Employees Provident Fund Organisation Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that TDS are not applicable as EPFO have not provided rent free accommodation to employees, as employees are paying license fees as per Rules of Govt. of India.
Facts- The assessee is an autonomous body and is a creation under the statute, “Employees Provident Fund Organisation and Miscellaneous Provisions Act 1952”. AO observed that assessee has provided its employees with unfurnished accommodation, and was of the view that assessee was required to deduct TDS on the perquisite value in respect of such accommodation provided to its employees. Accordingly, show cause notice was issued.
AO after considering the submissions of the assessee treated the assessee as “assessee in default” for non-deduction of TDS on perquisite value of unfurnished accommodation provided to its employees, and computed the default along with interest u/s. 201/1(A) of the act, for all the years under consideration. CIT(A) dismissed the appeal. Being aggrieved, assessee has preferred the present appeal.
Conclusion- Held that assessee cannot be held to be an assessee in default for the reason that it is an organisation under a Statute enacted by the legislature. Further that as the assessee collects license fee in the form of House Rent Allowance from its employees against the unfurnished accommodation and therefore, the provisions of TDS will not apply under such circumstances.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
Present appeals arises out of separate orders all dated 21.03.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi for A.Ys. 2011-12 to 2013-14.
2. It is submitted that, the issues raised by the assessee in all the three appeals are common and on identical facts. It is submitted that the observations of the Ld.CIT(A) as well as the Ld.AO are identical and similar for all the years under consideration. Accordingly, all the appeals are being disposed of by way of common order. For the sake of convenience, grounds raised by the assessee for A.Y. 2011-12 are reproduced as under:
“1. The Learned CIT (A) has not considered any of the submissions made by the Appellant in support of its case that, the residential accommodation provided by it to its employees must be treated at par with Central Government for the purpose of deduction of TDS on value of perquisites of rent free accommodation.
2. Section 17(2) of Income Tax Act reads, “Perquisite includes the value of rent free accommodation provided to the assessee by his employer”. EPFO does not provide any rent free accommodation. License fee in respect of accommodation allotted to them by the Board is deducted at the rates prescribed by Govt. of India. Therefore, Staff Quarter cannot be termed as Rent Free Accommodation. Staff quarters are given in lieu of “House rent allowance” i.e. part of basic wages or salaries and therefore it is not an excess benefit or advantage to be qualified as perquisites U/s 17(2) of IT Act.
3. The Central Board of Trustees, EPFO is governed, controlled and administered by Central Government. Union Minister of Labour and Employment is the Chairman of the Organisation and the Secretary of Ministry of Labour and Employment is the Secretary of the Organisation.
4. EPFO is the extension of the executive power of the Union of India for implementing the mandate envisaged under Article 41 of the Constitution and is brought into existence under the EPF & MP, Act 1952. Therefore, as per Articles 258(1) of Constitution read with 8(b)(1) of the General Clauses Act, 1897, Central Board of Trustees, EPFO is the executive organ of the Central Government.
5. Section 18 – A, 20 and 20 of EPF and MP Act, 1952 makes it a mandate to the Central Board of Trustees to comply with any directions given by the Central Government as it may think fit for the efficient administration of the Act.
6. Section 21 of the EPF and MP Act, 1952, the Central Government has powers to make rules to carry out the provisions of the EPF and MP Act, 1952.
7. Section 18A of the Act which reads as “Authorities and Inspector to be Public Servant”, which clearly implies that the Employees of Central Board of Trustee are the Government Employees and Public Servants.
8. CBT has been constituted by enactment of EPF& MP Act, 1952 with due approval of President of India. This implies that the Department and Wings can be created by the Act of Parliament and CBT exercises the delegated powers provided by president of India, while considered in consonance with the Section 3(8)(b) of the General Clauses Act, 1897, and hence earns its eligibility to be identified as Government.
9. The autonomy as per Para 50 of EPF Scheme 1952, enjoyed by the Organisation is merely a delegation of powers in accordance with the Section-19 of the EPF & MP Act, 1952 by which there is no discretion with the EPFO in the matter of finance and administration of the employees of CBT.
10. The guiding principles contained in the order of ITAT, Bangalore Bench-A, in ITA No. 1607, 1711/Bang/2013 in the case of Central Food Technology Research Institute, without noting that, the facts of the said case cannot be made applicable to the case on hand, in view of admitted fact that, Central Food Technology Research Institute, cannot be compared with the Appellant EPFO, which regulates the Directive Principles of State Policy as envisaged in Article 41 of the Constitution of India.
11. Apart from Police like organisations and Income Tax Department only EPFO executes its power to curtail the Right to Liberty by issuing the Orders under Section 7A, 8B, 8F and 8G of EPF & MP Act, 1952, to enforce Summons, Attachment and Imprisonment and these powers are legitimate powers of Government only.
12. Though the salaries of the Appellant EPFO are not drawn out of the consolidated funds of India but paid out of the funds of the Appellant EPFO it is regulated by the Central Government as provided under Section 5D(C), 5D (9) (a) of EPF and MP Act, 1952 and also that the funds of the Appellant EPFO are vested in and administered by the Central Board of Trustees, which is a tripartite body consisting of representatives from Central and State Governments, the Employers and Employees. Hon’ble Minister of Labour and Employment, Government of India is the Chairman of the Central Board of Trustees.
13. In the Orders of the Commissioner of Income Tax (Appeals), Chandigarh vide No.43/09-10 and 44/09-10, the employees of Central Board of Trustees, EPFO stands to be in the category of Central Government Employee.
14. The Learned CIT (A) has not considered the essence of the following decisions of the Hon’ble Apex Court:
• Rajasthan State Electricity Board Vs. Mohan Lal ((1967) 3 SCR 377),
• Sukhdev Singh & Ors Vs. Bhagath Ram Singh Raghuvanshi & Anr (1975) 1 SCC 421)
• Union of India Vs. R.C. Jain & Ors(1981) 2 SCC 308)
15. The Learned CIT (A) has erred in completely accepting the findings of the AO enumerated in his Order passed under Section 201(1) and 201(1A) of the Income Tax Act, without paying proper attention to the reply statement made by the Appellant EPFO and thus has erroneously held that:
