 566 /BANG/2020 PROVIDED THAT IN A CASE WHERE ALLOTMENT OR TRANSFER OF SPECIFIED SECURITIES IS MADE IN PURSUANCE OF AN OPTION EXERCI SED BY AN INDIVIDUAL, THE VALUE OF THE SPECIFIED SECURITIES S HALL BE TAXABLE IN THE PREVIOUS YEAR IN WHICH SUCH OPTION IS EXERCISED BY SUCH INDIVIDUAL. EXPLANATION- FOR THE PURPOSES OF THIS CLAUSE, (A) 'COST' MEANS THE AMOUNT ACTUALLY PAID FOR ACQUIRING SPECIFIED SECURITIES AND WHERE NO MONEY HAS BEEN PAID, THE CO ST SHALL BE TAKEN AS NIL; (B) 'SPECIFIED SECURITIES' MEANS THE SECURITIES AS DEFI NED IN CLAUSE(H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956) AND INCLUDES EMPLOYEES' STOC K OPTION AND SWEET EQUITY SHARES; (C) 'SWEAT EQUITY SHARES' MEANS EQUITY SHARES ISSUED BY A COMPANY TO ITS EMPLOYEES OR DIRECTORS AT A DISCOUNT OR FOR CONSIDERATION OTHER THAN CASH FOR PROVIDING KNOW-HO W OR MAKING AVAILABLE RIGHTS IN THE NATURE OF INTELLECTU AL PROPERTY RIGHTS OR VALUE ADDITIONS, BY WHATEVER NAME CALLED; AND (D) 'VALUE' MEANS THE DIFFERENCE BETWEEN THE FAIR MARKE T VALUE AND THE COST FOR ACQUIRING SPECIFIED SECURITIES;' 13. THE INTENTION BEHIND THE SAID AMENDMENT BROUGHT BY THE LEGISLATURE WAS TO BRING THE BENEFITS TRANSFERRED B Y THE EMPLOYER TO THE EMPLOYEES AS IN THE INSTANT CASE, WITHIN THE AM BIT OF THE INCOME TAX ACT, 1961. IT WAS THE FIRST TIME WHEN TH E LEGISLATURE SPECIFIED THE MEANING OF THE COST FOR ACQUIRING SPE CIFIC SECURITIES. ONLY BY THIS AMENDMENT, LEGISLATURE DETERMINED WHAT WOULD CONSTITUTE THE SPECIFIC SECURITIES. BY THIS AMENDME NT, LEGISLATURE CLEARLY COVERED THE DIRECT OR INDIRECT TRANSFER OF SPECIFIED SECURITIES FROM THE EMPLOYER TO THE EMPLOYEES DURING OR AFTER THE EMPLOYMENT. ON A PERUSAL OF THE SAID CLAUSE, IT IS EVIDENT THAT THE CASE OF THE RESPONDENT FALLS UNDER SUCH CLAUSE. HOW EVER, SINCE THE TRANSACTION IN THE INSTANT CASE PERTAINS TO PRIOR T O 01.04.2000, HENCE, SUCH TRANSACTION CANNOT BE COVERED UNDER THE SAID CLAUSE IN THE ABSENCE OF AN EXPRESS PROVISION OF RETROSPECTIV E EFFECT. WE ALSO DO NOT FIND ANY FORCE IN THE ARGUMENT OF THE REVENU E THAT THE CASE OF THE RESPONDENT WOULD FALL UNDER THE AMBIT OF SEC TION 17(2) (III) OF THE IT ACT INSTEAD OF SECTION 17(2) (IIIA) OF THE I T ACT. IT IS A FUNDAMENTAL PRINCIPLE OF LAW THAT A RECEIPT UNDER T HE IT ACT MUST BE MADE TAXABLE BEFORE IT CAN BE TREATED AS INCOME. COURTS CANNOT CONSTRUE THE LAW IN SUCH A WAY THAT BRINGS AN INDIV IDUAL WITHIN THE AMBIT OF INCOME TAX ACT TO PAY TAX WHO OTHERWISE IS NOT LIABLE TO PAY. IN THE ABSENCE OF ANY SUCH SPECIFIC PROVISION, IF AN INDIVIDUAL IS SUBJECTED TO PAY TAX, IT WOULD AMOUNT TO THE VIO LATION OF HIS CONSTITUTIONAL RIGHT PAGE 59 OF 74 ITA NO.507 TO 566 /BANG/2020 IT IS SUBMITTED THAT, ASSESSEE THUS MADE AN HONEST ESTIMATION OF TDS AS PER SECTION 192(1) OF THE ACT BASED ON DECLARATION FILED BY EMPLOYEES. 6.3.17. WE NOTE THAT, THIS TRIBUNAL CONSIDERED SIMILAR SUBMISSION IN CASE OF ACIT VS. INFOSYS BPO LTD.(SUPRA) AND EXPLAINED THE LAW ON THE ISSUE OF BONAFIDE BELIEF IN THE MATTER OF ESTIMATION OF INCOME UNDER THE HEAD 'SALA RIES' FOR THE PURPOSE OF SECC.192 OF THE ACT, IN THE FOLLOWIN G MANNER: '26. IT IS NO DOUBT TRUE THAT TDS IS TO BE MADE AT THE TIME OF PAYMENT OF SALARY AND NOT ON THE BASIS OF SALARY AC CRUED. SEC.192(3) OF THE ACT PERMITS THE EMPLOYER TO INCRE ASE OR REDUCE THE AMOUNT OF TDS FOR ANY EXCESS OR DEFICIENCY. WE HAVE ALREADY NOTICED THAT THE FACT THAT BILLS/EVIDENCE TO SUBSTA NTIATE INCURRING OF EXPENDITURE ON MEDICAL TREATMENT UP TO RS.15,000 /- AND THE AVAILING OF THE LTC BY THE EMPLOYEES AND THE FULFIL MENT OF THE CONDITIONS CONTEMPLATED BY SEC.10(5) OF THE ACT FOR AVAILING EXEMPTION BY THE EMPLOYEES SO AVAILING LTC, HAVE NO T BEEN DISPUTED BY THE AO. EVEN ASSUMING THE CASE OF THE A O, THAT AT THE TIME OF PAYMENT THE ASSESSEE OUGHT TO HAVE DEDU CTED TAX AT SOURCE, IS SUSTAINABLE; THE ASSESSEE ON A REVIEW OF THE TAXES DEDUCTED DURING THE EARLIER MONTHS OF THE PREVIOUS YEAR IS ENTITLED TO GIVE EFFECT TO THE DEDUCTIONS PERMISSIB LE UNDER PROVISO (IV) TO SEC.17(2) OR EXEMPTION U/S.10(5) OF THE ACT IN THE LATER MONTHS OF THE PREVIOUS YEAR. WHAT HAS TO BE SEEN IS THE TAXES TO BE DEDUCTED ON INCOME UNDER THE HEAD 'SALARIES' AS ON THE LAST DATE OF THE PREVIOUS YEAR. THE CASE OF THE AO IS TH AT LTC AND MEDICAL REIMBURSEMENT SHOULD BE PAID AT THE TIME TH E EXPENDITURE IS INCURRED OR AFTER THE EXPENDITURE IS INCURRED BY WAY OF REIMBURSEMENT AND NOT AT AN EARLIER POINT OF TIME. IF IT IS SO PAID, THEN, EVEN THOUGH THE PAYMENT WOULD NOT FO RM PART OF TAXABLE SALARY OF AN EMPLOYEE, THE EMPLOYER HAS TO DEDUCT TAX AT SOURCE TREATING IT AS PART OF SALARY, IS CONTRARY T O THE PROVISIONS OF SEC.192(3) OF THE ACT AND CANNOT BE SUSTAINED. THE RELIANCE PLACED BY THE AO ON THE EXPRESSION 'ACTUALLY INCURR ED' FOUND IN SEC.10(5) OF THE ACT AND PROVISO (IV) TO SEC.17(2) OF THE ACT, IN OUR VIEW CANNOT BE SUSTAINED. IN ANY EVENT, THE INTERPR ETATION OF THE WORD 'ACTUALLY PAID' IS NOT RELEVANT WHILE ASCERTAI NING THE PAGE 60 OF 74 ITA NO.507 TO 566 /BANG/2020 QUANTUM OF TAX THAT HAS TO BE DEDUCTED AT SOURCE U/ S.192 OF THE ACT. AS FAR AS THE ASSESSEE IS CONCERNED, HIS OBLIG ATION IS ONLY TO MAKE AN 'ESTIMATE' OF THE INCOME UNDER THE HEAD 'SA LARIES' AND SUCH ESTIMATE HAS TO BE A BONAFIDE ESTIMATE. 27. THE PRIMARY LIABILITY OF THE PAYEE TO PAY TAX R EMAINS. SECTION 191 CONFIRMS THIS. IN A SITUATION OF HONEST DIFFERE NCE OF OPINION, IT IS NOT THE DEDUCTOR THAT IS TO BE PROCEEDED AGAINST BUT THE PAYEES OF THE SUMS. TO REITERATE, THE PAYMENT TOWARDS MEDI CAL EXPENDITURE AND LEAVE TRAVEL IS MADE KEEPING IN VIE W THE EMPLOYEE WELFARE. THE EXCLUSION IN RESPECT OF PAYME NT TOWARDS MEDICAL EXPENDITURE AND LEAVE TRAVEL IS CONSIDERED AFTER VERIFYING THE DETAILS AND EVIDENCE FURNISHED BY THE EMPLOYEES . NO EXEMPTION IS GRANTED IN THE ABSENCE OF DETAILS AND/ OR EVIDENCE. THE EXEMPTION IN RESPECT OF MEDICAL EXPENDITURE IS RESTRICTED TO EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEES, OR RS. 15,000/- WHICHEVER IS LOWER. THE EXEMPTION IS GRANTED EVEN I F THE PAYMENT PRECEDES THE INCURRENCE OF EXPENDITURE. THE REQUIREMENTS/CONDITIONS OF SECTION 10(5) AND PROVIS O TO SECTION 17(2) ARE METICULOUSLY FOLLOWED BEFORE EXTENDING TH E DEDUCTION/EXEMPTION TO AN EMPLOYEE. NO TAX CAN BE R ECOVERED FROM THE EMPLOYER ON ACCOUNT OF SHORT DEDUCTION OF TAX AT SOURCE UNDER SECTION 192 IF A BONA FIDE ESTIMATE OF SALARY TAXABLE IN THE HANDS OF THE EMPLOYEE IS MADE BY THE EMPLOYER, IS T HE RATIO OF THE FOLLOWING DECISIONS. CIT V. NICHOLAS PIRAMAL INDIA LTD (2008) 299 ITR 03 56 (BOMBAY); CIT V. SEMICONDUCTOR COMPLEX LTD [2007] 292 ITR 636 (P&H) CIT V. HCL INFO SYSTEM LTD. [2006] 282 ITR 263 (DEL ) CIT V OIL AND NATURAL GAS CORPORATION LTD [2002] 25 4 ITR 121 (GUJ) ITO V GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD [2 001] 247 ITR 305 (GUJ) CIT V NESTLE INDIA LTD (2000) 243 ITR 0435 (DEL) GWALIOR RAYON SILK CO. LTD. V. CIT [1983] 140 ITR 8 32 (MP) ITO V G. D. GOENKA PUBLIC SCHOOL (NO. 2) [2008] 306 ITR (AT) 78 (DEL) USHA MARTIN INDUSTRIES LTD. V. ACIT (2004) 086 TTJ 0574 (KOL) NESTLE INDIA LTD. V. ACIT (1997) 61 ITD 444 (DEL) INDIAN AIRLINES LTD. V ACIT (1996) 59 ITD 353 (MUM) ' 6.3.18. THIS TRIBUNAL IN CASE OF KPTCL VS.ITO REPORTED IN (2018) 93 TAXMANN.COM 89 , FOLLOWING THE ABOVE OBSERVATIONS IN ACIT VS.INFOSYS BPO LTD . (SUPRA) , HELD AS UNDER: PAGE 61 OF 74 ITA NO.507 TO 566 /BANG/2020 '19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN O UR VIEW, THE PLEA OF THE ASSESSEE THAT IT MADE A BONA FIDE ESTIM ATE OF EMPLOYEE'S SALARY BY VALUING THE PERQUISITES IN THE FORM OF RESIDENTIAL ACCOMMODATION PROVIDED TO THE EMPLOYEES BY VALUING THE SAME AS IF EMPLOYEES WERE EMPLOYEES OF CENTRAL GOVT. HAS TO BE ACCEPTED. IN THIS REGARD, IT IS CLEAR FROM THE R ECORDS THAT THE POSITION WITH REGARD TO THE ASSESSEE NOT BEING A CE NTRAL GOVT. WAS BROUGHT TO ITS NOTICE BY THE DEPARTMENT ONLY IN THE PROCEEDINGS INITIATED IN 2013. EVEN THEREAFTER, THE ASSESSEE HAS BEEN TAKING A STAND THAT ITS EMPLOYEES OR EMPLOYEES OF CENTRAL GOVT. AS HELD IN SEVERAL DECISION REFERRED TO BY TH E LD. COUNSEL FOR THE ASSESSEE, THE OBLIGATION OF THE ASSESSEE IS ONL Y TO MAKE A BONAFIDE ESTIMATE OF THE SALARY. IN OUR VIEW, IN TH E FACTS AND CIRCUMSTANCE OF THE PRESENT CASE, ASSESSEE HAS MADE SUCH AN ESTIMATE. THE ASSESSEE'S OBLIGATION U/S.192 IS THER EFORE PROPERLY DISCHARGED AND HENCE PROCEEDINGS U/S.201(1) & 201(1 A) OF THE ACT HAVE TO BE QUASHED AND ARE HEREBY QUASHED.' 6.3.19. THE ABOVE OBSERVATION WAS IN THE CONTEXT OF TREATIN G THE EMPLOYEES OF KEB WHO BECAME EMPLOYEES OF KPTCL ON ITS CREATION WERE EQUATED WITH EMPLOYEES OF THE STA TE GOVERNMENT AND THEREFORE THE PLEA OF BONAFIDE BELIE F WHILE ESTIMATING INCOME WAS ACCEPTED. 6.3.20. RELIANCE WAS PLACED ON DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD., REPORTED IN (2016) 388 ITR 457 , WHEREIN ISSUE CONSIDERED BY THEIR LORDSHIPS WAS REG ARDING PER-DIEM ALLOWANCE PAID TO THE EMPLOYEES, AS A PART OF SALARY, BY SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD., WHICH WAS NOT SUBJECT TO DEDUCTION AT SOURCE UNDER SECTION 192 BY THE EMPLOYER THEREIN. HONBLE COURT RECORDED FOLLOWING OBSERVATIONS BY THIS TRIBUNAL : 3. WE MAY RECORD THAT THE TRIBUNAL IN THE IMPUGNED OR DER WHILE CONSIDERING THE AFORESAID ASPECT HAS OBSERVED AT PA RAGRAPHS 4.3.1 TO 4.3.3 AS UNDER : PAGE 62 OF 74 ITA NO.507 TO 566 /BANG/2020 '4.3.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD ; INCLU DING THE JUDICIAL PRONOUNCEMENTS AND GOVERNMENT OF INDIA CIRCULARS CI TED AND REFERRED TO. THE FACTS OF THE MATTER IN RESPECT OF PAYMENT OF PER DIEM BY THE ASSESSEE TO ITS EMPLOYEES TRAVELLING FO R BUSINESS/OFFICIAL TRIPS TO USA AND EUROPE AT $ 50 A ND $ 75 RESPECTIVELY TO COVER ACTUAL EXPENSES OF MEALS, TRA VEL, LAUNDRY AND OTHER MISCELLANEOUS EXPENSES ETC. ARE NOT DISPU TED AND THE CONTRASTING VIEWS OF BOTH THE ASSESSEE AND THE ASSE SSING OFFICER THEREON ; AS TO THE SAME BEING REASONABLE AND EXEMP T UNDER SECTION 10(14) OF THE ACT OR LIABLE TO DEDUCTION OF TAX UNDER SECTION 192 OF THE ACT HAVE BEEN LAID OUT BRIEFLY AT PARAS 2.1 TO 2.3 OF THIS ORDER (SUPRA). 4.3.2 WE FIND THAT THE LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS)'S IN THEIR IMPUGNED ORDERS HAD CONSIDERED THE DECISIONS OF THE INCOME-TAX APPELLATE TRIBUNAL, KOLKATA BENCH IN THE CASE OF SAPTARSHI GHOSH (SUPRA) AND DECISION OF THE MUMBAI BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF MADANL AL MOHANLAL NARANG (SUPRA) WHEREIN IT WAS HELD THAT IT IS NOT O PEN TO THE REVENUE TO CALL FOR DETAILS OF EXPENDITURE INCURRED UNLESS THE PER DIEM ALLOWANCE PAID IS DISPROPORTIONATELY HIGH COMP ARED TO THE SALARY RECEIVED OR WITH REGARD TO THE DUTIES PERFOR MED BY THE EMPLOYEE. IN THE CONTEXT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ALSO EXAMINED THE CIRCULAR NO. Q/FD/695/1 /90, DATED NOVEMBER 11, 1996 AND CIRCULAR NO. Q/FD/695/2/2000, DATED SEPTEMBER 21, 2010 ISSUED BY MINISTRY OF EXTERNAL A FFAIRS, GOVERNMENT OF INDIA AND CAME TO THE CONCLUSION THAT THE PER DIEM ALLOWANCE OF $ 50 TO $ 75 PAID BY THE ASSESSEE TO I TS EMPLOYEES ON OFFICIAL TRIPS TO USA AND EUROPE TO BE REASONABL E AND THAT THE SAME WOULD BE COVERED AS EXEMPT UNDER SECTION 10(14 ) OF THE ACT. IN THE IMPUGNED ORDER FOR THE ASSESSMENT YEAR 2009-10 DATED SEPTEMBER 25, 2014, THE LAST OF THE IMPUGNED ORDERS TO BE PASSED, THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) HELD AS UNDER AT 3 TO 5 AS UNDER : '3. I HAVE CAREFULLY CONSIDERED THE FACTS, THE APPE LLANT'S SUBMISSIONS AND PERUSED THE IMPUGNED ORDER. I AGREE WITH THE ARGUMENT OF LEARNED AUTHORISED REPRESENTATIVE T HAT THE PER DIEM ALLOWANCE PAID TO ITS EMPLOYEES QUALIFIES FOR EXEMPTION UNDER SECTION 10(14)(I) OF THE ACT READ W ITH RULE 2BB(1). CLAUSE (B) OF RULE 2BB(1) REFERS TO ANY ALL OWANCE TO MEET THE ORDINARY DAILY CHARGES INCURRED BY AN EMPL OYEE ON ACCOUNT OF ABSENCE FROM NORMAL PLACE OF DUTY. THERE IS NO MONETARY LIMIT PRESCRIBED AND HENCE UNLESS SUCH ALL OWANCE IS SAID TO BE FICTITIOUS OR ABNORMALLY HIGH OR OTHE RWISE TAXABLE PAGE 63 OF 74 ITA NO.507 TO 566 /BANG/2020 IN THE HANDS OF THE EMPLOYEE, NO LIABILITY COULD BE FASTENED UNDER SECTION 192 ON THE EMPLOYER TO DEDUCT TAX ON SUCH ALLOWANCE. MOREOVER, IT IS ALSO NOT POSSIBLE TO COL LATE BILLS FOR EVERY MINUSCULE EXPENSES AND MERE NON-COLLATION OF BILLS IN SUPPORT OF AMOUNT EXPENSES CANNOT PREVAIL OVER THE FACT OF INCURRING SUCH EXPENSES. IT IS FOUND THAT THE ASSES SING OFFICER HAS NOT GONE THROUGH THE CENTRAL BOARD OF DIRECT TA XES CIRCULAR WHEREIN IT IS CLARIFIED THAT WHERE SPECIFI C ALLOWANCES ARE REASONABLE WITH REFERENCE TO THE NATURE OF THE DUTIES PERFORMED BY THE EMPLOYEE AND ARE NOT DISPROPORTION ATELY HIGH COMPARED TO THE SALARY RECEIVED BY HIM, NO ATT EMPT WILL ORDINARILY BE MADE TO CALL FOR DETAILS OF EXPENSES ACTUALLY INCURRED BY HIM WITH A VIEW TO DISENTITLING HIM TO SOME EXTENT FROM THE EXEMPTION. 3.1 USEFUL REFERENCE COULD ALSO BE MADE TO THE FOLL OWING DECISIONS: 1. CIT V. LARSEN AND TOUBRO LTD.[2009] 313 ITR 1 (S C) 2. CIT V. I.T.I. LTD.[2009] 221 CTR (SC) 619 3. CIT V. GOSLINO MARIO[2000] 241 ITR 312 (SC) ; AN D 4. CIT V. MICRO LAND LTD.[2010] 323 ITR 670 (KARN.) TO THE QUESTION AS TO WHETHER ASSESSEE-EMPLOYER IS BOUND TO COLLECT AND VERIFY PROOF OF JOURNEY AND ACTUAL EXPE NDITURE INCURRED FOR SECTION 10(5) BEFORE GRANTING EXEMPTIO N UNDER THAT PROVISION, IT WAS HELD BY THE HON'BLE COURTS THAT T HERE IS NO SUCH REQUIREMENT IN THE LAW. THE PROVISION OF SECTI ON 10(14) AND 10(5) ARE SOMEWHAT PARI MATERIA, IN THE SENSE T HAT PROVISO TO SECTION 10(5) ALSO PUTS A CEILING THAT S UCH ALLOWANCE SHALL NOT EXCEED THE ACTUAL EXPENDITURE. IN ANY CAS E, THE ALLOWANCE CANNOT BE DENIED EXEMPTION UNDER SECTION 10(14) AND ASSESSEE-EMPLOYER SAID TO BE IN DEFAULT FOR FAI LURE TO DEDUCT TAX ON THE GROUND OF ABSENCE OF PROOF OF SUC H ACTUAL EXPENSES ON FOOD, TRAVEL, LAUNDRY INCURRED BY THE E MPLOYEES, WHILE PERFORMING DUTIES IN A FOREIGN COUNTRY. 3.2 IN VIEW OF THE ABOVE REASONS, ALSO ACCEPTED IN CASE OF APPELLANT FOR THE ASSESSMENT YEAR 2011-12 (APPELLAT E ORDER DATED OCTOBER 17, 2013) WHERE IT WAS HELD THAT THE PER DIEM ALLOWANCE IS REASONABLE AT $ 50 TO $ 75 FOR THE US AND EUROPE, AND WOULD BE COVERED UNDER SECTION 10(14). THE APPELLANT COULD NOT BE SAID TO BE IN DEFAULT WITHIN THE MEANING OF SECTION 201(1) FOR NOT INCLUDING SUCH ATTEMPT AL LOWANCE FOR THE PURPOSE OF SECTION 192. THE ASSESSING OFFICER I S DIRECTED TO EXCLUDE SUCH AMOUNTS OF PER DIEM ALLOWANCES FORM TH E AMOUNTS LIABLE TO DEDUCTION OF TAX AT SOURCE UNDER SECTION 192. PAGE 64 OF 74 ITA NO.507 TO 566 /BANG/2020 APPELLATE GROUNDS OF APPEAL (NOS. 1.1 TO 1.4) ON TH E ISSUE ARE ALLOWED. 4. THE OTHER GROUND (NO. 2) OF APPEAL RAISED IS WIT H REGARD TO LEVYING OF INTEREST UNDER SECTION 201(1A), AMOUNTIN G TO RS. 12,93,117 RELATING TO DEFAULT UNDER SECTION 201(1) READ WITH SECTION 192. SINCE, THE ASSESSEE HAS BEEN HELD TO B E NOT IN DEFAULT UNDER SECTION 201(1) WITH REGARD TO THE PER DIEM ALLOWANCES PAID THE INTEREST UNDER SECTION 201(1A) IS ALSO HELD TO BE NOT CHARGEABLE, AND HENCE DELETED. 5. AS A RESULT, THE APPEAL IS ALLOWED.' 4.3.3 BEFORE US, EXCEPT FOR RAISING THE GROUNDS OF APPEAL AND SUPPORTING THE VIEWS OF THE ASSESSING OFFICER, WHIC H ARE NOT TENABLE IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS OF THE TRIBUNAL AND THE CIRCULARS OF MINISTRY OF EXTERNAL AFFAIRS, GOVERNMENT OF INDIA REFERRED TO ABOVE, THE REVENUE HAS NOT BEEN A BLE TO CONTROVERT THE FINDINGS IN THE IMPUGNED ORDERS OF T HE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). FOLLOWING THE DECISION OF THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL, KOLKATA BENCH IN THE CASE OF SAPTARSHI GHOSH (SUPRA) WHEREIN IT HAS BEEN HELD THAT THERE IS NO REQUIREMENT FOR THE ASSESSEE-EMPLOYER T O COLLECT AND VERIFY THE PROOF OF JOURNEY, ACTUAL EXPENDITURE INC URRED IN RESPECT OF PER DIEM ALLOWANCE AND FURTHER THAT IT IS NOT OP EN TO THE REVENUE TO CALL FOR DETAILS OF EXPENDITURE UNLESS T HE ALLOWANCES ARE HIGHLY DISPROPORTIONATE OR UNREASONABLE TO THE SALARY RECEIVED OR NATURE OF DUTIES PERFORMED. WE ALSO CONCUR WITH THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) TH AT, IN THE LIGHT OF THE CIRCULARS ISSUED BY THE MINISTRY OF EX TERNAL AFFAIRS, GOVERNMENT OF INDIA DATED NOVEMBER 11, 1996 AND SEP TEMBER 21, 2010 (SUPRA), THE PER DIEM ALLOWANCE OF $ 50 TO $ 75 PAID TO EMPLOYEES ON THEIR OFFICIAL TRIPS TO USA AND EUROPE ARE REASONABLE AND WOULD BE EXEMPT UNDER SECTION 10(4) OF THE ACT. IN THIS VIEW OF THE MATTER, WE UPHOLD THE DECISIONS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), THAT SINCE TH E ASSESSEE HAS BEEN HELD TO BE NOT IN DEFAULT UNDER SECTION 20 1(1) OF THE ACT WITH REGARD TO PER DIEM ALLOWANCES PAID, INTEREST U NDER SECTION 201(1A) OF THE ACT IS ALSO CONSEQUENTLY NOT CHARGEA BLE. CONSEQUENTLY, THE GROUNDS AT S. NOS. 1 TO 4 RAISED BY THE REVENUE ARE REJECTED FOR ALL THE THREE ASSESSMENT Y EARS 2009-10 TO 2011-12.' 4. THE AFORESAID SHOWS THAT THE TRIBUNAL HAS FOLLOWED ITS EARLIER JUDICIAL PRONOUNCEMENT OF KOLKATA BENCH AND HAS ALS O CONSIDERED CIRCULARS ISSUED BY THE MINISTRY OF EXTERNAL AFFAIR S, GOVERNMENT OF INDIA INSTRUCTING THAT IF THE AMOUNT WHICH IS STATE D TO HAVE BEEN PAID AS PER DIEM ALLOWANCE WAS NOT HIGHLY DISPROPOR TIONATE OR NOT UNREASONABLE, THE FURTHER VERIFICATION OF THE ACTUA L EXPENDITURE IS PAGE 65 OF 74 ITA NO.507 TO 566 /BANG/2020 NOT TO BE CONSIDERED. THE RESULTANT EFFECT IS THAT THE AMOUNT IS TO BE TREATED AS BY WAY OF REIMBURSEMENT OF EXPENSES. 5. MR. ARAVIND, LEARNED COUNSEL APPEARING FOR THE APP ELLANT, RAISED THE CONTENTION THAT AS PER SECTION 17(1)(IV) OF THE INCOME-TAX ACT, 1961 ('THE ACT' FOR SHORT), THE AMOUNT WOULD FALL I N THE CATEGORY OF PERQUISITES IN ADDITION TO THE SALARY OR WAGES AND THEREFORE, THE TAX WAS DEDUCTIBLE AT SOURCE. HOWEVER, WHEN HE WAS CONF RONTED WITH THE NATURE OF THE AMOUNT AS TO WHETHER SUCH AMOUNT IS TAXABLE OR NOT, HE SUBMITTED THAT AS PER SECTION 10(14) IF IT IS BY WAY OF REIMBURSEMENT, SUCH AMOUNT WOULD NOT BE TAXABLE. BU T IT IS HIS SUBMISSION, THE PAYMENT MADE CANNOT BE TREATED AS REIMBURSEMENT BECAUSE IT IS PAID WITHOUT VERIFICATI ON OF THE EXPENSES ALREADY INCURRED BY THE EMPLOYEE CONCERNED . 6. SECTION 10(14) OF THE ACT READS AS UNDER : '(14)(I) ANY SUCH SPECIAL ALLOWANCE OR BENEFIT, NOT BEING IN THE NATURE OF A PERQUISITE WITHIN THE MEANING OF CLAUSE (2) OF SECTION 17, SPECIFICALLY GRANTED TO MEET EXPENSES WHOLLY, N ECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMENT OF PROFIT, AS MAY BE PRESCRIBE D, TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED FOR THAT PURPOSE ; (II) ANY SUCH ALLOWANCE GRANTED TO THE ASSESSEE EIT HER TO MEET HIS PERSONAL EXPENSES AT THE PLACE WHERE THE DUTIES OF HIS OFFICE OR EMPLOYMENT OF PROFIT ARE ORDINARILY PERFORMED BY HIM OR AT THE PLACE WHERE HE ORDINARILY RESIDES, OR TO COMPEN SATE HIM FOR THE INCREASED COST OF LIVING, AS MAY BE PRESCRIBED AND TO THE EXTENT AS MAY BE PRESCRIBED : PROVIDED THAT NOTHING IN SUB-CLAUSE (II) SHALL APPL Y TO ANY ALLOWANCE IN THE NATURE OF PERSONAL ALLOWANCE GRANT ED TO THE ASSESSEE TO REMUNERATE OR COMPENSATE HIM FOR PERFOR MING DUTIES OF A SPECIAL NATURE RELATING TO HIS OFFICE O R EMPLOYMENT UNLESS SUCH ALLOWANCE IS RELATED TO THE PLACE OF HI S POSTING OR RESIDENCE ;' THE AFORESAID SHOWS THAT IF ANY ALLOWANCE OR BENEFI T NOT BEING IN THE NATURE OF PERQUISITE IS GRANTED TO MEET THE EXP ENSES WHOLLY, NECESSARILY OR EXCLUSIVELY INCURRED IN PERFORMANCE OF DUTIES, TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED WOULD FALL IN THE SAID CATEGORY. IT IS THE CASE OF THE ASSESSEE T HAT THE PAYMENT WAS NOT MADE AS AN ALLOWANCE ON PAR WITH THE PERQUI SITES, BUT THE CASE OF THE ASSESSEE WAS THAT THE PAYMENT WAS MADE TO MEET THE EXPENSES INCURRED. WHEN THE PAYMENT IS MADE TO MEET THE EXPENSES INCURRED AND WHEN NOT TAXABLE UNDER SECTIO N 10(14) OF THE ACT MERELY BECAUSE THE ACTUAL EXPENSES WERE NOT VERIFIED, THE CHARACTER OR NATURE OF THE PAYMENT WOULD NOT BE CHA NGED SO AS TO INCLUDE UNDER SECTION 17(2) OF THE ACT. ON THE ASPE CTS OF PAGE 66 OF 74 ITA NO.507 TO 566 /BANG/2020 VERIFICATION, THE TRIBUNAL HAS RELIED UPON NOT ONLY ITS OWN DECISION BUT HAS FURTHER RELIED UPON THE CIRCULAR ISSUED BY THE MINISTRY. 7. IN VIEW OF THE ABOVE, WE DO NOT FIND, ANY SUBSTANT IAL QUESTION OF LAW, WOULD ARISE FOR CONSIDERATION, AS CANVASSED. H ENCE, ALL THE APPEALS ARE DISMISSED 6.3.21. LD.COUNSEL ALSO PLACED RELIANCE ON CBDT CIRCULAR NO.15 DATED 08/05/1969 AND SUBMITTED THAT REIMBURSEMENT ON THE BASIS OF DECLARATION BY THE EM PLOYEES IS PERMISSIBLE. IT WAS SUBMITTED THAT FOR PURPOSES OF CALCULATION OF TAX DEDUCTED AT SOURCE UNDER SECTION 192, SELF CERTIFICATION ON THE PART OF EMPLOYEE THAT EXPENDIT URE HAVE BEEN INCURRED AND HAS BEEN USED BY THE EMPLOYEE FOR PURPOSES OF SELF OR FAMILY MEMBERS WAS ADEQUATE. TH E LD.COUNSEL PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF CIT (TDS) VS OIL AND NATURAL GAS CORPORATION LTD REPORTED IN 2020122 TAXMANN.COM 159 . THEIR LORDSHIPS IN THIS CASE CONSIDERED THE ISSUE A S TO WHETHER ASSESSEE EXEMPTION GRANTED BY ASSESSEE TOWA RDS UNIFORM ALLOWANCE UNDER SECTION 10(14)( I ) OF THE ACT ON THE BASIS OF SELF-CERTIFICATION GIVEN BY THE EMPLOYEES WITHOUT VERIFYING WHETHER SUCH EXPENDITURE HAD ACTUALLY BEE N INCURRED, FULFILLED NECESSARY CONDITION. ASSESSEE T HEREIN RELIED ON CIRCULAR 15 ISSUED BY CBDT DATED 08/05/ 1 969 ENABLING THE ASSESSEE FOR NON-DEDUCTION OF TAX FROM THE REIMBURSEMENT ALLOWANCE ON THE BASIS OF UTILISATION CERTIFICATE OF THE EMPLOYEE. THEIR LORDSHIPS OBSER VED AS UNDER: PAGE 67 OF 74 ITA NO.507 TO 566 /BANG/2020 23. IN TERMS OF THE ABOVE CIRCULAR NO. 15 DATED 8-5-19 69, FOR THE PURPOSE OF CALCULATION OF TAX DEDUCTIBLE AT SOURCE UNDER SE CTION 192, SELF- CERTIFICATION ON THE PART OF THE EMPLOYEE THAT THE CONVEYANCE WAS OWNED BY HIM AND BEING USED BY HIM FOR THE PURPOSES OF EMPLO YMENT WAS ADEQUATE. THE PRESENT CASE RELATES TO UNIFORM ALLOWANCE, WHIC H AS NOTICED EARLIER IS EXEMPT FROM TAX UNDER SECTION 10(14)(I) OF THE ACT READ WITH RULE 2BB(1)(F) OF THE RULES TO THE EXTENT TO WHICH SUCH EXPENSES A RE ACTUALLY INCURRED FOR THAT PURPOSE. UNDER THE ACT, THE LIABILITY TO THE E MPLOYER IS TO DEDUCT TAX AT SOURCE TO THE EXTENT OF THE TAXABLE INCOME OF THE E MPLOYEE. IF ANY PART OF SUCH INCOME IS EXEMPT, THERE IS NO LIABILITY TO DED UCT TAX AT SOURCE FROM SUCH INCOME. SINCE LIABILITY TO PAY TAX UNDER THE A CT IS OF THE INDIVIDUAL EMPLOYEE AND THE LIABILITY ON THE PART OF THE EMPLO YER IS ONLY TO DEDUCT TAX AT SOURCE, CIRCULAR NO. 15 DATED 8-5-1969 PROVIDES THAT SELF CERTIFICATION ON THE PART OF THE EMPLOYEE IS SUFFICIENT FOR THE D ISBURSING OFFICER FOR CALCULATION OF THE TAX DEDUCTIBLE AT SOURCE. WHILE THE SAID CIRCULAR RELATES TO CONVEYANCES, THE UNDERLYING PRINCIPLE CAN WELL B E APPLIED EVEN IN THE CASE OF UNIFORM ALLOWANCE. THEREFORE, IF AN EMPLOYE E GIVES A CERTIFICATE CERTIFYING THAT HE HAD INCURRED CERTAIN EXPENDITURE TOWARDS UNIFORMS AND MAINTENANCE THEREOF, INSOFAR AS THE DISBURSING OFFI CER IS CONCERNED, THAT WOULD BE ADEQUATE WHILE CALCULATING THE TAX DEDUCTI BLE AT SOURCE. IF THE ASSESSING OFFICER HAS ANY DOUBT ABOUT THE CLAIM MAD E BY ANY INDIVIDUAL EMPLOYEE, HE CAN ALWAYS TAKE UPON THE ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF SUCH EMPLOYEE, INASMUCH A S, AS RIGHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE RESPONDENT , SELF CERTIFICATION IS GOOD ENOUGH FOR THE EMPLOYER NOT TO DEDUCT TAX AT S OURCE, IT DOES NOT GRANT ANY IMMUNITY TO THE EMPLOYEE IF THE CLAIM IS INCORR ECT. AS HELD BY THIS COURT IN OIL & NATURAL GAS CORPN. LTD. (SUPRA), WHE THER AN EMPLOYEE ACTUALLY INCURS SUCH AMOUNT FOR OFFICIAL PURPOSES I S RELEVANT FOR ASSESSMENT OF SUCH EMPLOYEE BECAUSE THE EXEMPTION O PERATES IN HIS TERMS AND CONDITIONS OF AVAILING SUCH EXEMPTION THAT IS T O BE FULFILLED BY HIM. WHETHER THE EMPLOYEE IS ABLE TO SUBSTANTIATE HIS CL AIM TO EXEMPTION HAS NO BEARING ON THE ESTIMATE OF INCOME LIABLE TO TAX TO BE MADE BY THE EMPLOYER. UNDER THE CIRCUMSTANCES, THERE IS NO LEGA L INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE TRIBUNAL IN PLACING RE LIANCE UPON THE ABOVE CIRCULAR FOR HOLDING THAT SELF CERTIFICATION ON THE PART OF THE EMPLOYEES WAS ADEQUATE FOR THE ASSESSEE NOT TO DEDUCT TAX FROM TH E REIMBURSEMENT ALLOWANCE TOWARDS EXPENDITURE INCURRED FOR UNIFORMS . 24. IN THE LIGHT OF THE ABOVE DISCUSSION, THIS COURT I S OF THE VIEW THAT THE IMPUGNED ORDER PASSED BY THE TRIBUNAL DOES NOT SUFF ER FROM ANY LEGAL INFIRMITY WARRANTING INTERFERENCE. THE SUBSTANTIAL QUESTION FRAMED BY THIS COURT WHILE ISSUING NOTICE IS ANSWERED IN THE AFFIR MATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE INCOME -TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN CONFIRMING THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS) DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER UNDER SECTION 201(1) OF THE INCOME-TAX ACT, 1961, A ND CONSEQUENTIAL INTEREST CHARGED BY THE ASSESSING OFFICER IN RELATI ON TO THE ASSESSEE'S PAGE 68 OF 74 ITA NO.507 TO 566 /BANG/2020 PAYMENTS TO ITS EMPLOYEES UNDER THE HEAD OF UNIFORM ALLOWANCE. THE APPEAL, THEREFORE, FAILS AND IS ACCORDINGLY DISMISS ED WITH NO ORDER AS TO COSTS. HONBLE COURT FOLLOWED ITS COORDINATE BENCH DECISION IN CASE OF CIT V. OIL & NATURAL GAS CORPN. LTD., REPORTED IN [2002] 125 TAXMAN 698, WHEREIN HONBLE COURT HELD AS UNDER: '5. WE ARE OF THE OPINION THAT IN THE FACTS AND CIR CUMSTANCES FOUND BY THE TRIBUNAL NO QUESTION OF LAW REFERABLE TO THIS COURT ARISES AS THE ANSWER IS EVIDENT. THE TAX AT S OURCE IN THE CASE OF AN EMPLOYEE IN RECEIPT OF SALARIES IS D EDUCTED ON THE BASIS OF ESTIMATE OF INCOME UNDER THE HEAD 'SAL ARY' EMANATING FROM THE EMPLOYER. THAT ESTIMATE ALSO INC LUDE A FAIR ESTIMATE BY THE EMPLOYER WHETHER ANY AMOUNT PA ID BY HIM IS NOT LIKELY TO BE SUBJECTED TO TAX UNDER ANY PROVISIONS OF THE INCOME-TAX ACT. AS WE HAVE NOTICED ABOVE, TH E EVIDENCE REGARDING OPERATION OF THE SCHEME CLEARLY ATTRACTED THE PROVISIONS OF SEC. 10(14) INASMUCH AS REIMBURSE MENT IS GRANTED FOR USE OF ONE VEHICLE OWNED AND POSSESSED BY THE EMPLOYEE FOR EXPENSES INCURRED IN UNDERTAKING OFFIC IAL JOURNEYS AND THE PAYMENT IS MADE ON EMPLOYEE ISSUIN G A CERTIFICATE THAT HE HAS INCURRED MORE EXPENSES THAN THE AMOUNT WHICH IS BEING REIMBURSED TO HIM AT THE END OF THE MONTH. THE FACT THAT REIMBURSEMENT UPTO A MAXIMUM L IMIT AND NOT MORE DOES NOT DETRACT FROM THE FACT THAT EX PENSES ARE BEING PAID AS FAR AS EMPLOYER IS CONCERNED TOWA RDS REIMBURSING ACTUAL EXPENSES INCURRED BY THE EMPLOYE E IN UNDERTAKING OFFICIAL JOURNEYS UPTO THE EXTENT AMOUN T IS ACTUALLY REIMBURSED. NOR THE FACT THAT THE EMPLOYEE , DURING THE COURSE OF HIS ASSESSMENT, IS NOT FOUND ENTITLED TO FULL BENEFIT U/S 10(14), DOES IN ANY WAY REFLECT ON THE ESTIMATE OF INCOME TAX PAYABLE ON INCOME OF THE EMPLOYEE AT THE TIME WHEN SUCH AMOUNT IS PAID. WHETHER AN EMPLOYEE ACTUA LLY INCURS SUCH AMOUNT FOR THE OFFICIAL PURPOSES IS REL EVANT FOR ASSESSMENT OF EMPLOYEE BECAUSE EXEMPTION OPERATES I N HIS TERMS AND CONDITIONS OF AVAILING SUCH EXEMPTION THA T IS TO BE FULFILLED BY HIM WHETHER THE EMPLOYEE IS ABLE TO SU BSTANTIATE HIS CLAIM TO EXEMPTION HAS NO BEARING ON ESTIMATE O F INCOME LIABLE TO TAX TO BE MADE BY THE EMPLOYER. 6. THESE FINDINGS DO NOT GIVE RISE TO ANY QUESTION OF LAW. THE FACT THAT ULTIMATELY ON THE ASSESSMENT OF EMPLOYEES THEY HAVE BEEN FOUND IN NOT UTILISING THE FULL AMOUNT RE CEIVED BY THEM FROM THE EMPLOYER DOES NOT REFLECT IN ANY MANN ER ON PAGE 69 OF 74 ITA NO.507 TO 566 /BANG/2020 THE ESTIMATE OF THE EMPLOYER AT THE END OF EACH MON TH ABOUT THE INCOME OF THE EMPLOYEE RECEIVING FROM HIS EMPLO YER LIABLE TO TAX AS PER THE MARK IT BEARS.' 6.3.22. WE NOTE THAT LD.AO/CIT(A) RAISED OBJECTION, THAT ASSESSEE DISCONTINUED GRANTING OF CASH MEDICAL BENE FIT TO ITS EMPLOYEE FOR F.Y 2009-10, WHICH IS FACTUALLY IN CORRECT. WE NOTE THAT ASSESSEE HAS GRANTED CASH MEDICAL BENE FIT FOR ASST. YEAR 2009-10. LD.COUNSEL PLACED RELIANCE ON P AGE 221- 223, WHEREIN FORM 16 ISSUED TO AN EMPLOYEE FOR F.Y: 2009- 10 IS BEEN PLACED, THAT REVELS SUM OF RS.6,000/- WA S PAID TO THE EMPLOYEE AS MEDICAL BENEFIT IN THE MONTH OF JUL Y 2009. FURTHER FROM PARA 6.3 OF CIT(A)S ORDER IT IS EVIDE NT THAT ASSESSEE HAS BEEN GRANTING CASH BENEFIT TO ITS ASSE SSEE SINCE 1991. WE THEREFORE REJECT THIS OBJECTION RAI SED BY AUTHORITIES AS IT IS BASED ON SURMISES AND CONJUNCT IONS. 6.3.23. BEFORE US, REVENUE HAS PLACED RELIANCE ON DECISION OF HONBLE CUTTACK TRIBUNAL IN IN CASE OF BRANCH MANAGER, LIC OF INDIA VS. ITO(TDS) REPORTED IN (2020) 119 TAXMANN.CO 380 . ON PERUSAL OF THE SAID DECISION, WE NOTE THAT THE LETTER ISSUED BY CBDT TO ASSESSE DATED 20/05/2002, AND THE FACTS PLACED BEFORE US WERE NOT AVAILABLE FOR CONSI DERATION BEFORE HONBLE CUTTACK TRIBUNAL. 6.3.24. COORDINATE BENCH OF THIS TRIBUNAL IN VARIOUS ASSESSEES CASE(REFERRED TO HEREIN ABOVE) UPHELD ES TIMATION OF INCOME UNDER SECTION 192(1) OF THE ACT, WHICH HA S ALSO BEEN APPROVED BY HONBLE KARNATAKA HIGH COURT IN CASE OF PAGE 70 OF 74 ITA NO.507 TO 566 /BANG/2020 INFOSYS TECHNOLOGIES LTD., REPORTED IN (2007) 293 ITR 146. THIS DECISION OF HONBLE KARNATAKA HIGH COURT HAS BEEN AFFIRMED BY HONBLE SUPREME COURT REPORTED IN (2008) 297 ITR 167 . 6.3.25. UNDER SECTION 192(1), THE ASSESSEE IS EXPECTED TO MAKE AN HONEST AND FAIR ESTIMATE OF INCOME AND DEDU CT TAX AT SOURCE. FOR ASSESSMENT YEAR 2015-16 AND 2016-17, CLAUSE (2D) WAS APPLICABLE, HOWEVER IN THE ABSENCE OF SPECIFIC REQUIREMENT UNDER RULE 26C, ASSESSEE WAS N OT OBLIGED TO COLLECT EVIDENCE/ PROOF FROM THE EMPLOYE ES FOR REIMBURSEMENT OF MEDICAL EXPENDITURE. THE ASSESSEE HAS SOUGHT PERMISSION FROM CBDT VIDE LETTER DATED 20/05/2002, REGARDING EXTENDING THE EXEMPTION UNDER PROVISO(V) TO SECTION 17(2) OF THE ACT, BASED ON SATISFACTION OF THE ASSESSEE. ASSESSEE HAS BEEN FOLLOWING THIS PRAC TICE SINCE THE YEAR 1991. FURTHER THE EXEMPTION AT NO TIME EXC EEDED RS.15,000/- 6.3.25. BASED ON ABOVE DISCUSSIONS WE NOTE THAT ASSESSE WAS UNDER A BONAFIDE BELIEF THAT; SECTION 192(1) REQUIRES ASSESSEE TO MAKE PAYMENTS T O ITS EMPLOYEES ON ESTIMATION; NON DEDUCTION OF TDS IS BASED ON LETTER DATED 20/05/2002 BY CBDT; INCURRING OF ACTUAL EXPENDITURE BY THE EMPLOYEES WA S SUPPORTED BY SELF ATTESTED DECLARATION FROM EMPLOYE ES; PAGE 71 OF 74 ITA NO.507 TO 566 /BANG/2020 PAYMENTS IN QUESTION FOR WHICH THE ASSESSEE HAS BEE N TREATED AS, ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE WERE NOT IN THE NATURE OF INCOME WITH IN THE MEANING OF SECTION 17(V) OF THE ACT, AND THEREF ORE THERE WAS NO OBLIGATION ON THE PART OF ASSESSEE TO DEDUCT TAX AT SOURCE. THOUGH SECTION 192(2D) WAS INSERTED BY FINANCE ACT 2015, RULE 26 DOES NOT SPECIFY REQUIREMENT TO DEDUC T TDS IN CASE OF CASH MEDICAL BENEFIT. IN THIS SITUATION, THE STAND OF THE ASSESSEE THAT T HE CASH MEDICAL BENEFIT WERE ONLY REIMBURSEMENT OF THE EXPE NDITURE INCURRED BY THE EMPLOYEES, AND AS SUCH THEY COULD N OT FORM PART OF THEIR INCOME, COULD NOT BE SAID TO BE WITHO UT ANY BASIS. THEREFORE, THE BELIEF OF THE ASSESSEE ON THA T POINT WAS BONA FIDE. SINCE THE ESTIMATE MADE BY THE ASSESSEE HAS BEEN HELD TO BE HONEST AND BONA FIDE, THE ASSESSEE COULD NOT BE TREATED AS ASSESSEE IN DEFAULT THEREFORE, THE LD.AO HAD NO JURISDICTION UNDER SECT ION 201 TO DEMAND FURTHER TAX FROM THE ASSESSEE IN RESPECT OF THE SHORT DEDUCTION MADE CONCERNING CASH MEDICAL BENEFI T FOR ASSESSMENT YEAR 2015-16 & 2016-17. AS REGARDS CHARGING OF INTEREST UNDER SECTION 201(1 A), SINCE RELIEF, AS MENTIONED ABOVE, HAD BEEN ALLOWED, THE L D.AO IS DIRECTED TO MODIFY THE QUANTUM OF INTEREST TAKING I NTO CONSIDERATION THE SAID RELIEF FOR ASSESSMENT YEAR 2 015-16 & 2016-17. PAGE 72 OF 74 ITA NO.507 TO 566 /BANG/2020 ACCORDINGLY, GROUND NO. 6.1-6.2, 6.4-6.7,6.9-6.10 AND 5.1-5.2, 5.4-5.7, 5.9-5.10 RELEVANT TO APPEALS FILE D BY EACH BRANCH FOR ASSESSMENT YEARS 2015-16 & 2016-17 RESPECTIVELY STANDS ALLOWED . 7. ISSUE IV: PAYMENT MADE TO SODEXO SVC (GROUNDS 7. 1- 7.4 FOR ASSESSMENT YEAR 2016-17) LD.COUNSEL SUBMITTED THAT, THESE GROUNDS PERTAINS CHITRADURGA AND DAVANGERE BRANCH. AT THE OUTSET WE REITERATE THAT THIS ISSUE IS ALSO RAISED IN GROUND NO.7.1.-7.2 FOR ASST. YEAR 2012-13 AND GROUN D NO.8.1-8.2. APPEAL FILED IN RESPECT OF ASSESSMENT YEAR 2014- 15. WE HAVE ALREADY QUASHED AND SET ASIDE THE ASSES SMENT ORDER PASSED UNDER SECTION 201 OF THE ACT BY LD.AO IN PARA 6.3.12 HEREINABOVE. AS A, RESULT THE ADDITION STAND S DELETED FOR ASST. YEAR 2012-13 & 2014-15. 7.1 LD.COUNSEL SUBMITTED THAT AUTHORITIES BELOW HAVE ERRED IN TREATING THE ASSESSEE AS, ASSESSEE IN DEF AULT, BY HOLDING THAT THE ASSESSEE DEDUCTED TAX AT A LOWER R ATE WITH RESPECT TO PAYMENT MADE TO SODEXO SVC INDIA PVT.LTD . 7.2. IT HAS BEEN SUBMITTED THAT AUTHORITIES BELOW HAVE N OT LOOKED INTO THE EVIDENCES AVAILABLE ON RECORD LIKE CERTIFICATE FURNISHED UNDER SECTION 197(1) OF THE ACT. LD.COUNS EL SUBMITTED THAT LD.CIT(A) IN THE IMPUGNED ORDER HAS NOT GIVEN ANY FINDING IN RESPECT OF THIS ISSUE. HE THUS SUBMITTED THAT THE ISSUE MAY BE REMANDED TO LD.CIT(A). 8. WE HAVE PERUSED THE RECORDS PLACED BEFORE US. PAGE 73 OF 74 ITA NO.507 TO 566 /BANG/2020 8.1. FOR ASSESSMENT YEAR 2016-17, WE NOTE THAT EVIDENCE FILED BY THE ASSESSEE HAS NOT BEEN CONSIDERED BY AU THORITIES. THE ASSESSEE IS DIRECTED TO FURNISH RELEVANT DETAIL S IN SUPPORT OF THE CLAIM BEFORE THE LD.AO. WE, THEREFOR E REMAND THIS ISSUE TO THE LD.AO TO CONSIDER THE GROUND IN L IGHT OF CERTIFICATES FURNISHED, IN ACCORDANCE WITH LAW. NEE DLESS TO SAY THE ASSESSEE MAY BE GRANTED PROPER OPPORTUNITY OF BEING HEARD IN ACCORDANCE WITH LAW. ACCORDINGLY THESE GROUNDS RAISED STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ST ANDS ALLOWED FOR ASSESSMENT YEARS 2011-12 TO 2014-15 ON THE LEGAL ISSUE AND THE APPEALS FOR ASSESSMENT YEARS 20 15- 16 & 2016-17 STANDS PARTLY ALLOWED AS INDICATED HEREINABOVE. ORDER PRONOUNCED IN OPEN COURT ON 21 ST JANUARY 2021. SD/- SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER (BEENA PILLAI) JUDICIAL MEMBER BANGALORE, DATED, 21 ST JANUARY, 2021. / VMS / PAGE 74 OF 74 ITA NO.507 TO 566 /BANG/2020 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.