The Bengaluru bench of the Income Tax Appellate Tribunal ( ITAT ) last day held that the rent-free accommodation provided to the employees of National Diary Research Institute, as it is a society and therefore, the employees cannot be treated as employees of Central Government.
The assessee, National Diary Research Institute is a research institute in the dairy development and it is accorded status of deemed university. It is under administrative control of the Indian Council of Agricultural Research and Education, Ministry of Agriculture and Food Processing Industry.
While completing assessment for the relevant year, the Assessing Officer treated the society as Assessee-in-Default for not deducting TDS from the perquisite value of rent free residential accommodation provided to its employees, in terms of rule 3 as applicable , where the accommodation is provided by any employer other than Central Government or State Government.
Challenging the order, the assessee contended that the employees of the assessee society can be treated as employees of the Central Government and therefore they are under no obligation to deduct tax on the perquisite value of the accommodation provided to its employees as applicable under clause(ii) of rule 3 of IT Rules.
The Tribunal noted the decision of the coordinate bench in the case of Central Food Technology research versus TDS officer wherein it was held that the employees of the corporation fully controlled by the Central Government cannot be equated with Central Government employees though it is instrumentality of the State within the meaning of Article 12 of the Constitution of India.
Answering the question in favor of the Revenue, the Tribunal held that the employees of the society cannot be equated with the employees of the Central Government, therefore, upheld the original order against the society.
Subscribe Taxscan Premium to view the Judgment
