Law:

Section:

Section 192, read with section 10(14) and 10(5), of the Income-tax Act, 1961 - Deduction of tax at source - Salary - Assessment year 1995-96 - Assessing Officer observed that assessee-company treated children's education allowances and leave travel allowances paid by it to its employees at fixed rate, as exempt under section 10(14) and 10(5), respectively, and did not include same in their taxable income for purpose of deduction of tax at source under section 192, merely on basis of declarations filed by them without verifying actual expenditure incurred by them - Assessing Officer, accordingly, raised demands which were confirmed in appeal by Commissioner (Appeals) - However, on second appeal, Tribunal quashed demands on findings that TDS was not effected only on parts of allowances which was exempt and on balance portion, tax had been duly deducted and paid to Government - Whether findings recorded by Tribunal were purely findings of fact with which no fault could be found and, therefore, appeal filed by revenue thereagainst was to be dismissed - Held, yes FACTS The assessee-company treated the children education allowance and the leave travel allowance paid by it to its employees at fixed rate, as exempt under section 10(14) and 10(5), respectively, and did not include same in taxable income of employees for purpose of deduction of tax at source under section 192. The Assessing Officer observed that the children education allowance and the leave travel allowance were treated as exempt by the assessee merely on the basis of declarations filed by its employees without verifying actual expenditure incurred by them and, therefore, held that the allowances were wrongly treated as exmpt and made demands. The Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeal, the Tribunal considered the declara-tions given by the employees of the assessee to the effect that they had incurred expenditure and noted that the TDS was not effected only on the part of the allowances which was exempt and on the balance portion, tax had duly been deducted and paid into the Government treasury. The Tribunal, therefore, quashed the demand made by the…

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