The Delhi Income-Tax Tribunal has held that valuation of perquisite determined by the assessee relying on interpretation of Taxman’s Direct Taxes Ready Reckoner, the assessee could not be deemed to be an assessee-in-default and consequently, interest under section 201(1A) could not be levied though the valuation methodology was held not justified.
In the relevant case, the assessee while calculating the value of perquisite taxable in the hands of employee deducted Rs 1,000 per month per child (PMPC) from the educational facility provided free of cost based on the interpretation of the provisions as per reckoner. The AO, following the provisions contained in Income-Tax Rules, 1962, held that in a situation where the value of the benefit of free education exceeds Rs 1,000 PMPC, the whole of the amount would be treated as perquisites and accordingly treated the assessee as an assessee-indefault for short deduction of tax.
The tribunal held that the assessee had some basis (though that interpretation might not have been correct) on which the decision was taken not to deduct tax on the impugned amount, and unless it was shown that there was something more than mere reliance upon the reckoner, the assessee could not be held to be an assessee-in-default, and consequently, interest under section 201(1A) could not be levied.
