The Commissioner Of Income Tax v. M/S. Gail (India) Ltd

1 hvn IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 117 OF 2009 The Commissioner of Income Tax ... Appellant The Commissioner of Income Tax ... Appellant The Commissioner of Income Tax ... Appellant Versus M/s. GAIL (India) Ltd. ... Respondent Mr.P.S. Sahadevan for the Appellant. Mrs. V.B. Patel for Respondent. CORAM: F.I. REBELLO, & CORAM: F.I. REBELLO, &R.S. MOHITE, JJ. R.S. MOHITE, JJ. DATED: FEBRUARY 17, 2009 P.C. P.C. . The Revenue has come in appeal on the following questions : "(a) Whether on the facts and in the circumstances of the case the Hon’ble Tribunal was justified in holding that the Assessee was not responsible for deduction of the tax at sources on amount of travelling/conveyance expenses reimbursed to the employees on the sole basis of certificate/undertakings from the employees that they had actually incurred the expenses? (b) Whether on the facts and in the circumstances of the case and in law, the fixed amount paid to the employees every month without any proof or evidence of expenditure having been incurred would qualify for exemption under Section 10(14) of the Income Tax Act?" . Similar issue had come up cor consideration 2 before us in Income Tax Appeal No. 432 of 2001 in the case of Commissioner of Income Tax Vs. M/s. Nicholas Piramal India Ltd. decided on 15th January, 2008. In view of amendment to section 201 we held that the test whether the assessee acted bona fide is still available as what the assessee under section 192(1) is called upon is to deduct tax "on the estimated income". Our attention is also invited by the learned counsel for the assessee to the order of the Supreme Court in Civil Appeal NO. 989 of 2005 in the case of Commissioner of Income Tax Versus M/s I.T.I. Limited decided on 21st January, 2009. The issue before the Supreme Court was "Whether the assessee was under statutory obligation under the Income Tax Act, 1961 and or rules to collect evidence to show that its employee(s) had actually utilized the amount(s) paid towards Leave Travel Concession(s)/Conveyance Allowance. . Considering the question, the court held that considering that the beneficiary of exemption under Section 10(5) is an individual employee and as there is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the 3 Declaration to be submitted by an employee(s), accordingly dismissed the appeal. . On behalf of the Revenue, the learned counsel drew our attention to Section 192(2)(c) of the Income Tax Act. The said sub section was inserted by Finance Act, 1987 with effect from 1.6.1987. A submission is made on behalf of the counsel for the revenue is that while disposing of the case, in Nicholas Piramal (supra), this court did not take note of the said sub section. The said sub section reads as under : "2C. A person responsible for paying any income chargeable under the head "Salaries" shall furnish to the person to whom such payment is made a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof in such form and manner as maybe prescribed." . In our opinion, the said sub section would not be attracted as what that sub section requires is furnishing to the person to whom such payment is made, a statement giving the correct and complete particulars of perquisites or profits etc. In the instant case, the amounts are reimbursed. In other words the amounts which the employee has already note of the said sub section. The said sub section reads as under : "2C. A person responsible for paying any income chargeable under the head "Salaries" shall furnish to the person to whom such payment is made a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof in such form and manner as maybe prescribed." . In our opinion, the said sub section would not be attracted as what that sub section requires is furnishing to the person to whom such payment is made, a statement giving the correct and complete particulars of perquisites or profits etc. In the instant case, the amounts are reimbursed. In other words the amounts which the employee has already expended. In our opinion, the argument on behalf of the Revenue is devoid of merits. At the highest if there is non compliance with the requirement under sub section (2C), the person who has to give the statement, would be liable for consequences provided under the Act and rules. . For the aforesaid reasons, in our opinion, there is not merit in this appeal which is accordingly dismissed. (R.S. MOHITE, J.) (R.S. MOHITE, J.)(F.I. REBELLO,J.) (R.S. MOHITE, J.) (F.I. REBELLO,J.)