# Drawing & Disbursement Officer, LIC of India & Ors v. Asst. Commissioner of Income Tax & Ors

- **Citation:** (2013) 3 ILRA 1559
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2013-12-17
- **Case number:** Civil Misc. Writ(TAX) Petition No. 620 of 2009
- **Bench:** Pankaj Mithal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/drawing-disbursement-officer-lic-of-india-ors-v-asst-commissioner-of-income-tax-42746
- **Pages:** 5

## Headnote

Act-1961-Section
192Petitioner being Drawing and Disbursing
officer-paying salaries to the employeesdeducted income tax at source from
estimated income of employees-allowed
allowance
of
donation-given
by
the
employees to the institution for rural
development programe-obliged to have
broad
picture
of
estimated
incomecircular
relied
by
department
also
nowhere
provides
any
guidance
for
deduction under section 80 GGA-heldonce
employees
found
subjected
to
regular income tax-no liability could be
fastened
upon
petitioner-petition
allowed.

Held: Para-26
The petitioner had made bona fide
allowance of the donation made by the
employees
for
rural
development
programme while making deduction of
tax at source and as such there was no
occasion for any order under Section 201
read with Section 201 (1A) of the Act. It
may be pertinent to note that the
employer while making deduction of tax
at source is only required to have a
broad picture of the estimated income on
which tax is to be deducted. He is not
supposed
to
calculate
the
income
minutely to precession.

Case Law discussed:
2009(6) SCC 735; AIR 1978 SC 851;
2003(129) STC 526; 2058 ITR 529; [2000]
243 ITR 0435; [1983] 140 ITR 0832.

## Text

3 All]Drawing &Disbursement Officer,LIC of India &Ors. Vs. Asst. Commissioner of Income Tax&Ors. 1559

18. Considering the above decisions
of the Apex Court and after a careful
reading of the decision of Full Bench of
this in Court Father Thomas (supra), it is
abundantly clear that an order rejecting
the
application
under
Section156(3)
Cr.P.C. is also an interlocutory order and
remedy of revision is barred.

19. From the above discussion, this
criminal revision is liable to be dismissed,
and is hereby dismissed as being barred
under subsection(2) of Section 397 Cr.P.C.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 17.12.2013

BEFORE
THE HON'BLE PANKAJ MITHAL, J.

Civil Misc. Writ(TAX) Petition No. 620 of
2009
alongwith W.P. No. 619 of 2009, W.P. No.
621 of 2009

Drawing & Disbursement Officer, LIC of
India & Ors.... Petitioners
Versus
Asst. Commissioner of Income Tax &
Ors.... Respondents

Counsel for the PetitionerS:
Sri Rakesh Ranjan Agarwal

Counsel for the Respondents:
A.S.G.I., C.S.C (I. Tax)., G.Krishna

Income
Tax
Act-1961-Section
192Petitioner being Drawing and Disbursing
officer-paying salaries to the employeesdeducted income tax at source from
estimated income of employees-allowed
allowance
of
donation-given
by
the
employees to the institution for rural
development programe-obliged to have
broad
picture
of
estimated
incomecircular
relied
by
department
also
nowhere
provides
any
guidance
for
deduction under section 80 GGA-heldonce
employees
found
subjected
to
regular income tax-no liability could be
fastened
upon
petitioner-petition
allowed.

Held: Para-26
The petitioner had made bona fide
allowance of the donation made by the
employees
for
rural
development
programme while making deduction of
tax at source and as such there was no
occasion for any order under Section 201
read with Section 201 (1A) of the Act. It
may be pertinent to note that the
employer while making deduction of tax
at source is only required to have a
broad picture of the estimated income on
which tax is to be deducted. He is not
supposed
to
calculate
the
income
minutely to precession.

Case Law discussed:
2009(6) SCC 735; AIR 1978 SC 851;
2003(129) STC 526; 2058 ITR 529; [2000]
243 ITR 0435; [1983] 140 ITR 0832.

(Delivered by Hon'ble Pankaj Mithal, J.)

1. Heard Sri Rakesh Ranjan
Agrawal, Senior Advocate, assisted by Sri
Suyash Agrawal, learned counsel for the
petitioner and Sri Govind Krishna,
learned Standing Counsel for the Income
Tax Department.

2. The above three petitions relate to
the assessment years 2003-04, 2004-05
and 2005-06 and are based upon identical
facts involving the same assessee.

3. In all the writ petitions separate
but identical orders dated 28.3.2007
passed by the Assistant Commissioner of
Income Tax, TDS, Varanasi and a
common order dated 29.12.08 passed by
the Commissioner of Income Tax, TDS,
Lucknow dismissing the three revisions
arising there-from have been impugned.
1560 INDIAN LAW REPORTS ALLAHABAD SERIES

4. The petitioner is a drawing and
disbursing Officer of the Life Insurance
Corporation of India responsible for the
payment of salary to its employees. He is
obliged under Section 192 of the Income
Tax Act, 1961 (hereinafter referred to as
the Act) to deduct income tax at source
from
the
estimated income
of
its
employees under the head 'salaries' and to
furnish return thereof under Section 206
of the Act.

5. The petitioner filed the annual
returns of the relevant years regarding the
income of its employees and the tax
deducted
on
source.
The
Assistant
Commissioner of Income Tax, TDS, found
that the tax deducted by him at source was
short. Therefore, after issuing show cause
notices to the petitioner, the Assistant
Commissioner of Income Tax, TDS, passed
orders under Section 201 of the Act treating
the petitioner as an assessee in default and
demanding shortage in tax deducted and
interest thereon as per Section 201 (1A) of
the Act. The orders so passed by the
Assistant Commissioner of Income Tax,
TDS were upheld by the Commissioner of
Income Tax, TDS in revisions filed under
Section 264 of the Act.

6. The petitioner while deducting tax
at source under Section 192 of the Act
allowed the benefit of donations made by
the employees to the two institutions M/s
Manav Kalyan Sansthan, Kabir Road,
Varanasi
and
Swami
Sahjanand
Educational Trust, Kamachha, Varanasi
for integral rural development work as
envisaged under Section 35 CCA of the
Act on the basis of the certificate of
Commissioner of Income Tax dated
11.3.2003 and 1.4.2003 issued under
Section 80GGA of the Act to the said
institutions.

7. The two authorities aforesaid held
that the benefit so accorded by the
petitioner was not permissible at his level
and as such he failed to make proper
deduction of tax at source from the
income from salaries of the employees. It
was further held that the petitioner in
computing the total income of its
employees has acted in contravention of
the instructions issued by the department
on the subject. It was further held that the
representative of the petitioner admitted
the default in deducting tax at source and
therefore, petitioner is liable to make
good the short fall and to pay interest
thereon.

8. In these petitions basically only
two points need consideration:-

(i) Whether the petitioner in making
deduction of tax at source could have
allowed deductions under Section 80GGA
to the employees of the LIC; and

(ii) Whether
the
deduction
on
account of the donations made to the
institutions for carrying rural development
programmes were in contravention of the
departmental instructions?

9. Section 192 of the Act provides that
any person responsible for paying any
income chargeable under the head 'salaries'
shall deduct from the amount payable tax on
the estimated income of the assessee under
the head salaries for that financial year.

10. Section 192(1) of the Act for the
sake of convenience is quoted below:-

192(1) "Any person responsible for
paying any income chargeable under the
head "Salaries" shall, at the time of
payment, deduct income tax on the
amount payable at the average rate of
3 All]Drawing &Disbursement Officer,LIC of India &Ors. Vs. Asst. Commissioner of Income Tax&Ors. 1561
income tax computed on the basis of the
[rates in force] for the financial year in
which the payment is made, on the
estimated income of the assessee under
this head for that financial year."

11. The use of words "estimated
income of the assessee" in Section 192 of
the Act is of great importance. It means
that
the
employer
or
the
person
responsible for the payment of salary to
the employees has to deduct tax from the
amount payable on the estimated income
of the assessee under the head salary. In
the computation of the estimated income
of the assessee it is but natural that
statutory deductions provided under the
Act have to given effect to.

12. The estimated income of the
employees referred to in Section 192(1) of
the Act is the income of the employees
from salaries after according benefits of
the deductions permissible under Section
80GGA of the Act or similar other
provisions under the Act.

13. In this view of the matter, the
submission that the computation of
income was to be left upon the assessing
officer is not correct. The assessing
officer
computes
the
net
income
chargeable to tax whereas the petitioner
was only obliged to make an estimation of
the income of the employees for the
purposes of deducting tax at source which
is subject to final assessment to be made
by the assessing officer. In making the
estimation of the income under the head
salaries, the petitioner was required to act
honestly, bonafidely and in just and
proper manner. The petitioner has allowed
allowance of the donation made by the
employees under Section 80GGA of the
Act on the basis of the certificates issued
by the prescribed authority and as such it
cannot be said that he had acted in a
dishonest or unfair manner. At least, there
is no finding to this effect by any of the
authorities.

14. The reliance placed by Sri
Govind Krishna, on the decision of the
Supreme Court in the case of Dr. Ram
Deen Maurya Vs. State of U.P. and others
2009(6) SCC 735 to the effect that the
assessing authority draws his power under
Section 120 of the Act and the deduction
from the income if any has to be made by
him and not by the drawing and
disbursing officer is of no substance
inasmuch as the petitioner acting as a
drawing and disbursing officer has not
allowed any deduction for the purposes of
computing the net taxable income. He has
only
permitted
allowance
for
the
contribution made by the employees to
certain institutions permissible under
Section 80GGA of the Act for the
purposes of estimating the broad taxable
income of the employees for the limited
purposes of deducting tax at source under
Section 192 of the Act which is always
subject to the final computation of the
taxable income by the assessing authority.

15. The instructions contained in the
circulars Nos. 6, 9 & 13 dated 23.12.02,
18.11.03
and
6.12.2004
for
the
assessment years 2003-04, 2004-05 and
2005-06 respectively which are identical
in nature in relation to the deduction of
tax at source under Section 192 of the Act
provides guidelines for making deduction
under Section 80G and 80GG of the Act.
The said circular nowhere provides for
any guidance for making deduction under
Section 80GGA of the Act. None of the
impugned orders specifies the relevant
condition of any of the aforesaid circulars
which had been violated by the petitioner
1562 INDIAN LAW REPORTS ALLAHABAD SERIES
in
giving
allowance
under
Section
80GGA of the Act.

16. In view of the fact that the above
circulars nowhere prescribes any guidance
for making deduction under Section
80GGA of the Act, the said circulars
cannot be treated to have been violated or
contravened by the petitioner.

17. In the counter affidavit the
department has taken a stand that the
certificate
issued
to
associations/institutions
under
Section
35CCA of the Act has been withdrawn
subsequently with retrospective effect and
as such the petitioner was not justified in
giving the allowance to the employees.

18. The said ground has not been
taken by any of the authorities in passing
the impugned orders.

19. None of the impugned orders
have non-suited the petitioner on the
ground of withdrawal of certificate of
approval. It is well settled vide Mohinder
Singh Gil and another Vs. The Chief
Election Commissioner, New Delhi and
others AIR 1978 SC 851 that the validity
of the impugned order is to be judged
from the reasoning and the grounds taken
in the order itself and that nothing can be
substituted or read in it by counter
affidavit. Therefore, the stand taken in the
counter affidavit that the certificate of
approval was withdrawn subsequently
with retrospective effect is meaningless.

20. Moreover, in the case of
Commissioner of Income Tax, West
Bengal-II Vs. Ethelbari Tea Co. (1931)
Ltd. 2003 (129) STC 526 (Calcutta) it has
been held that deduction for donation to
association for carrying out work of rural
development programme which has been
approved when payment was made would
not be affected by the subsequent
withdrawal of the approval of the society
even with the retrospective effect.

21. Thus, the allowance given to the
employee under Section 80GGA of the
Act would not be affected by the
subsequent withdrawal of the approval of
the society.

22.

The
Supreme
Court
in
Commissioner
of
Income
Tax
Vs.
Chotatingrai Tea and others 2058 ITR 529
held that once the conditions of allowing
the expenditure under Section 35CCA of
the Act are satisfied it is no obligation of
the employee or the assessee to see the
proper utilization of the funds by the
institution. It means that deduction from
the income on account of the donation
made to the association or institution
recognized for integral rural development
programme is permissible provided the
institution is recognized and a certificate
to that effect issued by the prescribed
authority irrespective as to whether the
said donation has been actually utilized
for that purpose or not.

23. In view of the aforesaid since the
institution to which donations were made
by the employees were recognized for
rural development programme and were
having
valid
certificate
from
the
prescribed authority at the relevant time,
the subsequent withdrawal would not
effect the eligibility of the employees for
getting benefit of the said donation in the
computation of their income under the
head salaries.

24. As far as the acceptance of the
default by the representative of the
3 All] State of U.P. & Ors. Vs. Pankaj Srivastava
1563
petitioner is concerned, the same cannot
be held to be binding for the simple
reason that if a statute permits a particular
allowance that cannot be taken away by
admission of one of the parties. It is
settled law that there is no estopple
against the statute.

25. In Commissioner of Income-tax
Vs. Nestle India Ltd. [2000] 243 ITR
0435, a Division Bench of the Delhi High
Court while dealing with the deduction at
tax at source in relation to the income
under the head salaries held that where
the assessee was under a bona fide belief
that conveyance allowance was not
taxable then neither penalty under Section
201 of the Act nor interest under Section
201 (1A) of the Act was leviable.

26. The petitioner had made bona
fide allowance of the donation made by
the employees for rural development
programme while making deduction of
tax at source and as such there was no
occasion for any order under Section 201
read with Section 201 (1A) of the Act. It
may be pertinent to note that the employer
while making deduction of tax at source is
only required to have a broad picture of
the estimated income on which tax is to
be deducted. He is not supposed to
calculate
the
income
minutely
to
precession.

27. A similar view was expressed by
the Division of the Madhya Pradesh High
Court in the case of Gwalior Rayon Silk
Co. Ltd. Vs. Commissioner of Income
Tax [1983] 140 ITR 0832 and it was
further held that where the regular
assessment of an employee had been
completed the Commissioner of Income
Tax, TDS has no jurisdiction under
Section 201 of the Act to demand further
tax from the employer in respect of tax
shortly deducted at source relating to such
employees.

28. The revisional order dated
29.12.2008 makes a reference to the fact
that the employees have been subjected to
regular assessment in which case no
liability could have been fastened upon
the petitioner in respect of any tax which
may have been deducted less at source.
The assessing authority could have taken
care for realizing such shortage while
making the regular assessment.

29. Sri Govind Krishna, in the end
made a request that the authorities should
be given liberty to proceed to recover the
shortage of tax if any from the defaulting
employees.

30. I am afraid such liberty at this
stage is not warranted, in view of the fact
that all the employees have furnished
regular returns for the relevant years and
by now the assessment may have been
finalized leaving no scope for any further
recoveries against them.

31. In view of above the impugned
orders dated 28.3.2007 and 29.12.2008
are quashed.

32. The petitions succeeds and are
allowed without any costs.
--------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 03.12.2013

BEFORE
THE HON'BLE DR. DHANANJAYA
YESHWANT CHANDRACHUD, C.J.
HON'BLE DEVENDRA KUMAR ARORA, J.

Special Appeal (D) No. 845 of 2013