PRAHALLAD BEHERA,ROURKELA vs. ITO(TDS),, ROURKELA

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM आयकर अपीऱ सं./ITA No.196/CTK/2019 (नििाारण वषा / Assessment Year :2012-2013) Branch Manager, Vs. ITO(TDS), Rourkela LIC of India, Rourkela PAN No.AAACL 0582 H & TAN No. : BBNL 00159 F AND आयकर अपीऱ सं./ITA No.199/CTK/2019 (नििाारण वषा / Assessment Year :2011-2012) Branch Manager, Vs. ITO(TDS), Rourkela LIC of India, Rourkela PAN No.AAACL 0582 H & TAN No. : BBNL 00159 F AND आयकर अपीऱ सं./ITA No.218/CTK/2019 (नििाारण वषा / Assessment Year :2011-2012) LIC of India, Rourkela Vs. ITO(TDS), Rourkela PAN No.AAACL 0582 H & TAN No. : BBNL 00150 D AND आयकर अपीऱ सं./ITA No.219/CTK/2019 (नििाारण वषा / Assessment Year :2012-2013) LIC of India, Rourkela Vs. ITO(TDS), Rourkela PAN No.AAACL 0582 H & TAN No. : BBNL 00150 D AND आयकर अपीऱ सं./ITA No.250/CTK/2019 (नििाारण वषा / Assessment Year :2011-2012) Shri Prahallad Behera, Vs. ITO(TDS), Rourkela Branch Manager (Sales), LIC of India, Rourkela PAN No.AAACL 0582 H & TAN No. : BBNL 00172 E AND आयकर अपीऱ सं./ITA No.251/CTK/2019 (नििाारण वषा / Assessment Year :2012-2013) Shri Prahallad Behera, Vs. ITO(TDS), Rourkela Branch Manager (Sales), LIC of India, Rourkela PAN No.AAACL 0582 H & TAN No. : BBNL 00172 E (अऩीलाथी /Appellant) (प्रत्यथी / Respondent) ..

2 ITA Nos.196,199,218,219,250&251/CTK/2019 ननधाारिती की ओर से /Assessee by : Shri Sunakar Mahanty, Adv. िाजस्व की ओर से /Revenue by : Shri Subhendu Dutta, DR सुनवाई की तािीख / Date of Hearing : 22/01/2020 घोषणा की तािीख/Date of Pronouncement : 17/02/2020 आदेश / O R D E R Per Bench : These six appeals have been filed by the assessee against the order of CIT(A), Sambalpur, all dated 15.03.2019 for the assessment years 2011-2012 & 2012-2013. 2. In all the above appeals, the assessee has raised common ground with regard to confirming the addition by the CIT(A) made u/s.201(1) of the Act by the AO for short-deduction of TDS and interest u/s.201(1A) of the Act. 3. Brief facts of the case are that the assessee-bank is a cooperative society which has been created by the Special Act of the Legislature. A TDS verification was conducted on 19th October, 2012 in the impugned cases and the ITO(TDS) found from the pay bills register, form No.16 and other relevant documents relating to salary payments of the employees of the assessee that ‘cash medical benefit’ was allowed exemption u/s.10 of the Act by the deductor. The ITO(TDS) noted that under the provisions of Income Tax Act, the cash medical benefit which is paid as an allowance is taxable u/s.15 of the Act irrespective of the fact that it is paid in addition to, or in lieu of salary. Accordingly, the

3 ITA Nos.196,199,218,219,250&251/CTK/2019

ITO(TDS) calculated the TDS liability for short deduction of tax

u/s.201(1) and interest payable u/s.201(1A) of the Act for the

respective assessment years under consideration in the respective

appeals as under :-

Sl ITA No. AY. Short deduction Interest No of tax payable u/s.201(1) of u/s.201(1A) the Act of the Act 1. ITA No.196/CTK/19 2012-2013 Rs.43,777/- Rs.3,064/- 2. ITA No.199/CTK/19 2011-2012 Rs.83,162/- Rs.15,801/- 3. ITA No.218/CTK/19 2011-2012 Rs.1,72,582/- Rs.34,597/- 4. ITA No.219/CTK/19 2012-2013 Rs.33,578/- Rs.2,686/- 5. ITA No.250/CTK/19 2011-2012 Rs.1,39,001/- Rs.26,410/- 6. ITA No.251/CTK/19 2012-2013 Rs.40,824/- Rs.2,858/-

before the CIT(A), however, the CIT(A) dismissed all the appeals of the

assessee.

in appeals before the Income Tax Appellate Tribunal.

order of AO for non-deduction of TDS as per Section 194A of the Act. It

was further submitted by the ld. AR that both the authorities below

have failed to appreciate that CBDT vide letter Ref.L

F.No.200/75/2001-ITAT, dated 20.05.2002 clarified the matter relating

to the income tax on lump sum cash medical benefit to officer and

employees of LIC of India and has allowed exemption upto Rs.15,000/-

as per the proviso (v) of Section 17(2) of the Act in respect of any

expenditure incurred by the officer/employee on his medical treatment

4 ITA Nos.196,199,218,219,250&251/CTK/2019 or treatment of any member of his family reimbursed by the employer.

Therefore, ld. AR vehemently submitted that the lump sum cash

medical benefit to officers and employees upto Rs.15000/- is not

chargeable to tax in view of the proviso (v) of Section 17(2) of the Act

and also the interest cannot be leviable. Therefore, ld AR submitted

that the appeals of the assessee deserves to be allowed.

below and submitted that the assessee is to be treated as assessee-in-

default for non-deduction of TDS as per Section 201(1) of the Act.

Therefore, ld. DR submitted that the order of the CIT(A) be upheld.

available on record, we noticed from the orders of authorities below

that the ITO(TDS) noted that under the Income Tax Act, the cash

medical benefit which is paid as an allowance is taxable u/s.15 of the

Act irrespective of the fact that it is paid in addition to or in lieu of

salary. The AO was of the view that what is contemplated by proviso

(iv) to Sec.17(2) of the Act was any sum paid by the employer in

respect of any expenditure "actually incurred" by the employee on his

medical treatment or treatment of any member of his family. Since the

Assessee was paying medical reimbursement as a component of

the monthly payment to the employee and later claiming that it was not

perquisite to the extent of Rs.15,000, the same had to be considered as

5 ITA Nos.196,199,218,219,250&251/CTK/2019 salary and not exempt perquisite. The reasoning is the same that the

payment should not precede the actually incurring of the expenses and

it should be only by way of reimbursement. The grievance of the

assessee is that there should not be any deduction of TDS on

reimbursement of medical allowance and charging of interest thereon.

On perusal of the impugned order, the CIT(A) observed that the

assessee has paid fixed medical allowance and as per the CBDT letter

issued to LIC, the exemption of Rs.15000/- is allowed to

reimbursement of actual expenditure. We find that medical allowance

is a fixed allowance paid to the employees of a company on a monthly

basis irrespective of whether they submit the bills to substantiate the

expenditure or not. However, medical reimbursement is a payment

made to employees against specific medical bills submitted by them,

subject to entitlement. If employees want to claim tax benefit, they

should submit bills for the corresponding amount under medical

reimbursement. As per the provisions of Income Tax Act, 1961, medical

allowance is not categorised as an allowance which bears entire

exemption. Therefore, the medical allowance is a fixed pay provided by

an employer, and is fully taxable. Employees can claim a tax benefit up

to Rs.15,000/- under medical reimbursement on production of bills

and supporting document as per Section 17 (2) of the IT Act, 1961.

6 ITA Nos.196,199,218,219,250&251/CTK/2019 9. In view of the above factual aspect of the case, we find that the employer has provided fixed medical allowance to his employees. It is clear from the order of the authorities below that the employees have not submitted any bills/vouchers regarding their medical expenses incurred by them. The allowance is exempt to the extent of expenditure incurred by the employees. In the impugned case, there is no any proof of medical expenditure incurred by the employees which is clear from the orders of authorities below. The ld. AR of the assessee also could not substantiate that the employees have spent the allowances received by them for the intended purpose. Therefore, the fixed medical allowance given by the employer is taxable as salary income. The employer has not been deducted TDS on the fixed medical allowance. The CBDT letter relied on by the ld. AR of the assessee has no application on the issue under consideration as the CIT(A) has already dealt the same in the appellate order. The authorities below have decided the issue in detail and accordingly, we uphold the same. Thus, the sole ground raised in all the appeals under consideration is dismissed. 10. In the result, all appeals of the assessee are dismissed. Order pronounced in the open court on 17/02/ 2020. Sd/- Sd/- (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनाांक Dated 17/02/2020 Prakash Kumar Mishra, Sr.P.S.

7 ITA Nos.196,199,218,219,250&251/CTK/2019 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीलाथी / The Appellant- 1.

प्रत्यथी / The Respondent- 2.

आयकि आयुक्त(अऩील) / The CIT(A), 3. आयकि आयुक्त / CIT 4. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT, 5. Cuttack गार्ा पाईल / Guard file. आदेशािुसार/ BY ORDER, 6. सत्यावऩत प्रनत //True Copy//

(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack