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IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD

BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER

I.T.A. No.339/Ahd/2026 (Assessment Year: 2016-17)

State Bank of India, Assistant Commissioner of nd Vs.

Local Head Office, 2 Floor, Income Tax, SBI Tower, Plot No. 53-A, Road Circle(TDS), 1-C, Zone 5, DTA, Gift City, Ahmedabad

Gandhinag ar-382355 App ellant Respondent

[PAN : AHMS06041A]

Appellant by :

( ) .. ( )

Respondent by:

Shri Lokesh Karia, AR Date of Hearing Smt. Kakoli Uttam Ghosh, Sr. DR Date of Pronouncement

07.04.2026 09.04.2026

O R D E R

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) (in short “Ld. CIT(A)”), ADDL/JCIT(A)-2, Siliguri vide order dated

08.12.2025 relevant to Assessment Year 2016-17.

2. The assessee has raised the following grounds of appeal:

In our case assessing officer has disallowed exemption u/s.10(5) of Income Tax Act, on the base of differences in interpretation of law and treated us an assessee in default and passed order against us u/s. 201(1) and 201(1A) of the Income Tax Act and we filed appeal against said order before CIT (Appeals), which is dismissed

and order was issued u/s.250 of the Income Tax Act.

The Kerala High Court has held in a recent judgement that State Bank of India (SBI) cannot be treated as an “Assessee in Default” under section 201 of the

ITA No. 339/Ahd/2026 Asst. Year : 2016-17 - 2–

Income Tax Act for not deducting Tat at Source (TDS) on Leave Travel Concession (LTC) payments, as it was bound by an interim order which prohibited such deduction. The copy of said order is attached herewith.

Therefore, against said order u/s.250 and u/s. 201(1) and 201(1A), we prefer to file appeal before ITAT and furnished facts of the case along with said appeal along with relevant documentary evidences and we demand the withdrawal of the same from your honour by allowing our appeal on the basis of grounds and

evidences furnished by us.

Section 10(5) of the Income Tax Act, 1961

3. In the present case, the Assessing Officer disallowed the exemption claimed under

on the basis of a difference in interpretation of the provisions of law.

Section 201(1A) of the Income Consequently, the Assessing Officer treated the assessee as an assessee Tax Act, 1961

in default and passed an order under Commissioner of Income Tax (Appeals)

. Aggrieved by the said action, the assessee preferred an appeal before the who,

confirmed the action of the Assessing Officer.

4. Heard the argument of both the parties and perused the material available on record.

5. At the outset, both the parties fairly submitted that the issue State Bank of India, Bhavnagar Vs.

raised by the assessee in the present appeal stands covered by the ITO for A.Y 2016-17 in ITA Nos.453 & 454/Ahd/2026 dated order of the Tribunal in the case of

26.03.2026.

For the sake of ready reference, the operative portion of said order is reproduced as under:

“…11. We have heard the rival contentions and perused the material available on record.

12. At the outset, we note that the issue on merits regarding allowability of exemption under section 10(5) of the Act in cases where the journey involves a foreign leg now stands concluded against the assessee by the

ITA No. 339/Ahd/2026 Asst. Year : 2016-17 - 3–

judgment of the Hon’ble Supreme Court dated 04.11.2022. There is no dispute on this legal position and the same is duly acknowledged. However, the limited controversy before us is whether, in the peculiar facts of the present case, the assessee can be treated as an “assessee in default” under section 201(1) of the Act for non-deduction of tax at source during the

relevant period.

13. The contention of the assessee has consistently been that during the year under consideration, it was bound by the interim orders passed by the Hon’ble Madras High Court in W.P. No.11991 of 2014, wherein vide order dated 16.02.2015 it w