CENTRAL SILK BOARD, MINISTRY OF TEXTILES,BANGALORE vs. INCOME-TAX OFFICER, BANGALORE

The assessee is a autonomous body constituted under Central Silk Board Act, 1948 primarily for promoting and developing silk industry. The assessee provides scientific and technological assistance for Central Government. Thus the assessee is a statutory body functioning directly under the control of Ministry of Textiles, Government of India. The Assessing Officer proceeded to hold the assessee as assessee in default under Section 201(1) and 201(1A) of the Income Tax Act, 1961 (in short 'the Act') for want of deduction of TDS in respect of the house accommodation provided by the assessee to its employees. The Assessing Officer computed the tax liability in accordance with the Table I of Rule 3 and treating the assessee in the category of the employer other than the Central Government or State Government. The Assessing Officer was of the view that the assessee is neither Central Government nor the State Government nor its employees can be considered holding office or post in connection with the affairs of the union or state. The Assessing Officer accordingly determined the tax liability vide order passed under Section 201(1) and 201(1A) of the Act. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed.

Before us, the learned Authorised Representative of the assessee has submitted that the assessee is established under the Central Silk Board Act, 1948. The assessee is a statutory body functioning directly under the control of Ministry of Textiles, Government of India. The assessee receives annual grant only from Government of India based on budget proposal from the Ministry of Textiles. Such grants are distributed out of consolidated fund of India. Therefore the employees of the assessee are covered by the Govt. of India Pay & Allowances Rules, Conduct Rules and other rules as applicable to central government employees as per Rule 28 of Central Silk Board Rules, 1955. He has further submitted that its employees are eligible for pension on same scale as central government employees. The accounts for the assessee are actually audited by CAG of India therefore, the perquisite value of unfurnished accommodation provided by the assessee to its employees is required to be worked out in accordance with Sl.No.1 of Table 1 of Rule 3 of IT Rules, 1962. The learned Authorised Representative has thus submitted that the license fees in respect of accommodation fixed as per Govt. of India rules was recovered from the employees and the value of perquisite in respect of unfurnished accommodation was NIL. Further the learned Authorised Representative has submitted that though the assessee has not raised any specific ground however, the assessee has valued the perquisite as bona fide estimate by considering Sl.No.1 of Table 1 of Rule 3 therefore, the assessee cannot be held as assessee in default in respect of the accommodation provided to its employees. He has relied upon the decision dt.27.2.2015 of the co-ordinate Bench of this Tribunal in the case of Indian Institute of Science (IISC) Vs. DCIT in as well as decision dt.11.08.2016 in ITA No.1262/Bang/2015 in the case of ACIT Vs. IISC. Thus, it was was contended that when the assessee’s valuation of perquisite is based on bona fide estimate then no tax liability can be imposed on the assessee.

On the other hand, the learned Departmental Representative has submitted that after the amendment to the Rules, the category of employees of public sector undertaking and semi-government organization has been removed and therefore when the assessee does not fall under the first category being central or state government then the perquisite value has to be computed as per Sl.No.2 category in the Table 1 of Rule 3. He has further contended that an organization that receives grants from government cannot be deemed to be government for the purpose of Rule 3. Further the assessee has significant financial as well as administrative autonomy. The learned Departmental Representative has relied upon the decision of the co-ordinate Bench of this Tribunal dt.4.7.2014 in the case of Central Food Technology Research Institute Vs. ITO (TDS) in to 1611/Bang/2013 and submitted that an identical fact the Tribunal has held that an autonomous body constituted under the statute receiving grants from the government cannot cannot be treated as government or state for the purpose of Rule 3 of the IT Rules. He has relied upon the orders of the authorities below.

We have considered the rival submissions as well as the relevant material on record. As regards the applicability of the Sl.No.2 in Table 1 of Rule 3 for the purpose of computing the perquisite value of the accommodation provided by the assessee, the issue is covered by the decision dt.4.7.2014 of the co-ordinate Bench of this Tribunal in the case of Central Food Technology Research Institue Vs. ITO (supra) wherein the Tribunal after discussing all the relevant facts held in paras 10 to 12 as under :

However the issue has not been examined by the authorities below from the angle of bona fide estimate made by the assessee while valuing the perquisite. The Tribunal in the case of IISC Vs. DCIT dt.27.2.2015 (supra) has dealt with this issue in para 19 as under :

This decision was again followed by the Tribunal in the case of ACIT Vs. IISC for the Assessment Year 2011-12 vide order dt.11.8.2016. We further note that it is not a fresh issue raised by the assessee but it is only a plea in respect of the same subject matter and issue of deduction of TDS in respect of the accommodation provided to the employees. Therefore in the facts and circumstances and in view of the decisions of the Tribunal, we set aside this issue to the record of the Assessing Officer to examine the matter in the light of the decisions as relied upon by the assessee as well as by the department.