Law:

Section:

I. Section 192, read with section 17, of the Income-tax Act, 1961 and rule 3 of the Income-tax Rules, 1962 - Deduction of tax at source - Salaries - Whether where assessee-company had distributed free food/meal coupons to its employees for purchase of meals only at specified eating points; such coupons were not transferable; and value of each coupon did not exceed monetary limit provided by rule 3(7)(iii), merely because some of employees had misused said facility by using coupons for other purposes, assessee-company could be treated to be in default for non-compliance with requirement of deducting tax at source under section 192 - Held, no II. Section 17, read with section 192, of the Income-tax Act, 1961 - Salaries - Perquisites - Whether Explanation to section 17(2)(iii)(c) only envisages that expenditure is in relation to use of any vehicle provided by employer; there is no qualification as to nature of vehicle or as to ownership of vehicle - Held, yes - Whether payment made by assessee-employer to its employees by way of reimbursement of conveyance expenses was tax-free perquisite and, therefore, assessee was not required to deduct TDS in that behalf - Held, yes FACTS-I The assessee-company distributed free food/meal coupons to its employees for purchase of meals as per company's policy. For that purpose, it had entered into an agreement with 'A'. The employees were provided with coupons of 'A' at the rate of Rs. 50 per day. The assessee-company claimed that amount paid to 'A' for food/meal coupons given to the employees was not taxable perquisite within the meaning of rule 3(7)(iii) and, therefore, it did not deduct the tax at source on that amount. The Assessing Officer found that some of coupons had been misused by some of the employees for purchase of grocery items, cosmetics items, etc., from shops/super stores selling such items. According to the Assessing Officer, in light of rule 3(7)(iii) the value of free meals provided by an employer to an employee had to be treated as perquisite within the meaning of section 17(2) for being taxed under the head 'Salaries'; that the proviso under clause (iii) of sub-rule (7) of rule 3 provides for an exception…

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