TDS not deductible on Uniform Allowance given to Employees for use while on duty

Commissioner of Income Tax (TDS) Vs Oil And Natural Gas Corporation Ltd. (Gujarat High Court)

It is observed that the uniform given to an employee for using the same during his duty hours is presumed to be used for the purpose of employment only. When there was a circular of CBDT enabling the assessee for non-deduction of tax from the reimbursement of allowances on the basis of utilisation certificate of the employee, there was no liability on the part of the assessee for deduction of tax from payments made to the employees as uniform allowance.

THE ISSUE:

“Whether the Income Tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income Tax (Appeals) deleting the additions made by the Assessing Officer under section 201(1) of the Income Tax Act, 1961, and consequential interest charged by the Assessing Officer in relation to the assessee’s payments to its employees under the head of uniform allowance?” 

LEGAL PROVISIONS:

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