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2025 Supreme(Online)(ITAT) 3250
INCOME TAX APPELLATE TRIBUNAL (AGRA BENCH)
Sunil Kumar Singh, J, Brajesh Kumar Singh, ACJ
THE REGIONAL MANAGER STATE BANK OF INDIA FARRUKHABAD – Appellant
Versus
ITO (TDS) ALIGARH – Respondent
ITA No.199/Agr/2022
For the Appellants/Petitioners: None
For the Respondents: Sh. Shailendra Srivastava, Sr. DR
Leave Travel Concession is strictly for domestic travel; any foreign leg invalidates exemption under Section 10(5), making the employer liable for TDS.
Headnote:(A) Income Tax Act, 1961 - Sections 10(5), 192(1), 201(1), 201(1A), 201(3) - TDS on Leave Travel Concession (LTC) - Assessee, a Public Sector Undertaking, was deemed an 'assessee in default' for failing to deduct tax on reimbursements for travel involving foreign legs - LTC is strictly for travel within India, and the exemption under Section 10(5) does not apply to international travel. (Paras 2-16)
(B) Tax Deduction at Source - Obligation of employer to deduct TDS is distinct from the payment of tax - Ignorance of employee travel plans does not absolve employer from liability. (Paras 8-16)
Facts of the case:
The assessee, State Bank of India, was found liable for failing to deduct TDS on reimbursements for employee travel expenses that included foreign destinations, leading to a demand of Rs.4,12,502/-. The CIT(A) upheld this finding.
Findings of Court:
The court confirmed the revenue's decision, reiterating that LTC must be strictly for domestic travel, and any foreign leg violates statutory provisions.
Issues: The primary issue was whether the appellant was in default for not deducting TDS on LTC payments involving foreign travel.
Ratio Decidendi: The court held that LTC is intended solely for domestic travel, and the failure to deduct TDS in cases where the travel included foreign legs constituted a default under the Act.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. factual background of the case. (Para 1 , 2 , 3) |
| 2. grounds of appeal by the assessee. (Para 4) |
| 3. court's analysis of the proceedings. (Para 5 , 6 , 7) |
| 4. detailed examination of ltc provisions. (Para 8) |
| 5. final decision on the appeal. (Para 9) |
ORDER
Per: Sunil Kumar Singh, Judicial Member:
This appeal has been preferred by the assessee against the impugned order dated 13.10.2022 passed in Appeal No. NFAC/2013- 14/10042681 by the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(Appeals)”] u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year (A.Y.) 2014-15, wherein the ld. CIT(Appeals) has confirmed the demand raised u/s. 201(1) r.w.s. 201(1A) of the Act vide assessment order dated 23.03.2021 and dismissed assessee’s first appeal.
2. Briefly stating, the facts are that the deductor assessee is a Public Sector Undertaking organization, namely State Bank of India. The proceedings started with TDS survey conducted on 07.03.2019, u/s. 133A(1A) of the Act wherein it was discerned by the Revenue that the bank has reimbursed cost of travel to its employees , Shri Ashok Kumar Agrawal and Shri Pramod Kumar Sharma who had travelled to foreign countries to get leave fair concession (LFC)/ leave travel concession (LTC) without deducting tax at source. Revenue found that these employees travelled to Trichy. To ascertain the actual default of TDS, show cause notices dated 04.01.2021 and 11.02.2021 were issued by the Assessing Officer, but the appellant/assessee did not make any submission. Therefore, the deductor assessee was held by revenue as ‘assessee in default’ u/s. 201(1) read with section 192 of the Act and raised total demand of Rs.4,12,502/- (Rs. 2,14,777/- as short deduction of TDS u/s. 201(1) and Rs.1,98,025/- as interest on short deduction u/s. 201(1A) of the Act).
3. Assessee preferred an appeal before learned CIT(Appeals), who , after considering the submissions and contentions of the appellant, approved the action of learned Assessing Officer and dismissed assessee’s appeal.
4. Assessee has preferred this second appeal against the first appellate impugned order dated 13.10.2022 on the following grounds :
(1) That learned CIT(A) has erred in not holding that the order under section 201(1) and 201(1A) of the Income Tax Act 1961 is barred by limitation and hence, void-ab-Initio
(2) That Learned CIT(A) has erred in holding that the provisions of section 201(3) of the Income Tax Act 1961, as amended by Finance Act,2014 are retrospective in nature and applies to the captioned assessment year.
(3) That Learned CIT(A) has erred in holding the appellant as assessee in default on account of non-deduction of tax at source in respect of leave fare concession (LFC) provided by the appellant to its employees amounting to Rs 4,12502/- in cases where LFC was paid by the shortest route for a journey where the designated place was in India but the same also involved some in-route foreign travel being undertaken by the employee.
(4) The Learned CIT (A) has erred in not appreciating that the benefit of exemption under section 10(5) of the Income Tax Act 1961 is available to the appellant 's employees' even in case where the journey under by an employee involves a foreign leg, where the employee's designated place is in India and he actually visits the place as designated.
(5) That Learned CIT(A) has erred in not appreciating that the appellant provided exemption under section 10(5) of the Income Tax Act 1961 only when the employee's designated place is in India and he actually visit the place as designated. Further, even in case where the employees travel outside India during the course of his travel to place in India, the exemption under section 10(5) of Income Tax Act 1961 is restricted for travel with in India. Further, all conditions under section 10(5) and Rules 2B are satisfied.
(6) That the Learned CIT(A) has erred in not appreciating that if at all t
