EIH LTD.,NEW DELHI vs. ITO, DELHI

Assessee 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.

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).

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