COMMISSIONER OF INCOME TAX (TDS) vs. OIL & NATURAL GAS CORPORATION (INDIA) LTD.

TAXAP/551/2013HC GujaratGJHC24022932201312 August 2013Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI15 pages
AI SummaryDismissed

What were the facts?

During a survey under Section 133A of the Income-tax Act, 1961, at the premises of Oil & Natural Gas Corporation Ltd. (ONGC), it was observed that the company paid Conveyance Maintenance Reimbursement Expenditure (CMRE) to its employees. This amount was not reflected in Form No. 16 or Form No. 12BA. The Assessing Officer treated CMRE as additional salary under Section 17(1)(iv) and held ONGC liable for not deducting Tax Deducted at Source (TDS) under Section 201(1)/201(1A), raising a significant demand. The CIT(Appeals) and the Income-Tax Appellate Tribunal ruled in favour of ONGC, leading to the Revenue filing these appeals.

What did the High Court hold?

The High Court held that the Tax Appeals deserved no entertainment. The Court noted that the issue of CMRE was squarely covered by its own previous decision in Commissioner of Income-Tax v. ONGC (supra). In that prior case, the Court had examined whether CMRE paid on the condition of vehicle ownership and possession amounted to conveyance allowance for official purposes fully exempt under Section 10(14), and whether there was material to hold that the assessee had an impression of such exemption even if not fully utilized. The Court had concluded that no question of law arose, as the reimbursement was granted for official journeys, and the employer's estimate of income tax payable at the time of payment was not affected by the employee's subsequent failure to substantiate full utilization for exemption. The Tribunal's approach that the employer cannot be faulted for employees' shortcomings was upheld. The Court also observed that CMRE was not a blanket payment and involved verification and sanction, and that the payment of FBT by the company further indicated no loss to the Revenue. Therefore, the provisions of TDS were held not to have been attracted.

What were the issues?

1. Whether the Appellate Tribunal erred in holding that Conveyance Maintenance Reimbursement Expenditure (CMRE) paid to employees is liable for Fringe Benefit Tax (FBT), overlooking that it is additional salary under Section 17(1)(iv) attracting TDS under Section 192? Assessee's Contention: The issue is covered by this Court's decision in CIT v. ONGC (254 ITR 121). The payment of FBT does not preclude considering that the issue is already covered. The question is whether they are taxable receipts, not just the payment of tax. Once FBT is paid and the assessment admitted, there is no penalty or default. CMRE falls under perquisite, not salary under Section 17(1)(iv). Reliance was placed on CIT v. Larsen and Toubro Ltd. (313 ITR 1) regarding no need for employers to collect evidence for individual employee claims in the absence of such requirement. Revenue's Contention: Payment of FBT does not absolve the assessee from deducting TDS if the amount falls under Section 17(1)(iv). CMRE is an additional amount that is part of salary, not a perquisite. The Tribunal failed to discuss whether CMRE is salary or a perquisite, merely endorsing the CIT(Appeals) decision.

Which sections of the Income-tax Act were involved?

Section 133A,Section 17(1)(iv),Section 201(1),Section 201(1A),Section 192,Section 10(14)

AI-generated summary — verify with the full judgment below

O/TAXAP/551/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 551 of 2013 With TAX APPEAL NO. 552 of 2013 With TAX APPEAL NO. 555 of 2013

FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI =========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX (TDS)....Appellant(s) Versus OIL & NATURAL GAS CORPORATION (INDIA) LTD.....Opponent(s) ================================================================ Appearance : MR MR BHATT, LD.SENIOR COUNSEL WITH MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MR BS SOPARKAR, ADVOCATE for th

The order continues below.

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