GIRNAR SOFTWARE PVT. LTD., DELHI V. ASSISTNAT COMMISSIONER OF INCOME TAX-TDS, JAIPUR, JAIPUR

ITA 792/JPR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1264 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 01-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J. C. KULHARI
• Assessee Lawyers: KAPIL GOYAL
• Keywords: Non-deduction of tax; Fair market value; Onus to prove; TDS; Set aside
• Section: 194C; 201(1); 195; 192; 194J

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 792/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16. M/S. GIRNAR SOFTWARE PVT. LTD., C/O KAPIL GOEL, ADV. F-26/124 SECTOR 7 ROHINI DELHI 110 085. CUKE VS. THE ACIT, TDS, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCG 7277J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI KAPIL GOYAL (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.07.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 05/09/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.08.2017 OF LD. CIT (A)-3, JAIPUR ARISING FROM THE ORDER PASSE D UNDER SECTION 201(1)/201(1A) OF THE IT ACT FOR THE ASSESSMENT YEAR 2015-16. THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT-A ERRED IN SUSTAINING THE ACTION OF LD . ACIT (TDS) JAIPUR IN TREATING ASSESSEE COMPANY AS DEFAULTER FO R ALLEGED VIOLATION OF SECTION 192 OF THE ACT ON CERTAIN PRO VISIONS MADE IN BOOKS, DEALING WITH TAX DEDUCTION AT SOURCE ON I NCOME CHARGEABLE UNDER THE HEAD SALARY IN TOTAL NON APP RECIATION OF CONDITION PRECEDENT OF PAYMENT WHICH MANDATES ACT UAL PAYMENT HAVING BEEN MADE TO AN IDENTIFIED PAYEE SO AS TO TRIGGER TAX DEDUCTION OBLIGATION U/S 192, WHICH IS EVIDENT FROM PAGES 2, 3, 4, 5 AND PAGE 23 OF THE IMPUGNED ORDER PASSED BY LD. ACIT (TDS), JAIPUR. 2 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. 2. THAT ON THE F ACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LD. CIT-A ERRED IN SUSTAINING THE ACTION OF LD . ACIT (TDS), JAIPUR IN TREATING ASSESSEE COMPANY AS DEFAULTER FO R ALLEGED VIOLATION OF SECTION 192 OF THE ACT ON CERTAIN PRO VISIONS MADE IN BOOKS, IGNORING ALL THE SUBMISSIONS AND CONTENTI ONS RAISED WITHOUT APPRECIATING THE CONCEPT OF CHARGEABLE INCO ME QUA A RECIPIENT WHICH IS COMPLETELY OVERLOOKED. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF WEBSITE DEVELOPMENT, E-COMMERCE AND ONLINE SALE/PURCHASE OF USED CARS UN DER THE DOMAIN OF CARDEKHO.COM. DURING THE COURSE OF SPOT VERIFICA TION CONDUCTED ON 27 TH FEBRUARY, 2015 AT THE BUSINESS PREMISES OF THE ASSESSEE, IT W AS FOUND THAT THE ASSESSEE HAS DEBITED VARIOUS EXPENDITURES IN THE PROFIT & LOSS A CCOUNT AND HAD CREDITED THESE EXPENSES AS PROVISIONS IN THE BOOKS WHICH WERE IN T HE NATURE OF PERQUISITES BUT HAD NOT DEDUCTED ANY TDS ON THESE PERQUISITES. THE AO IN THE PROCEEDINGS UNDER SECTION 201(1)/201(1A) OF THE ACT WAS OF THE VIEW T HAT AS PER THE IT ACT, TDS IS TO BE DEDUCTED ON CREDIT OR PAYMENT, WHICHEVER IS EARL IER. THUS THE AO OBSERVED THAT AS SOON AS THE CREDIT ENTRIES WERE PASSED AND THE E XPENSES WERE BOOKED, THE ASSESSEE SHOULD HAVE DEDUCTED TDS. THE AO ACCORDIN GLY PROPOSED TO HELD THE ASSESSEE AS ASSESSEE IN DEFAULT IN RESPECT OF THE E MPLOYEES STOCK OPTION PLAN (ESOP), LEAVE ENCASHMENT, GRATUITY AND BONUS. THE ASSESSEE OBJECTED TO THE ACTION OF THE AO AND SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 192 OF THE ACT, THE TDS OBLIGATION ARISES ONLY ON THE PAYMENT AND NOT A T THE TIME OF ACCRUAL OR CREDITING THE PROVISIONS. FURTHER, IT WAS CONTENDED THAT THE ESOP IS CRYSTALLIZED ONLY WHEN THE EMPLOYEES EXERCISED THEIR OPTION AND NOT AT THE TIM E OF GRANTING OF OPTION BY THE ASSESSEE COMPANY. THE AO DID NOT ACCEPT THE CONTEN TION OF THE ASSESSEE AND HELD THE ASSESSEE AS ASSESSEE IN DEFAULT FOR NON DEDUCTI ON OF TDS TO THE TUNE OF RS. 3 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. 53,91,554/- AND RS. 9,70,480/- AS INTEREST UNDER SE CTION 201(1) AND 201(1A) OF THE ACT RESPECTIVELY. THE ASSESSEE CHALLENGED THE ACTI ON OF THE AO. HOWEVER, THE LD. CIT (A) UPHELD THE ORDER PASSED UNDER SECTION 201(1 )/201(1A) OF THE ACT BY FOLLOWING THE DECISION OF BANGALORE BENCH OF THE TR IBUNAL IN THE CASE OF IBM INDIA (P) LTD. VS. ITO TDS LTU, 59 TAXMANN.COM 107 (BANGA LORE TRIB.). 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE PROVISIONS OF SECTION 192 REQUIRE DEDUCTION OF TAX IN RESPECT OF THE SALARY ONLY ON PAYMENT AND NOT AT THE TIME OF ENTRY MADE IN THE BOOKS. WHEN T HERE IS NO PAYMENT DURING THE YEAR UNDER CONSIDERATION TO THE EMPLOYEES, THE ASSE SSEE IS NOT LIABLE TO DEDUCT TAX AS PER THE PROVISIONS OF SECTION 192 AND CONSEQUENT LY THE AO CANNOT HELD THE ASSESSEE LIABLE FOR THE SAME. THE LD. A/R HAS ALSO REFERRED TO THE PROVISIONS OF SECTION 17(2) AND SUBMITTED THAT ALL THE PERQUISITE S ARE PART OF THE SALARY AND, THEREFORE, NO DEDUCTION OF TAX AT SOURCE CONTEMPLAT ED UNDER SECTION 192 IN CASE WHERE THE PAYMENT TOWARDS SALARY HAS ACCRUED BUT IS NOT MADE. HE HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. TEJ QUEBECOR PRINTING LTD., 281 ITR 170 (DELHI) AND SUBMITTED THAT THE HO NBLE HIGH COURT HAS HELD THAT SECTION 192 OF THE ACT INTER ALIA REQUIRES ANY PERS ON RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD SALARIES TO DEDU CT INCOME TAX ON THE AMOUNT PAYABLE AT THE STIPULATED RATE AT THE TIME OF PAYME NT. THE HONBLE HIGH COURT HAS OBSERVED THAT THE EXPRESSION PAYMENT SHALL HAVE TO BE GIVEN ITS ORDINARY LITERAL MEANING AND, THEREFORE, THE PERSON MAKING THE PAYME NT CAN OR IS REQUIRED TO MAKE A DEDUCTION TOWARDS TAX AT SOURCE ONLY AT THE TIME OF MAKING SUCH PAYMENT. IT WAS SPECIFICALLY HELD THAT THE ACCRUAL OF PAYMENT AND T HE ACTUAL ACT OF MAKING PAYMENT MUST BOTH EXIST IN ORDER THAT A DEDUCTION AT SOURCE MAY BE MADE. HENCE, THE LD. A/R 4 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. HAS SUBMITTED THAT THE RELIANCE PLACED BY THE AO AN D LD. CIT (A) ON THE DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF IBI INDIA PVT. LTD. VS. ITO TDS LTU (SUPRA) IS MISPLACED AS THE SAID DECISION WAS NOT I N RESPECT OF THE LIABILITY OF TDS UNDER SECTION 192 OF THE ACT. 3.1. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO DISPUTE THAT T HE ASSESSEE HAS NOT DEDUCTED TDS IN RESPECT OF THE VARIOUS EXPENDITURES CLAIMED AND DEBITED TO THE PROFIT & LOSS ACCOUNT. THEREFORE, THE ASSESSEE HAS RECOGNIZED TH ESE EXPENDITURES AS ACCRUED DURING THE YEAR UNDER CONSIDERATION. HOWEVER, WHEN THE ASSESSEE HAS FAILED TO DEDUCT THE TAX THEN THE ASSESSEE CANNOT ESCAPE FROM THE TAX LIABILITY UNDER SECTION 201(1) AND 201(1A) OF THE ACT. THE ENTRIES IN THE BOOKS OF ACCOUNTS WOULD NOT DETERMINE THE TAX LIABILITY BUT THE REAL NATURE OF THE TRANSACTION HAS TO BE TAKEN INTO CONSIDERATION. THE LD. CIT (A) HAS RELIED UPON THE SPECIAL BENCH DECISION OF BANGALORE BENCHES OF THE TRIBUNAL IN THE CASE OF BI OCON LTD. VS. DCIT DATED 18.07.2013 IN ITA NO. 368/B/2010 AS WELL AS IN THE CASE OF IBM INDIA PVT. LTD. VS. ITO TDS LTU (SUPRA). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS GIVEN THE DETAILS OF THE EXPEND ITURE AND TDS LIABILITY UNDER SECTION 192 OF THE ACT AS UNDER :- S. NO. FY EXPENSE AMOUNT OF PROVISION MADE TDS TO BE DEDUCTED U/S 192 @ 30% ACTUALLY DEDUCTED BY THE DEDUCTOR SHORT DEDUCTION U/S 201(1) INTEREST U/S 201(1A) RS. 1) 2014- 15 ESOP EXPENSE RS.1,09,84,200 RS.3295260 0 RS.3295260 593147 2) 2014- 15 LEAVE ENCASHMENT EXPENSES RS. 23,06,313 RS. 691893 0 RS.692893 124721 3) 2014- BONUS RS. 5,65,310 RS. 169593 0 RS.169593 30527 5 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. 15 EXPENSES 4) 2014- 15 GRATUITY EXPENSES RS.4112694 RS.1233808 0 RS.1233808 222086 TOTAL RS.53,91,554 RS.970480 THUS ALL THESE EXPENDITURES ARE IN THE NATURE OF PE RQUISITES TO THE EMPLOYEES. WE WILL DEAL WITH EACH NATURE OF EXPENDITURE SEPARATEL Y AS UNDER :- ESOP EXPENSES 5. THE AO HAS NOT DISPUTED THE FACT THAT THE ASSESS EE HAS MADE PROVISION OF RS. 1,09,84,200/- IN THE BOOKS ON ACCOUNT OF EMPLOYEES STOCK OPTION PLAN. HOWEVER, UNTIL AND UNLESS THE SAID OPTION WAS EXERCISED BY T HE EMPLOYEES, IT WILL NOT BE AN INCOME ACCRUED TO THE EMPLOYEES. WE FIND FORCE IN THE CONTENTION OF THE LD. A/R THAT AT THE TIME OF OPTION VESTED WITH THE EMPLOYEE S, THE PROVISIONS OF SECTION 192 ARE NOT ATTRACTED FOR DEDUCTION OF TDS AND ONLY WHE N THE EMPLOYEES EXERCISED THIS OPTION AND FINALLY THE SHARES ARE ALLOTTED IN PURSU ANT TO THE OPTION EXERCISED BY THE EMPLOYEES THE LIABILITY TO DEDUCT TAX AT SOURCE WOU LD ARISE. THE AO HAS NOT EXAMINED THE FACT WHETHER DURING THE YEAR UNDER CON SIDERATION THE OPTION WAS EXERCISED BY THE EMPLOYEES OR IT WAS EXERCISED IN T HE SUBSEQUENT YEARS. FURTHER, HOW MANY EMPLOYEES HAVE EXERCISED THE OPTION AND TH E CRYSTALLIZATION OF THE EXPENDITURES DEPENDS ON THE NUMBER OF EMPLOYEES EXE RCISED THE OPTION. ACCORDINGLY, WHEN THE AO HAS NOT CONTRADICTED THE F ACT AS ASSERTED BY THE ASSESSEE THAT THERE WAS NO CREDIT GIVEN TO THE EMPLOYEES DUR ING THE YEAR UNDER CONSIDERATION ON ACCOUNT OF EMPLOYEE STOCK OPTION PLAN AS IT WAS SUBJECT TO THE EXERCISE OF OPTION BY THE EMPLOYEES AND FINAL ALLOTMENT OF SHARES, THE REFORE, THE PROVISIONS OF SECTION 192 ARE NOT APPLICABLE ON THIS EXPENDITURE. THE HO NBLE DELHI HIGH COURT IN THE CASE 6 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. OF CIT VS. TEJ QUEBECOR PRINTING LTD., 281 ITR 170 HAS CONSIDERED THIS ISSUE IN PARA 7 TO 11 AS UNDER :- 7. SECTION 192 OF THE INCOME-TAX ACT, INTER ALIA, REQ UIRES ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME CHARGEABLE UNDER THE HEAD 'SALARIES' TO DEDUCT INCOME-TAX ON THE AMOUNT PAYABLE AT THE STIP ULATED RATE AT THE TIME OF PAYMENT. THE TERM 'PAYMENT' HAS NOT BEEN DEFINED EI THER IN SECTION 192 OR AT ANY OTHER PLACE OF THE ACT. THE EXPRESSION SHALL, T HEREFORE, HAVE TO BE GIVEN ITS ORDINARY LITERAL MEANING. IT FOLLOWS THAT THE PERSO N MAKING THE PAYMENT CAN OR IS REQUIRED TO MAKE A DEDUCTION TOWARDS TAX AT SOUR CE ONLY AT THE TIME OF MAKING SUCH PAYMENT. THE ACCRUAL OF THE PAYMENT AND THE ACTUAL ACT OF MAKING THE PAYMENT MUST BOTH EXIST IN ORDER THAT A DEDUCTION AT SOURCE MAY BE MADE. NO DEDUCTION AT SOURCE IS CONTEMPLATED UNDER SECTION 192 IN CASES WHERE A PAYMENT TOWARDS SALARY HAS ACCRUED BUT IS N OT MADE. THIS POSITION BECOMES CLEARER IF WE REFER TO SIMILAR OTHER PROVIS IONS IN THE ACT LIKE SECTIONS 194(B), 194(BB), 194(BE), 194(F) AND 194(L) UNDER W HICH ALSO A DEDUCTION AT SOURCE IS ENVISAGED ONLY IF ACTUAL PAYMENT OF TH E AMOUNT IS MADE TO THE PAYEE. IN CONTRADICTION TO THAT REQUIREMENT, THERE ARE PROVISIONS IN THE ACT WHICH AUTHORISE DEDUC- TION AT SOURCE EVEN IN CASES WHERE THE PAYMENT IS EITHER MADE TO THE PAYEE OR CREDITED TO HIS ACCOUNT . THE PROVISIONS OF SECTIONS 193, 194(A), 194(C), 194(D), 194(E), 194(G), 194(H) , 194(I), 194(J), 194(K), 195, 196(A), 196(B), 196(C) AND 196(D) ARE IN THIS REGARD RELEVANT. THE INFERENCE THEREFORE IS THAT WHEREVER THE PARLIAMENT INTENDED DEDUCTIONS TO BE MADE AT SOURCE ONLY AT THE TIME OF MAKING THE PAYME NT, IT PROVIDED SO AND WHEREVER DEDUCTIONS WERE INTENDED TO BE MADE EVEN I F THE PAYMENT IS CREDITED TO THE ACCOUNT OF THE PAYEE IT MADE A SPECIFIC PROV ISION TO THAT EFFECT. THE DISTINCTION BETWEEN THE TWO CANNOT BE OBLITERATED B Y INTERPRETING THE PROVISIONS OF SECTION 192 IN A MANNER WHICH WOULD A MOUNT TO RE-WRITING THE SAID PROVISION SO AS TO BRING THEM AT PAR WITH THE PROVISIONS THAT REQUIRE DEDUCTIONS AT THE TIME OF PAYMENT OR CREDIT OF THE AMOUNT TO THE PAYEE'S ACCOUNT. THE DECISION OF THE ANDHRA PRADESH HIGH CO URT IN SYNDICATE BANK'S CASE (SUPRA) TAKES A SOMEWHAT SIMILAR VIEW. 8. IN STANDARD TRIUMPH MOTOR CO. LTD.'S CASE (SUPRA) RELIED UPON BY MR. JOLLY, THE SUPREME COURT WAS DEALING WITH A SITUATI ON WHERE A NON-RESIDENT INDIAN COMPANY WAS ENTITLED TO A ROYALTY ON ALL SAL ES EFFECTED BY IT. THE INDIAN COMPANY WHICH WAS LIABLE TO MAKE THIS PAYMENT CREDI TED THE AMOUNT OF ROYALTY TO THE APPELLANT IN ITS ACCOUNT BOOKS. IN T HE RETURNS FILED BY THE ASSESSEE-NON-RESIDENT COMPANY IT ADMITTED THE ROYAL TY BUT FILED NIL RETURNS CLAIMING THAT IT WAS MAINTAINING ITS ACCOUNTS ON CA SH BASIS AND SINCE NO PART OF THE ROYALTY HAD BEEN RECEIVED BY IT, THEREFORE, NOTHING WAS PAYABLE. THE QUESTION WAS WHETHER THE CREDIT ENTRY OF THE ROYALT Y TO THE ACCOUNT OF THE APPELLANT-ASSESSEE AMOUNTED TO RECEIPT OF THE ROYAL TY BY THE APPELLANT AND WAS, THEREFORE, TAXABLE. INTERPRETING SECTION 5(2)( B) OF THE ACT, THE APEX COURT HELD THAT AS SOON AS MONEY IS CREDITED TO THE ACCOU NT OF THE ASSESSEE IT MUST BE DEEMED TO HAVE RECEIVED THE SAME, HENCE TAXABLE. IN ARRIVING AT THE 7 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. CONCLUSION, THE SUPREME COURT PLACED RELIANCE UPON ITS EARLIER DECISION IN RAGHAVA REDDI'S CASE (SUPRA). 9. IT IS, THEREFORE, EVIDENT THAT THE SUPREME COURT W AS NOT DEALING WITH A CASE INVOLVING DEDUCTION OF TAX AT SOURCE UNDER SECTION 192 OF THE ACT. IT WAS, ON THE OTHER HAND, DEALING WITH THE QUESTION OF TAXABI LITY OF THE AMOUNT CREDITED TO THE ACCOUNT OF THE ASSESSEE HAVING REGARD TO THE PROVISIONS OF SECTION 5(2)(B) OF THE ACT. THE QUESTION WHETHER THE AMOUNT WAS TAXABLE IN THE HANDS OF THE PAYEE AND, IF SO, FOR WHICH ASSESSMENT YEAR IS, HOWEVER, A MATTER DISTINCTLY DIFFERENT FROM THE QUESTION OF DEDUCTION OF TAX AT SOURCE UNDER SECTION 192. THE MAJORITY DECISION OF THE TRIBUNAL, THEREFORE, RIGHTLY HELD THAT THE OBLIGATION TO DEDUCT TAX AT SOURCE DID NOT IN T HE INSTANT CASE ARISE AS THE AMOUNT OF SALARY DUE TO THE EMPLOYEE HAD NOT BEEN P AID. 10. MR. JOLLY MADE A FEEBLE ATTEMPT TO URGE THAT THE S ALARY DUE TO MR. GARNETT HAD IN FACT BEEN RECEIVED BY HIM OUTSIDE THE COUNTR Y AND THAT THE PLEA OF NON- PAYMENT WAS RAISED ONLY TO AVOID THE LIABILITY ARIS ING OUT OF THE NON-DEDUCTION OF TAX AT SOURCE. WE SEE NO REASON TO GO BEYOND THE FINDING OF FACT RECORDED BY THE TRIBUNAL THAT THERE WAS NO ACTUAL PAYMENT OF TH E SALARY BY THE ASSESSEE TO MR. GARNETT. THE TRIBUNAL HAS, IN THIS REGARD, OBSE RVED : 'THE LOWER AUTHORITIES HAVE SIMPLY PROCEEDED ON THE ASSUMPTION THAT THE MONEY CREDITED IN THE ACCOUNT OF MR. GARNETT WI TH HONGKONG AND SHENGHAI BANKING CORPORATION WAS PAID BY THE ASSESS EE OUT OF UNKNOWN SOURCES. SUCH ASSUMPTION, IN OUR OPINION, I S BASED ON SURMISES AND CONJECTURES, AND THEREFORE, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. IF THE ASSESSING OFFICE R COULD OBTAIN THE ACCOUNT OF MR. GARNETT FROM THE BANK, HE COULD ALSO MAKE ENQUIRIES AS TO WHO PAID THE AMOUNT IN THE ACCOUNT OF MR. GARNET T. ON THE OTHER HAND, THE ASSESSEE HAS BEEN ABLE TO PLACE THE EVIDE NCE THAT QUEBECOR WORLD OF CANADA HAD PAID THIS AMOUNT AS ADVANCE TO MR. GARNETT FOR DISCHARGING HIS INCOME-TAX LIABILITY IN INDIA. IT F URTHER SHOWS THAT THIS MONEY WAS RETURNABLE BY MR. GARNETT TO THE CANADIAN COMPANY ON RECEIVING HIS SALARY FROM INDIA. ACCORDINGLY, IT IS HELD THAT THE REVENUE HAS NOT DISCHARGED ITS ONUS TO PROVE THAT ANY PAYME NT OF SALARY WAS MADE BY THE ASSESSEE TO MR. GARNETT DURING THE YEAR UNDER CONSIDERATION.' 11. IN THE LIGHT OF, WHAT WE HAVE SAID ABOVE, WE SEE N O ERROR OF LAW IN THE VIEW TAKEN BY THE TRIBUNAL TO WARRANT INTERFERENCE BY TH IS COURT. THE APPEAL, ACCORDINGLY, FAILS AND IS HEREBY DISMISSED. THUS IT WAS HELD THAT FOR ATTRACTING THE PROVISIONS OF SECTION 192 THE ACCRUAL OF PAYMENT AND ACTUAL ACT OF MAKING THE PAYMENT MUST B OTH EXIST. THOUGH SUB- SECTION (1)(A) CURVES AN EXCEPTION IN THE PROVISION S OF SECTION 192 OF THE ACT 8 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. REGARDING THE PERQUISITES WHICH IS NOT PROVIDED FOR BY WAY OF MONETARY PAYMENT AS REFERRED IN CLAUSE (2) OF SECTION 17, THE TAX ON SU CH PERQUISITES IS REQUIRED TO BE OTHERWISE DEDUCTIBLE AS PER THE PROVISIONS OF SECTI ON 192(1) OF THE ACT. HOWEVER, WHEN THE EMPLOYEES STOCK OPTION WAS NOT FINALLY EXE RCISED BY THE EMPLOYEES THEN THE QUESTION OF DEDUCTION OF TDS AS PER SECTION 192 DOES NOT ARISE. THIS POSITION IS ALSO RECOGNIZED BY THE PROVISIONS OF SECTION 17(2)( VI) AND EXPLANATION THERETO. AS PER CLAUSE (C) OF THE EXPLANATION, THE VALUE OF THE SWEET EQUITY SHARE SHALL BE FAIR MARKET VALUE OR SPECIFIED MARKET VALUE ON THE DATE ON WHICH THE OPTION IS EXERCISED BY THE EMPLOYEES AS REDUCED BY THE AMOUNT ACTUALLY PAID BY THE EMPLOYEES IN RESPECT OF SUCH SHARE. LEAVE ENCASHMENT EXPENDITURE, BONUS EXPENDITURE & G RATUITY EXPENDITURE : 6. THE ASSESSEE CONTENDED THAT IT IS NOT ACTUAL PAY MENT BUT ONLY PROVISIONS WERE MADE FOR THE LIABILITY TO BE DISCHARGED IN FUT URE. THIS FACT HAS NOT BEEN DISPUTED BY THE AO THAT THESE ARE ONLY PROVISIONS M ADE ON ACCOUNT OF LEAVE ENCASHMENT, BONUS AND GRATUITY EXPENSES. HENCE IN V IEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TEJ QUEBECOR PRINTING LTD. (SUPRA) WHEN THERE IS NO ACTUAL PAYMENT OF THESE PERQUISITE S BEING PART OF SALARY, THEN THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER SECTION 192 OF THE ACT DOES NOT ARISE. THE REVENUE HAS RELIED UPON THE DECISION OF BANGALORE B ENCHES OF THE TRIBUNAL IN THE CASE OF IBM INDIA PVT. LTD. VS. ITO TDS LTU (SUPRA) . HOWEVER, WE FIND THAT THE ISSUE IN THE SAID CASE WAS NOT FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 192 OF THE ACT. THE PROVISIONS WERE CREATED BY THE ASSESS EE IN THE SAID CASE ON ACCOUNT OF 9 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. VARIOUS EXPENDITURES AND THE PARTICULARS ARE REPROD UCED BY THE TRIBUNAL IN PARA 4 AS UNDER :- 4. THE PROVISION SO CREATED BY THE ASSESSEE IN THE BO OKS OF ACCOUNTS FOR THE VARIOUS ASSESSMENT YEARS ARE AS FOLLOWS: F.Y. 2005-06 PARTICULARS AMOUNT SECTION PERCENTAGE AMT TO BE DEDUCTED INTEREST SUB-CONTRACTING CHARGES 196063727 194C 1.13% 210250 1766116 COMMISSION 23787112 194H 5.65% 1343971 1128936 PROFESSIONAL CHARGES 24241731 194J 5.65% 1369657 1150512 CONTRACTORS CHARGES 33159502 194C 2.26% 749404 629499 SUB-CONTRACTING CHARGES 1428358659 194C 1.13% 16140452 13557980 FOREIGN PAYMENTS (WTC) 775791935 195 10% 77579193 62063354 TOTAL 2471402665 9739292 80296397 F.Y. 2006-07 PARTICULARS AMOUNT SECTION PERCENTAGE AMT TO BE DEDUCTED INTEREST COMMISSION 8823629 194H 5.65% 498535 358945 SUBCONTRACTING 1334844862 194C 1.13% 15083746 10860297 PROFESSIONAL & CONSULTANCY 71477952 194J 5.65% 4038504 2907723 ADVT & MARKETING 21641814 194C 1.13% 244552 176077 RECRUITMENT 46079329 194C 2.26% 1041392 749802 REPAIR & MAINTENANCE 4420775 194C 2.26% 99909 71934 GENERAL EXP. - EDUCATION EXP. 92581732 194C 2.26% 2092347 1506489 RENT 174993369 194I 22.66% 39653497 28550518 OTHER EXPENSES 16154003 194C 2.26% 365080 262857 FOREIGN PAYMENTS 1134433077 195 10% 1344330 967917 TOTAL 2905450542 64461892 46412559 10 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. FY 2007-08 PARTICULARS AMOUNT SECTION PERCENTAGE AMT TO BE DEDUCTED INTEREST COMMISSION 233671617 194H 5.65% 13202446 7921467 SUBCONTRACTING 479760513 194C 1.13% 5421293 3252776 PROFESSIONAL & CONSULTANCY 127571394 194J 5.65% 7207783 4324670 ADVT & MARKETING 213424632 194C 1.13% 2411698 1447019 RECRUITMENT 237073540 194C 2.26% 5357862 3214717 REPAIR & MAINTENANCE - 194C 2.26% - GENERAL EXP. - EDUCATION EXP. - 194C 2.26% - RENT 331697952 194I 22.66% 75162755 45097653 OTHER EXPENSES 469931105 194C 2.26% 10620442 6372265 TOTAL 2093130753 119384279 16730567 FY 2008-09 PARTICULARS AMOUNT SECTION PERCENTAGE AMT TO BE DEDUCTED INTEREST PROFESSIONAL FEES 816228909 194J 11.33% 92478735 44389792 CONTRACTORS/SUB- CONTRACTORS 243440622 194C 2.26% 5501758 2640843 FOREIGN PAYMENTS 112899026 195 15% 169348804 81287425 COMMISSION 234463891 194H 11.33% 26564759 12751084 RENT 273153222 194I 22.26% 61896520 2971032 OTHERS 1368936161 194C 11.33% 155100467 74448224 TOTAL 4065214831 510891043 218488400 AS NONE OF THE EXPENDITURES WAS FALLING WITHIN THE AMBIT OF SECTION 192 OF THE ACT, THEREFORE, THE SAID DECISION OF THE TRIBUNAL WOULD NOT HELP THE CASE OF THE REVENUE FOR THE PURPOSE OF TDS UNDER SECTION 192 OF THE ACT . ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISIO N OF HONBLE DELHI HIGH COURT IN 11 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI. CASE OF CIT VS. TEJ QUEBECOR PRINTING LTD. (SUPRA), WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 05/09 /2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 05/09/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. GIRNAR SOFTWARE PVT. LTD., D ELHI. 2. THE RESPONDENT THE ACIT, TDS, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 792/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 12 ITA NOS. 792/JP/2017 GIRNAR SOFTWARE PVT. LTD., DELHI.