CSIR - NATIONAL AEROSPACE LABORATORIES vs. THE ASST. COMMISSIONER OF INCOME-TAX (TDS)

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF JULY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR I.T.A. NO.493 OF 2014 BETWEEN: CSIR - NATIONAL AEROSPACE LABORATORIES P.B.NO.1779, HAL AIRPORT ROAD BANGALORE-560017 REPRESENTED BY ITS SR. CONTROLLER OF ADMINISTRATION SRI. M.S. VIDYANATHAN AGED ABOUT 58 YEARS S/O LATE S. SUBBAKRISHNA DIXIT. ... APPELLANT (BY MR. S. PARTHASARATHI, SR. COUNSEL A/W MS. JINITA CHATARJEE, ADV.,) AND: THE ASST. COMMISSIONER OF INCOME-TAX (TDS) CIRCLE-18(1), 4TH FLOOR NO.59, HMT BHAVAN BELLARY ROAD, BANGALORE-560032. ... RESPONDENT (BY MR. K.V. ARAVIND, ADV.) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 27.08.2014 PASSED IN ITA NOs.453 TO 456/BANG/2014 FOR THE ASSESSMENT YEAR 2010-11 & 2011-12, PRAYING TO:

2 (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE ITAT DATED 27.08.2014 BEARING ITA NO.453 TO 456/BANG/2014 FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee against order dated 27.08.2014 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The subject matter of the appeal pertains to the Assessment years 2010-11 and 2011-12. The appeal was admitted by a bench of this Court on the following substantial questions of law:

(a) Whether Sl.No.1 of Table-1 of Rule 3 of the IT Rules, 1962 would apply to the employees of the Appellant who is one of the constituent units of the Council of Scientific and Industrial Research established in 1962 by resolution of the

3 then Central Legislative Assembly, registered under the Registration of Societies Act of 1860?

(b)

Whether the appellant which functions directly under the control of the Ministry of Science and Technology of the Government of India and receiving annual grants from the Government of India based on budget proposal from the Ministry of Science and Technology after approval of the Planning Commission and when the employees were governed by the Government of India Pay and Allowance Rules, Conduct Rules and other rules as applicable to the Central Government employees, can valuation of perquisite to such employees could be made without applying Sl.No.1 of Table-1 of Rule 3 of the IT Rules, 1962 and consequently whether the authorities were justified in holding that there was short deduction of tax at source under Section 192 of the Act to consider the Appellant as a defaulter to apply the provisions of Section 201(1) and 201(1A) of the Act?"

4 (c) If the answer to Question No.2 above is in affirmative still can the appellant-institute be held to be a defaulter to apply the provisions of Section 201(1) and 201(1A) of the Act of bonafide reason or belief in interpretation of Sl.No.1 of Table-1 of Rule 3 of the IT Rules, 1962 rws 17(2) of the IT Act, 1961? 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.486/2014, the order of the Income Tax Appellate Tribunal dated 27.08.2014 insofar as it pertains to initiation of proceedings under Section 201 and 201(1A) is concerned is hereby quashed. In the result, appeal is disposed of. Sd/- JUDGE Sd/- JUDGE ss