EIH LTD.,NEW DELHI vs. ITO, DELHI

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ITA 400/DEL/2015Status: DisposedITAT Delhi14 July 2016AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the receipt of tips by employees from customers is not a direct consequence of the contract of employment. Therefore, such tips fall outside the scope of Section 192, and the assessee cannot be held liable for TDS deduction on them.

What were the facts?

The assessee, EIH Ltd., appealed against an order concerning the deduction of TDS on credit tips recovered from hotel guests. The assessee argued that they were not liable to deduct TDS under Section 192 on these tips.

What were the issues?

The primary issue was whether credit tips received by hotel employees from guests constituted 'salary' for the purpose of TDS deduction under Section 192 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 192,Section 15,Section 17,Section 201(1),Section 201(1A)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “SMC-I”: NEW DELHI

Before: SHRI P.K.BANSAL

For Respondent: Shri S.K. Mishra, Sr. DR
Hearing: 14/07/2016Pronounced: 14/07/2016

This appeal has been filed by the assesee against the order of the Ld. CIT(A) dated 11.11.2014.

2.

None appeared on behalf of the assessee. I therefore decided to dispose off the appeal after hearing the Ld. DR. I noted that in this case ssessee even though has taken as many as seven grounds of appeal but the only issue involved in the ground taken by the assessee is whether the assessee was liable to deduct TDS under the provision of section 192 on the credit tips recovered from the hotel guest.

3.

After giving the rival submission and going through the orders of the authorities below this issue in my opinion is no more res-integra in view of the decision of the Hon’ble Supreme Court in the case ITC Ltd. vs. CIT(TDS) 68 Taxman.Com 323 (SC) in which the Supreme Court held that contract of employment not being proximate cause for receipt of tips by employee from a customer, same would be outside dragnet of section 15 and 17 u/s 201(1A), interest can only be levied when the person if declared as an assessee in default. The assessee’s liability in the present case are outside section 192. Therefore it can not hold assessee to be in default. In view of the said decision of the Hon’ble Supreme Court, I quash the order of the AO passed u/s 201(1) / u/s 201(1A).

4.

In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 14/07/2016.

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