IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "C" AHMEDABAD
Before Shri, A.K.Garodia, Accountant Member and
Shri Kul Bharat, Judicial Member
IT A No.02/ Ahd/2010
Assessment Year:2005-06
Gujarat Urja Vikas Nigam V/s. Income Tax Officer
Ltd., (erstwhile Gujarat (TDS), Anand
Electricit y Board) Sardar
Patel Vidyut Bhavan,
Race Course Circle,
Baroda
[PAN No. AACCG 8540N]
अपीलाथȸ/Appellant .. ू×यथȸ/Respondent)
अपीलाथȸ कȧ ओर से/By Appellant Shri J.P. Shah, SR-AR ू×यथȸ कȧ ओर से/By Respondent Shri D.K Singh, SR-DR सुनवाई कȧ तारȣख/Date of Hearing 05-12-2012 घोषणा कȧ तारȣख/Date of Pronouncement 14-12-2012 आदे श/O R D E R PER Kul Bharat, Judicial Member:-
This appeal of the assessee is directed against the order of Commissioner of Income-tax (Appeals)-IV, Baroda (‘CIT(A)’ for short) dated 09-10-2009 pertaining to assessment year (AY) 2005-06. The assessee has raised the following grounds of appeal:-
“1.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the tax of Rs.4,19,723/- payable under section 201(1) of the IT Act for the alleged non-deduction of tax at source from perquisite on account of rent free residential accommodation provided to the employees.
ITA No.2/Ahd/2010 A.Y. 2005-06 G.U.V.N.Ltd. v. ITO(TDS) Anand Page 2
2.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has confirmed the levy of interest of Rs.1,63,692/- under section 201(1A) of the I T Act for the alleged non-deduction of tax at source from perquisite on account of rent free residential accommodation provided to the employees.”
2. Briefly stated facts are that assessee-company is incorporated under the Companies Act, 1956 is holding company of companies engaged in the business of generation, transmission and distribution of electricity in the Gujarat State. During the year under consideration that the order u/s.201(1) r.w.s. 194 of the Income-tax Act, (hereinafter referred to as ‘the Act’) was passed by Income Tax Officer (TDS) thereby he computed tax payable of Rs.4,19,723/- and interest of delayed payment of tax u/s.201(1A) of the Act of Rs.s1,63,692/- and total demand of Rs.5,83,415/- was made.
3. Against this order, assessee filed an appeal before Ld. CIT(A) who after considering the submissions of assessee dismissed the appeal. Now being aggrieved by this order of Ld. CIT(A) assessee filed appeal before us.
4. First ground of the assessee’s appeal is with regard to non-deduction of tax. Ld. SR-counsel for the assessee, Shri J.P.Shah vehemently argued that the tax was not deductible as the assessee has not provided any rent free accommodation to its employees. He submitted that as per Section 17(*2)(i) of the Act, perquisite includes the value of rent free accommodation provided to the assessee by his employer. He submitted that in the present case no rent free accommodation was provided by the employer. He submitted that the employer of the assessee-company were on deputation to Gujarat State Electricity Corporation Limited (GSECL for short) had provided the accommodation to the employees of the assessee-company. He submitted that this fact is undisputed that the accommodation belonged to GSECL and GSECL had provided the accommodation to the employees. On the contrary, Ld. SR-DR on behalf of the Revenue submitted that Section 17(2)(i) to be read with the Rule-3 of the I.T. Rules, 1962. He submitted that it is quite clear ITA No.2/Ahd/2010 A.Y. 2005-06 G.U.V.N.Ltd. v. ITO(TDS) Anand Page 3 that for the purpose of computing the income chargeable under the head “salary”. The value of perquisites provided by the employer directly or indirectly to the assessee or to any member of his household by reason of his employment is determined in accordance with sub-rules of Rule-3 of the IT Rules. He submitted that the accommodation to the employee is provided by GSECL by reason of his employment with the assessee-company. He submitted that due to employment and his appointment to carry out the work such accommodation was provided. He strongly supported the orders of authorities below.
5. We have heard the rival submissions and perused the material available on record. Ld. counsel for the assessee submitted that the rent free accommodation was not provided by the employer, therefore, the employer was not responsible for deduction of tax as such same is not a perquisites within the meaning of Section 17(2)(i) of the Act. In this case is the issue is whether rent accommodation provided by the GSECL to the employee of Gujarat Urja Vikas Nigam Limited (GUVNL for short), the assessee herein, would tantamount to perquisites within the meaning of Section 17(2)(i) of the Act read with Rule-3 of the IT Rules. For better understanding Section. 17(2)(i) is reproduced hereinbelow:-
“17. ‘For the purposes o section 15 & 16 and of this section, –
(1) …..
(2) “perquisite” includes –
(i) the value of rent-free accommodation provided to the assessee by his employer ;”
Further, Rule-3 of the I.T. Rules, speaks as under:-
“3. For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:-“
ITA No.2/Ahd/2010 A.Y. 2005-06 G.U.V.N.Ltd. v. ITO(TDS) Anand Page 4
The undisputed facts in this case are that the assessee-company has executed a transmission service agreement with Gujarat Ener4gy Transmission Corporation Limited (GETCO for short) and GSECL. It is also undisputed fact that the employees were deputed for the purpose of carrying out responsibility of the assessee-company arising out of the transmission service agreement. Therefore, the deputation of the employees at given places were by the reason of employment. Now coming to the provisions of law as per Rule-3 of the I.T. Rules value of perquisites provided by the employer directly or indirectly to the assessee or to any member of his household by reason of his employment is determined in accordance with Rule-3(1) of the IT Rules. In the present case the undisputed fact remains that although the rent free accommodation was not provided directly by the assessee-company but the accommodation was given to the employees of the assessee by a third party at whose places the employees of the assessee-
company were deputed for carrying out the responsibilities of the assessee-
company under the agreement executed between the assessee-company and the GSECL (third party). Admittedly, the submissions that the employer has not provided any rent free accommodation to its employees was not made before Ld. CIT(A) and this aspect has not been examined. Therefore, it would be in the interest of justice that this issue is restored back to the file of Ld. CIT(A) to decide afresh after providing sufficient opportunity of hearing to the assessee. This ground of assessee’s appeal is allowed for statistical purposes.
6. Next ground is with regard to charging of interest u/s. 201(1A) of the Act. Ld. counsel for the assessee submitted that once the tax was not deductible therefore the assessee cannot be termed as a defaulter u/s. 201(1A) of the Act and no interest can be charged u/s. 201(1A) of the Act. On the contrary, Ld. SR-DR strongly supported the order of authorities below.
ITA No.2/Ahd/2010 A.Y. 2005-06 G.U.V.N.Ltd. v. ITO(TDS) Anand Page 5
7. We have heard the rival submissions and perused the materials available on record. Since we have already remitted back first ground of this assessee’s appeal as indicated above to the file of Ld. CIT(A) therefore, this ground of assessee’s appeal is also remitted back to the file of Ld. CIT(A) for fresh adjudication after providing reasonable opportunity of being heard to assessee.. This ground of assessee’s appeal is also allowed for statistical purposes.
8. In the result, appeal filed by assessee is allowed for statistical purposes.
Order pronounced in Open Court on the date mentioned hereinabove at caption page.
Sd/- Sd/-
(A.K.Garodia) (Kul Bharat)
(Accountant Member) (Judicial Member)
Ahmedabad,
*Dkp
Ǒदनांकः-14/12/2012 अहमदाबाद ।
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, /True Copy/ उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।
Strengthen preparation & delivery of orders in the ITAT
1) date of taking dictation 06/12
2) direct dictation by Member straight on No computer/laptop/dragon dictate
3) date of typing & draft order place before Member 06/12
4) date of correction 07/12 ITA No.2/Ahd/2010 A.Y. 2005-06 G.U.V.N.Ltd. v. ITO(TDS) Anand Page 6
5) date of further correction 07/12, 10/12
6) date of initial sign by Members 11/12
7) order uploaded on 14/12
8) original dictation pad-part has been enclosed in the file Yes
9) final order and 2nd copy send to Bench Clerk on 14/12
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