Employer not required to check proof when deducting TDS u/s 192: SC

Summary

Where the assessee-employer allowed the employees the benefit of deduction under section 10 (5) of the Act without collecting evidence to show that its employees had actually utilized the amounts paid towards Leave Travel Concessions/Conveyance Allowance and the question arose whether the employer could be said to have wrongly allowed the deduction, HELD:

As the beneficiary of exemption under Section 10(5) is an individual employee and there is no circular of the Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the Declaration to be submitted by an employees, the employer was not at fault.

CASE LAWS

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 989 OF 2005

COMMISSIONER OF INCOME TAX, BANGALORE & ANR. …APPELLANT (S) VERSUS M/S I.T.I. LIMITED …RESPONDENT(S)

ORDER

A short question which arises for determination in this Civil Appeal is – whether the assessee was under statutory obligation under Income Tax Act, 1961, and/or the Rules to collect evidence to show that its employee(s) had actually utilized the amount(s) paid towards Leave Travel Concession(s)/Conveyance Allowance?

It may be noted that the beneficiary of exemption under Section 10(5) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the Declaration to be submitted by an employee(s).

For the above reasons there is no merit in the Civil Appeal and the same is dismissed with no order as to costs.

………………..J.
[ S.H. KAPADIA ]
………………..J
[ AFTAB ALAM ]
New Delhi, January 21, 2009