| The Tax Publishers2019 TaxPub(DT) 1038 (Bang-Trib) : (2019) 175 ITD 0504 : (2019) 198 TTJ 0470 : (2019) 070 ITR (Trib) 0352 INCOME TAX ACT, 1961
Section 201(1) Section 192 Section 201(1A)
Where belief of the assessee that its employees were to be regarded as employees of State cannot be said to be not bona fide by a statutory corporation (employer) on allowing exemption under section 10(10AA)(i) to retired employees for amount paid on account of unutilized leave, proceeding under section 201(1) and 201(1A) was, therefore, to be quashed.
|
Tax deduction at source - Assessee-in-default - Employee entitled to exemption of unutilized leave under section 10(10AA)(i) - Employer being a State statutory corporation
KPTCL, a statutory corporation in the present group of cases, did not deduct tax at source on payments made to its retired employees towards unutilized leave period where such payment was made in excess of Rs. 3 lacs. The Income Tax Authorities initiated proceedings against the assessee under section 201(1) and 201(1A) for treating KPTCL as an assessee-in-default and also for levying interest on tax not paid to the credit of the Central Government. Plea of KPTCL was that its employees were employees of the State Government and therefore, the entire payment to its employees towards unutilized leave period on retirement was exempt under section 10(10AA)(i). Both the AO and the CIT(A) rejected the plea of KPTCL. Held: The belief of the assessee that its employees were to be regarded as employees of State cannot be said to be not bona fide. Obligation of the assessee under section 192 is only to make bona fide estimate of income of his employee under the head 'Salaries'. There was no reason for KPTCL to think that its estimate of employee's income under the head 'Salaries' was incorrect as the belief it entertained was that its employees were to be regarded as employees of State Government and that its employees are entitled to exemption of the entire sum of unutilized leave encashment under section 10(10AA)(i). KPTCL had discharged its obligation under section 192 and hence, proceedings under section 201(1) and 201(1A) deserved to be quashed and were quashed.
Followed:Tribunal in ITA No. 2223/Bang/2017 to 2300/Bang/2017 and Tribunal by its order dt. 2-5-2018 and Tribunal in MP No. 175/Bang/2018 to 252/Bang/2018 in ITA No. 2223/Bang/2017 to 2300/Bang/2017 by order dt. 4-1-2019.
REFERRED : CIT v. Eli Lilly & Co. (India) Pvt. Ltd. (2009) 178 Taxman 505 (SC) : 2009 TaxPub(DT) 1585 (SC), CIT v. Calcutta Knitwear (2014) 362 ITR 673 (SC) : 2014 TaxPub(DT) 1547 (SC), Karnataka Electricity Board ILR 2006 KAR 3384 : 2007(1) Kar LJ 147 (Karn) and ITO v. TechSpan India (P) Ltd. (2018) 92 Taxmann.com 361 (SC) : 2018 TaxPub(DT) 1991 (SC) and DGIT(Inv.) v. Spacewood Furnishers (P) Ltd. (2015) 374 ITR 595 (SC) : 2015 TaxPub(DT) 2158 (SC).
FAVOUR : In assessee's favour.
A.Y. : 2013-14 to 2015-16
IN THE ITAT, BANGALORE 'C' BENCH
 SUBSCRIBE FOR FULL CONTENT
|