June 2010
Explanation 1 to S. 17(2), S. 192 — Assessee employer is not hit by the retrospective insertion of Explanation 1 to S. 17(2) in the absence of any such extension of retrospective effect either in S. 192 or S. 201.
By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
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New Page 1
22 2010 TIOL 231 ITAT (Hyd.)
State Bank of India, IFB Branch, Hyderabad v. DCIT (TDS)
A.Ys. : 2004-2005 to 2007-08.
Dated : 3-12-2009
Explanation 1 to S. 17(2), S. 192 — Assessee employer is not
hit by the retrospective insertion of Explanation 1 to S. 17(2) in the absence
of any such extension of retrospective effect either in S. 192 or S. 201.
Facts :
The assessee employer took residential premises on lease and
provided them to its employees. It recovered from its employees standard rent
for the accommodation so provided. Lease rent paid by the assessee was greater
than amount recovered by it from its employees. In accordance with the ratio of
decisions of several High Courts including the jurisdictional High Court, the
difference between the amount of rent paid by the employer and the amount of
standard rent charged from the employee was not regarded as a perquisite.
Subsequently, the Finance Act, 2007 inserted Explanation 1 to S. 17(2)(ii) with
retrospective effect from 1-4-2002. As a result of the retrospective amendment
the employee became chargeable to tax on perquisite value of the accommodation
where the rent paid by the assessee was greater than the rent recovered from the
employee.
The AO held that the assessee has short-deducted income-tax
at source from salaries paid by it to its employees and consequently the AO held
the assessee to be an assessee in default and demanded the amount of income-tax
short-deducted along with interest u/s.201(1A). The CIT(A) upheld the action of
the AO.
The assessee preferred an appeal to the Tribunal.
Held :
The Tribunal noted that :
(a) at the relevant time, when the TDS was to be effected
by the assessee-bank, there was no such provision on the statute book and the
law was amended at a later date with retrospective effect from 1-4-2002.
(b) the issue under consideration is covered in favour of
the assessee with the decision of the Nagpur Bench of the Tribunal in the
group cases of Canara Bank where it has been held that as far as the
assessee-employer is concerned, it is not hit by the retrospective insertion
of Explanation 1 to S. 17(2) thereof in the absence of any such extension of
retrospective effect either to S. 192 or S. 201.
The Tribunal, agreeing with the ratio of the Nagpur Bench
division decided the issue in favour of the assessee.
