COMMISSIONER OF INCOME TAX Vs. ITC LTD

JUDGEMENT

(1.) These four appeals are being disposed of by this common order as the questions of law arising in these appeals are common. ITAs No.475/2010, 476/2010 and 860/2010 relate to assessee/ITC Ltd. (hereinafter referred to as the assessee/ITC ) for the assessment years 2005-06, 2004-05 and 2003-04 respectively. ITA No.445/2011 relates to assessee, C.J. International Hotels Ltd. (hereinafter referred to as the assessee/CJ ) for the assessment year 2004-04.

(2.) The assessees are engaged in the business of owning, operating and managing hotels. Surveys were conducted under Section 133A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) at the business premises of the assessees during which it was found that the assessees had been paying tips to its employees but not deducting taxes thereon. The Assessing Officers treated the amounts of tips under the head Salary in the hands of respective staff and held that the assessees were liable to deduct taxes at source from such payments under Section 192 of the Act. The assessees were treated by the Assessing Officers as assessees-in-default under Section 201(1) of the Act. The Assessing Officers worked out different amount of taxes to be paid by these assessees under Section 201(1) and also interest under Section 201(1A) of the Act for the aforementioned assessments years.

(3.) Aggrieved from the orders of the Assessing Officers, the assessees filed appeals before Commissioner of Income Tax (Appellate) [hereinafter referred to as CIT(A) ]. The appeals in all the four cases were allowed by the CIT(A) by separate orders. The CIT(A) relied upon the decisions of the Tribunal in the case Nehru Place Hotels v. ITO, 173 Taxman 88, ITA No.4055- 4060/DL/2005 and held that the assessees could not be treated assessees-in-default under Section 201(1) of the Act for non deduction of tax on tips collected by it and distributed among their employees. Consequently, the CIT(A) in all the four appeals held that no interest was to be charged under Section 201(1A) of the Act.