IN THE ITAT DELHI BENCH ‘H’
Superintendent (DDO)
V/s.
Income-tax Officer (TDS)
IT APPEAL NOS. 4804 to 4806, 4812 to 4819 and 4826 to 4832 (DELHI) OF 2011
[ASSESSMENT YEARS 2006-07 TO 2009-10]
JULY 27, 2012
ORDER
This is a bunch of nineteen appeals filed at the instance of the assessees against the common order of the Ld.CIT(Appeals) dated 24.08.2011 passed for assessment years 2006-07 to 2009-10. In response to the notice of hearing, no one has come present on behalf of the assessee. With the assistance of learned DR, we have gone through the record carefully and proceed to decide the appeals ex parte.
2. The facts on all vital points are common in the case of all the assessees. For the facility of reference, we are taking up the facts from ITA No.4804/Del/2011 in the case of the Principal Campus School, Chaudhary Charan Singh Hisar Agriculture University, Hisar. The brief facts of the case are that a survey operation under sec. 133A(1)(i) of the Income-tax Act, 1961 was carried out on the offices of all the appellants on different dates. The Principal of Campus School was surveyed on 9th September, 2008. The Office of Superintendent C/o Registrar was surveyed on 7th October, 2009. The Office of Superintendent (DDO) University Library was surveyed on 05.011.2009. According to the ITO(TDS), Hisar, the survey team has verified the TDS record and directed the appellants to submit these TDS records for scrutiny. The record was produced before the ITO. On an analysis of the record, he formed an opinion that university has provided accommodation to its employees for which it charges license fees but did not deduct the TDS on the value of perquisite of the rent free accommodation as per the procedure provided in Rule 3 of the Income-tax Rules, 1962. We find that almost verbatim finding has been recorded by the Assessing Officer except variation in the dates and quantum, in the impugned order in all these appeals. For the facility of reference, the finding recorded in the case of principles campus school is being noted here. It reads as under:
“5. From the perusal of TDS records supplied by the PR/DDO, it is noticed that the DDO has not added the value of perquisites on account of residential accommodation provided to the employees as mentioned in Annexure-A. But as per sec. 17(2) of Income-tax Act, 1961 read with Rule 3 of the Income-tax Rules, 1962 the DDO was required to add value of perquisites in the salary income of the employees to whom residential accommodation provided during the year under consideration which the DDO has failed to do so”.
3. Learned Assessing Officer thereafter reproduced the table appended with Rule 3 and recorded a finding how to compute the perquisite. According to the Assessing Officer, as per sub-rule (1)(a)(iii), 7.5% of the salary is to be treated as perquisite value of the accommodation provided by the employer to its employees and the DDO ought to have deducted the TDS on such perquisite’s value. In the opinion of the Assessing Officer, the appellants have failed to deduct the TDS while making payments of salary to the employees. Assessing Officer computed the perquisite value, tax payable on such amount and the interest for non-payment of such amount in government’s account within the due date in the annexure annexed with each order. In the case of Principal Campus School, learned Assessing Officer has worked out the tax at Rs.16,562 interest under sec. 201(1A) at Rs.5588 and raised a demand of Rs.22,150 under sec. 201(1) and 201(1A) of the Act. Similar demands have been raised in the cases of other appellants.
4. Dissatisfied with the demands, the appellants filed appeals before the learned first appellate authority. They have contended that the learned ITO(TDS) has erred in treating the university employees in the category of “others” instead of treating them as a State Government employees. According to the appellants, there is no violation of provisions of sec. 17(2) of the Income-tax Act, 1961, in the instant case, as the university employees are State Government servants and cannot be classified under the category of “others”. It was also contended that university falls within the ambit of “state” as per article 12 of the Constitution of India. It is established under an Act of Parliament and its employees got salaries from out of the 100% budgetary support from the State Government. It follows the State Government Rules regarding all its financial matters as well as service rules. The major amount of the budget comes from the state funds and is totally regulated and controlled by the Government of Haryana. It was also contended that similar issue has arisen before the ITAT in ITA No.1214/Del/1996 in the case of CIT, Panchkula v. Different Colleges of CCS HAU. Hisar. Similarly, in the case of Financial Officer, Maharishi Dayanand University, Rohtak v. ITO, Rohtak in ITA No.4676/Del/2005. The ITAT has considered an identical issue in ITA No.4676/Del/2005 and held that the assessee could not be treated as an assessee in default in terms of section 201 and 201(1A) of the Act. Learned first appellate authority has gone through the contentions of the assessee, however, did not concur with the submissions of the assessee. According to the learned first appellate authority, assessee failed to place on record complete text of the ITAT’s order in the case of Maharishi Dayanand University. As far as status of the assessee being of a state under article 12 of the Constitution of India is concerned, Learned CIT(Appeals) has observed that expression “state” mentioned in Part III of the Constitution of India under the fundamental rights is with regard to nation as a state and it is for the purpose of fundamental rights. It has no relevance to the tax matters as specified in the Income-tax Act, 1961. Thus, according to the Learned CIT(Appeals), The employees of the assessee cannot be treated as State Government employees or Central Government employees. The University is an autonomous body which is run by Board of Governor/Senate. The administration is controlled by the Vice-Chancellor. It may be getting entire budgetary support from the State Government but that does not mean that it is a state and its employees are government employees.
5. Learned DR relied upon the orders of ITO(TDS), as well as the order of the Learned CIT(Appeals). He pointed out that employees of the University cannot be treated at par with the State Government employees and they are rightly being treated in the category of others. Sub-rule (3) of Income-tax Rules provides the mechanism of valuation of perquisite and Assessing Officer has rightly valued it and has rightly treated the assessee in default.
6. We have heard the rival contentions and gone through the record carefully. Before adverting to the contentions raised by the assessee before the learned first appellate authority as well as reasons assigned by the learned revenue authorities below. It may be appropriate if we refer to the relevant provisions of the act, the rules and the important decisions on the points. Section 17 of the Act defines “salary”, “perquisite” and “profits” in lieu of “salary”. For the purpose of the controversy in hand, the relevant part of the section 17 reads as under:
“17. For the purposes of sections 15 and 16 and of this section,-
