Per Vimal Gandhi, President: first set of appeals of revenue and cross-objection of assessee, Delhi Public School involves common point relating to interpretation of rule 3(5) of Income-tax Rules. 2. second set of appeals relating to M/s. Cambridge Foundation School also involves interpretation of above rule and, therefore, these were heard together and are being disposed of through this common consolidated order. 3. assessees are running public schools and are liable to deduct tax at source from salary and remuneration paid to its teaching staff. On perusal of Form No. 12BA, annexed with Form No. 16, providing information on tax deducted at source in case of Delhi Public School. Assessing Officer found that assessee, while calculating amount of perquisites assessable in hands of teachers, staff in respect of free/concessional educational facility provided to wards, deduction at rate of Rs. 1,000 per month per child has been claimed. Assessing Officer accordingly raised query. In reply thereto, assessee claimed that above deduction was claimed under rule 3(5) of Income-tax Rules. Assessing Officer did not agree with contention of assessee. He passed detailed order holding that deduction claimed by assessee was not permissible and, therefore, assessee was defaulter in terms of section 201(1)/201(1A) of Income-tax Act for not deducting proper t x from salary paid to teachers/staff. He, accordingly, held that there was shortfall in deduction of tax at source by assessee @ Rs. 12,000 per annum per child from salary subjected by TDS under section 192 of Income- tax Act. After holding assessee to be defaulter, demand under section 201(1)/201(1A) was raised in each of assessment years as per Annex. 'B' of order passed by Assessing Officer. 3a. assessee impugned above levies in appeal before CIT(A). In course of appellate hearing, assessee relied upon decision of his colleague CIT(A) XXX, New Delhi dated 28-6-2005 in Appeal No. 78/2005-06 in case of Delhi Public School, Vasant Kunj, New Delhi. In said case, learned CIT(A) held as under: 'The value of perquisite as per rule 3(5) of Income-tax Rules, provided by employer in this case resulting from provision of free education facilities for wards of employees of school would be total fees (including transportation charges) plus other fees/charges (per annum) less amount recovered, which would otherwise have been payable by employees in case their wards were studying in this school without getting free/concessional education facilities. It may be re-emphasized here that P.R. has wrongly allowed deduction of Rs. 1,000 per month per child, while calculating amount of taxable perquisites in Form No. 12BA on this account in hands of employees P.R. has grossly misinterpreted provisions provided in proviso contained in this rule 3(5). This proviso clearly provides that where cost of such education per child does not exceed Rs. 1,000 per month, provisions of rule 3(5) shall not apply and as such value of perquisites would be taken as nil . Thus, where cost of such expenditure of education per child exceeds Rs. 1,000 per month, provisions of rule 3(5) shall apply and proviso carving exception in cases of value of benefit not exceeding Rs. 1,000 is not applicable. In other words, whole of value of benefit to employees resulting from provisions of free education facilities to wards of employees would be taken as value of perquisites in hands of employees without giving exemption of Rs. 1,000 per month per child.' 4. Learned CIT(A), in impugned order, noted (that Assessing Officer has accepted working of perquisites on account of free education facilities provided to children of school employees as worked out by employer. He further found that employer had calculated perquisite value on basis of fee charged by similar institution in nearby locality for calculating perquisite value and, thereafter, reduced same by Rs. 1,000 per month per child. On basis of above working, assessee claimed that as perquisite value was less than Rs. 1,000, no tax was to be deducted and, therefore, no deduction was made. Assessing Officer did not change perquisite value provided by assessee but disallowed and added back deduction of Rs. 1,000 per month, i.e., Rs. 12,000 per annum while calculating tax deductible at source for which action was taken under section 201(1)/201(1A). 5. Learned CIT(A) obtained comment of Assessing Officer on claim of assessee under rule 3(5) on 'cost' of free education etc., and not cost of running establishment providing education. Learned representative of assessee further submitted that as per working given by assessee, average monthly cost per student worked out to Rs. 902.27. This being less than Rs. 1,000, no tax was deductible by assessee. 6. Learned CIT(A) reproduced relevant rule 3(5) of Income-tax Rules and agreed with his colleague CIT(A)-XIII, New Delhi that basis of working out value of perquisite free and concessional education given by school has to be cost of education and not fees charged by other schools as is adopted by assessee and accepted by Assessing Officer. He, however, did not agree that perquisite value of facility of free education in hands of employee is to be worked out on basis of actual amount of expenditure considering only direct expenditure incurred in providing education. There was no scope to consider only 50 per cent of establishment expenses, educational expenses and electricity expenses and this way work out cost of education at Rs. 798 per child. Learned CIT(A) found that total expenditure claimed by assessee in P&L account was Rs. 6,33,90,432 for 3,401 students. This way, average monthly cost per student was worked out to be Rs. 1,053.23 for period relevant to financial year 2002-03. Assessing Officer was directed to work out short deduction of tax on above basis. Likewise, for financial years 2003-04 and 2004-05, cost per student was worked out to Rs. 1,660 and Rs. 2,121 respectively. 7. revenue is aggrieved and has challenged order by raising following common ground: 'The learned CIT(A) has erred in law in directing Assessing Officer to amend assessment order to extent of recalculating value of perquisites on account of free education facilities provided to wards of employees/staff of school and to then calculate short deduction of tax and interest under section 201, which is not in consonance with rule 3(5) of Income-tax Rules, 1962.' 8. assessee, in cross-objection, has taken two grounds as under: '1. That learned CIT(A) was not justified in calculating cost of education in manner he has done by including all expenses of appellant as appearing in income and expenditure account. 2. That learned CIT(A) was not justified in law and on facts in not granting deduction of Rs. 1,000 per child per month in accordance with rule 3(5) of Income-tax Rules.' 9. In other case of Cambridge Foundation School, revenue authorities on survey found that assessee did not add any perquisite value in hands of employees whose children were having similar free educational facilities. Assessing Officer, accordingly, took proceedings against assessee for not properly deducting tax at source from salaries paid to employees under section 192 and consequently treated assessee as assessee-in-default and initiated proceedings under sections 201(1) and 201(1A). After rejecting contention of assessee that they were not liable to add perquisite for free education and deduct tax at source, he found number of students who were provided free educational facilities in different assessment years. number is recorded in para A-6 of order for financial years 1998-99 to 2004-05 dated 3-6-2005. While calculating total value of perquisite at Rs. 4,84,993, Assessing Officer accepted that above tax has been paid by payees and was not recoverable. Assessing Officer only imposed interest and penalties for not deducting above amount of tax on assessee. 10. assessees impugned above addition in appeal before CIT(A), who, after considering facts of case in light of rule 3(5) of IT Rules, held that aforesaid rule was entitled to liberal construction. He further held that word 'cost' in said rule should be distinguished from word 'price' and exemption of Rs. 1,000 per ward per month should also be allowed while computing perquisite value in respect of free educational facilities. Accordingly, it was held that Assessing Officer was in error in denying deduction/exemption of Rs. 1,000 per month per child. He further directed that recoveries made from employees/teachers, etc., should be given credit and only net amount in respect of concession be considered as perquisite for taxation purposes. 11. aforesaid findings of learned CIT(A) are subject-matter of appeal b y revenue and direction to deduct Rs. 1,000 per child per month while computing value of taxable perquisite is under challenge. revenue has also disputed interpretation put by learned CIT(A) on rule 3(5) including its proviso. 12. We have heard both parties. Learned Departmental Representative relied upon order of Assessing Officer and had contended that working given by assessee was adopted by Assessing Officer except for addition of Rs. 12,000 per annum per child and, therefore, there was no justification on part of learned CIT(A) to interfere with order of Assessing Officer. 13. Learned counsel for assessee, on other hand, submitted that as per working given by assessee, from perquisite value, assessee was entitled to deduction of Rs. 1,000 per month per child on correct interpretation of rule 3(5) and that deduction was wrongly not allowed to assessee. In support of his argument, learned counsel placed reliance on decision of Tribunal 'H' Bench in case of ITO v. Delhi Public School in IT Appeal No. 482/Delhi of 2006 and other appeals decided on 23-3-2007 wherein Tribunal held as under: 'Since learned CIT(A) has held that as per accounts maintained by assessee, cost of education comes to Rs. 902.27, nothing is to be considered as perquisite in hands of employee. Even otherwise, benefit of expenditure of Rs. 1,000 per month per child is to be given as per intention of Legislature. We accordingly do not find any infirmity in order of learned CIT(A).' 14. It was also observed that when estimate of salary is bona fide and there is small shortfall due to bona fide impression regarding assessment, deduction, etc., assessee should not be treated as assessee-in-default. 15. Shri Rakesh Gupta, learned counsel for M/s. Cambridge Foundation School supported impugned order of CIT(A). He submitted that any amount paid or recovered from employee has to be reduced while taking cost or value of benefit and in case after such reduction, value of perquisite is less than Rs. 1,000, then, in light of proviso, nothing is to be added. In support of claim that deduction of Rs. 1,000 per month per child is to be allowed in all cases, Shri Gupta placed reliance on Circular No. 15, dated 12-12-2001 [(2002) 172 CTR (St.) 65] issued by CBDT explaining and clarifying provisions of Finance Act, 2001. He argued that in respect of similar provisions relating to free meals, circular has provided that deduction of perquisite for free meal is to be charged only where it exceeds Rs. 50. Likewise, in case of aggregate value of gifts, vouchers or token in lieu of gift to be taken as taxable perquisite, only where gifts beyond Rs. 5,000 would only be taxed as perquisite. He read out articles IX and X of sub-para (4) of para 5.1 of circular. 16. We have given careful thought to rival submissions of parties. assessee, in all assessment years, claimed rebate of Rs. 12,000 per annum per child for calculation of salary paid to staff, which was subjected to deduction of tax at source under section 192 of IT Act. That was held to be wrongly claimed by Assessing Officer and that was issue which had emerged from order of Assessing Officer. Before learned CIT(A), it was also contended that perquisite value of benefit of free or concessional education to staff, etc. is to be worked out on basis of fees charged by other schools similarly situated. Learned CIT(A), on other hand, held that basis of working out perquisite value has to be 'cost' of education. aforesaid questions are subject-matter of dispute before us. In order to resolve issue raised, we may straightaway refer to provisions of rule 3(5) which are as under: 'The value of benefit to employee resulting from provision of free or concessional educational facilities for any member of his household shall be determined as sum equal to amount of expenditure incurred by employer-in that behalf or where educational institution is itself maintained and owned by employer or where free educational facilities for such member of employees' household are allowed in any other educational institution by reason of his being in employment of that employer, value of perquisite to employee shall be determined with reference to cost of such education in similar institution in or near locality. Where any amount is paid or recovered from employee on that account, value of benefit shall be reduced by amount so paid or recovered: Provided that where educational institution itself is maintained and owned by employer and free educational facilities are provided to children of employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, nothing contained in this sub-rule shall apply if cost of such education or value in such benefit per child does not exceed Rs. 1,000 per month.' 17. It is clear from above that perquisite value of free or educational facilities to any member of staff, etc. is to be calculated as under: (a)The amount of expenditure incurred by employer in that behalf; or (b)Where educational institution is maintained and owned by employer, or free facilities are allowed by reason of employment, value of perquisite to similar institution in or nearby locality; (c)If any amount is paid or recovered from employees for free or concessional educational facilities, then value of benefit is to be reduced by amount so paid or recovered. (d )The proviso would be attracted and rule 3(5) shall not apply if following conditions are fulfilled: (i )If cost of such education 'free or concessional educational facilities' does not exceed Rs. 1,000; (ii )The educational institution itself is owned by employer where free educational facilities are provided to children of employee or such facilities are provided in any institution by reason of employment of that employee. 18. In support of claim for deduction of Rs. 1,000 per month per child for concessional treatment in all cases, reliance was placed on decision of Tribunal 'H' Bench, New Delhi in case of Delhi Public School (supra) and also on Circular No. 15, dated 12-12-2001. After great deal of deliberation, we are of view that neither circular of Board nor decision of Tribunal dated 23-3-2007 render any help to assessees. Dealing first with decision of Tribunal, we find that in cases before Tribunal, perquisite value per child per month under rule 3(5) of IT Rules was found by assessee at Rs. 902.27, amount being less than Rs. 1,000, which is clearly exempt under proviso to rule 3(5). It was not issue before learned Bench whether in all cases, exemption of Rs. 1,000 per month per child is to be allowed where cost/value of perquisite exceeds Rs. 1,000. Therefore, observation of Bench 'Even otherwise, benefit of expenditure of Rs. 1,000 per month per child is to be given as per intention of Legislature' is not ratio of decision and, therefore, not binding. These are passing observations on issue not before Bench. We further find that decision of Hon'ble Supreme Court in case of CED v. Kantilal Trikamlal [1976] SCC 1935 or decision in case of Gwalior Rayon Silk Co. Ltd. v. CIT [1983] 140 ITR 832 (MP) cannot help assessee. 19. In our considered opinion, proviso here is exception to rule laid down in main sub-rule. It is to be so read. Legislature or rule making authorities wished to give benefit to persons where cost or perquisite value of free educational facility did not exceed Rs. 1,000 per month per child. There is nothing in proviso to show that benefit was to be extended in all cases. intention is to be gathered from plain and simple language used in proviso. Those who laid down policy did not permit deduction of Rs. 1,000 universally and in fall cases even where value of perquisite exceeded Rs. 1,000. benefit can only be allowed by twisting language and by adding words to proviso, which are not there. words to proviso, which are not there. 20. Hon'ble Supreme Court, in case of Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345, approved observations in case of Cape Brandy Syndicate v. IRC [1921] 1 KB 64 (KB) by observing as under: 'To us, there appears no justification to depart from normal rule of construction according to which intention of Legislature is primarily to be gathered from words used in statute. It will be well to recall words of Rowlatt, J. in Cape Brandy Syndicate v. IRCs (1921) 1 KB 64 (KB) at p.71, that: '. . . in taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at language used.' Once it is shown that case of assessee comes within letter of t h e law, he must be taxed, however, great hardship may appear to judicial mind to be.' In case of Keshavji Ravji & Co. v. CIT [1990] 183 ITR 1 Apex Court observed as under: 'As long as there is no ambiguity in statutory language, resort to any interpretative process to unfold legislative intent becomes impermissible. supposed intention of Legislature cannot then be appealed to whittle down statutory language which is otherwise unambiguous. If intendment is not in words, it is nowhere else. need for interpretation arises when words used in statute are, on their own terms, ambivalent and do not manifest intention of Legislature.' In case of Guru Devdata VKSSS Maryadit v. State of Maha-rashtra AIR 2001 SC 1980, their Lordships of Apex Court held as under: 'It is cardinal principle of interpretation of statute that words of statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless there is something in context or in object of statute to suggest to contrary. golden rule is that words of statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when words of statute are clear, plain and unambiguous, then Courts are bound to give effect to that meaning irrespective of consequences. It is said that words themselves best declare intention of law give. Courts have adhered to principle that effort should be made to give meaning to each and every word used by Legislature and it is not sound principle of construction to brush aside words in statute as being inapposite surplus if they can have proper application in circumstances conceivable within contemplation of statute.' Though there are various judgments upholding above principle but we may only mention that Constitution Bench of Hon'ble Supreme Court in case of CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1 (SC), has endorsed above view by observing as under: 'This exercise of purposive interpretation by looking into object and scheme of Act and legislative intendment would arise, in our opinion, if language of statute is either ambiguous or conflicting or gives meaning leading to absurdity.' Similarly in case of Prakash Nath Khanna v. CIT [2004] 266 ITR 1 (SC), their Lordships have observed as under: 'It is well-settled principle in law that Court cannot read anything into statutory provision which is plain and unambiguous. statute is edict of Legislature. language employed in statute is determinative factor of legislative intent. first and primary rule of construction is that intention of legislation must be found in words used by Legislature itself. question is not what may be supposed and has been intended but what has been said. 'Statutes should be construed, not as theorems of Euclid'. Judge learned Hand said, 'but words must be construed with some imagination of purposes which lie behind them'. ** ** ** While interpreting provision Court only interprets law and cannot legislate it. If provision of law is misused and subjected to abuse of process of law, it is for Legislature to amend, modify or repeal it, if deemed necessary, [seeRishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. [2000] 5 SCC 515: [2000] 101 Comp. Cas. 284 (SC). legislative casus omissus cannot be supplied by judicial interpretative process. Two principles of construction-one relating to casus omissus and other in regard to reading statute as whole-appear to be well settled. Under first principle casus omissus cannot be supplied by Court except in case of clear necessity and when reason for it is found in four corners of statute itself but at same time casus omissus should not be readily inferred and for that purpose all parts of statute or section must be construed together and every clause of section should be construed with reference to context and other clauses thereof so that construction to be put on particular provision makes consistent enactment of whole statute.' 21. Now, turning to Circular No. 15, dated 12-12-2001 of CBDT, we have considered carefully articles IX and X of sub-para (4) of Circular. We are unable to agree with assessee that in respect of perquisite of free meals and gifts, universal exemption is granted up to Rs. 50 or up to Rs. 5,000 in all cases in circular of CBDT. Such concession, in our considered opinion, is not really spelt out and argument of learned counsel for assessee is based on misreading of circular. Even if argument is accepted, it cannot be allowed, as provision relating to free or concessional educational facility is also explained in same circular at article V of same sub-para of circular. No such concession of Rs. 1,000 has been permitted in all cases where value of such facility exceeds Rs. 1,000. Therefore, in given circumstances of case and on plain language of provision, we are of opinion that under proviso to rule 3(5), perquisite value is not to be added in case it is less than Rs. 1,000 per month per child. In that situation, rule 3(5) is not applicable at all. This is concession given by laying down exception to principle of rule. However, in case, cost or perquisite value exceeds Rs. 1,000 per month per child, then entire amount is to be added and taxed as perquisite in hands of employee. This follows from plain language. Those who are enjoined with duty to interpret are to give simple meaning to words used which are unambiguous here. mandate of Legislature is required to be carried. It is open to people laying down policy to allow benefit in cases where perquisite value exceeds Rs. 1,000 per child per month. Such benefit cannot be allowed by twisting language and under guise of giving it liberal construction. We, therefore, decide this issue against assessees. 22. other claim that any amount paid or recovered from employee is to be deducted and value of benefit is to be reduced is well-founded and is required to be accepted in both rule 3(5) and its proviso. In other words, if part of cost of teaching is paid or recovered from employee, then there is no question of treating that part of facility as perquisite. Only perquisite for which payment is not made or recovered, can be treated as perquisite. Therefore, if after giving benefit for amount paid or recovered from employee, cost of education or value of perquisite does not exceed Rs. 1,000 per month per child, then nothing is to be added on account of concessional treatment. Rule 3(5) of IT Rules would have no application in light of proviso to said rule. It is really not material as to how and in what manner, amount has been paid or recovered from employee. This follows from plain reading of sub-rule including proviso. Accordingly, we decide this issue in favour of assessees. 23. Another contention was advanced before us that cost of free or concessional education is different from value of perquisite. We do not find any force in this contention. It is clear from above that different methods of computing perquisite value of free or concessional educational facilities to staff are provided under sub-rule. If amount of expenditure actually incurred is available, then that amount is to be taken. If such actual expenditure incurred is not available, then perquisite value of cost in similar institution in or near locality where educational institution in question is situated can be taken. Different computations are separated by word 'or'. Therefore, words 'cost' or 'value of perquisite' are used alternatively. assessee can always insist that revenue should adopt mode of computation, which would put least that revenue should adopt mode of computation, which would put least burden on assessee (employer/employee). We direct accordingly. 24. assessees have also challenged computation of cost of education made by learned CIT(A). Total cost, both direct and indirect, have been taken into account to work cost per child. learned counsel for Delhi Public School has given us chart as to why indirect costs like financial expenses, transport expenses, repair and maintenance expenses, depreciation, etc. cannot be taken into account. We are of view that all expenses incurred in running of school where education is imparted to children are to be taken into account, both direct or indirect. Depreciation, being only notional expenditure, can be excluded. Other expenditures are to be taken into account. During course of hearing, learned counsel for assessees could not find any specific defect in computation. However, as cost computed by learned CIT(A) was different from cost or perquisite value declared by assessee to Assessing Officer, assessees are at liberty to point out any error involved in computation of cost/perquisite value. Assessing Officer would objectively consider such objections and pass appropriate order. 25. For above reasons, we allow all appeals in terms stated above. *** INCOME TAX OFFICER v. DIRECTOR, DELHI PUBLIC SCHOOL