An employer is liable as an 'assessee in default' for failing to deduct tax at source on Leave Fare Concession payments that include a foreign leg, strictly applying the legal principles settled by the Supreme Court where specific interim judicial protection is absent for that entity.

O R D E R

PER M. BALAGANESH, A. M.:

1. The appeals in ITA Nos. 151, 175 & 265/AGR/2026 for AY 2017-18 arises out of the order of the ld Addl./ JCIT(A)-2, Siliguri [hereinafter referred to as ‘ld. JCIT(A)’, in short] dated 15.01.2026, 30.12.2025 and 27.01.2026 against the order of assessment passed u/s 201 of the Income tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 19.01.2024, 22.03.2024 and 26.03.2024 by ITO, TDS, Bhopal (hereinafter referred to as ‘ld. AO’). Identical issues involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.

2. The only effective issue to be decided in this appeal is as to whether the ld CIT(A) was justified in confirming the action of the ld AO in treating the assessee (a Public Sector Bank) as an assessee in default u/s 201 of the Act and consequential interest u/s 201(1A) of the Act in respect of non-deduction of tax at source for Leave Fare Concession (LFC) given to its employees who had a foreign stop-over in their travel.

3. We have heard the rival submissions and perused the material available on record. The employees of the assessee bank had availed leave travel concession from the bank and had gone to certain foreign countries during their visit. The assessee had not deducted tax at source on the payment of LFC to its employees on the ground that the same is not taxable in the hands of the said employees as salary in terms of Section 192 of the Act. The assessee bank however was aware of the fact that the employee during their LTC visit had indeed travelled abroad as the same would be evident from the settlement of bills by the concerned employees to the assessee bank. The assessee bank took a stand that even if the said LFC is liable for TDS, the same would be protected in hands of the assessee as the employees would be in turn paying the tax in their individual hands. The assessee bank also took shelter of the order of Hon’ble Madras High Court in the case of All India State Bank Officer’s Federation and All India Bank Officer’s Confederation Vs. State Bank of India and others in MP No. 2 of 2014 in WP No. 11991 of 2014 dated 16.02.2015. Further, the Hon’ble Kerala High Court in the case of State Bank of India Vs. CIT in ITA 45 of 2025 dated 18.11.2025 had also held that assessee bank could not be treated as assessee in default for non-deduction of tax at source on payment of LFC to its employees. The ld AR before us also placed reliance on the decision of coordinate bench of Ahmedabad Tribunal in the case of State Bank of India, Bhavnagar Para Branch Vs. ITO for A.Y 2016-17 in ITA Nos. 453 & 454/Ahd/2026 dated 26.03.2026. For the sake of convenience, the entire order of the Tribunal is reproduced below:-

“Both appeals have been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-12, (in short “Ld. CIT(A)”), ADDL/JCIT(A)-2, Siliguri vide orders dated 12.01.2026 & 22.12.2025 passed for A.Y. 2016-17. Since common facts and issues for consideration are involved for both the appeals before us, both the appeals are being disposed by way of a common order.

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

“1. The Learned Commissioner of Income-tax (Appeals) ("CIT(A)") erred in confirming the order of the Assessing Officer ("AO") holding the appellant to be an assessee in default for failing to deduct tax at source under section 192 of the Income tax Act, 1961 (the Act). 2. The CIT(A) erred in not appreciating that the Appellant had issued e-Circular no CDO/P&HRD PM/7/2014-15 dated 15th April 2014 stating that the employee shall not be entitled to visit overseas countries/ centers as part of leave travel concession ("LTC") which Circular was challenged