2019 (7) TMI 1562 - AT - Income Tax

Tribunal overturns denial of LTC reimbursement exemption, challenges TDS non-deduction, interest levy, remanded for compliance.

State Bank of India Versus ACIT, Circle-77 (1), Delhi

The Tribunal set aside the order denying exemption under section 10(5) for reimbursement of Leave Travel Concession involving a foreign leg, remanding the ... Denial of exemption u/s 10(5) - reimbursement of Leave Travel Concession involving foreign leg through circuitous route as long as the employee designated place is in India for his Leave Travel Concession and he actually visits the place as designated - HELD THAT:- Decided this ground against the assessee while following the decision of the Lucknow Bench of ITAT in SBI vs. DCIT,TDS, Kanpur (2016 (3) TMI 282 - ITAT LUCKNOW) and the assessee bank preferred an appeal to the Hon’ble High Court and, therefore, the result of this issue will follow the decision of the Hon’ble High Court. Non-deduction of TDS on reimbursement towards leave travel concession - HELD THAT:- Before us also the assessee furnished the list of officers who have been sanctioned LTC for a designated place in India with the details like PAN number, amount claimed and paid, date of journey and registration. On a comparison of the details furnished by the assessee, we do not find those to fit in the requirements stipulated by the proviso to Section 201(1) of the Act. The assessee has to furnish the details as to whether the recipient of the amounts have filed their returns of income by taking into account the amounts in question and the paid taxes thereon along-with a certificate to that effect. In the circumstances, we are in agreement with the Ld. DR that there is no full compliance with the requirement of law. As decided in THE BRANCH MANAGER, ALLAHABAD BANK VERSUS ITO, (TDS/SURVEY) , GHAZIABAD. [2016 (3) TMI 1240 - ITAT DELHI] and in assessee’s own case for the assessment year 2012-13a coordinate Bench of this Tribunal having considered the decisions of the Tribunal in Aligarh Muslim University [2017 (8) TMI 278 - ITAT AGRA] and Branch Manager, Allahabad bank (supra) and observed that since the assessee had not place the requisite information before the Ld. AO, he is not under any obligation to make such enquiries without having the requisite information and on that ground the matter was remanded to the file of the Ld. AO for making necessary verification with regard to payment of tax of such a receipt by the recipient. Thus remand the issue to the file of the Ld. AO with a direction to re-adjudicate the issue afresh after affording an opportunity of being heard to the assessee in the light of our above observations and at the same time directing the assessee to place all relevant information required under law before the Ld. AO. Issues:1. Denial of exemption under section 10(5) for reimbursement of Leave Travel Concession involving foreign leg.2. Treatment of the bank as 'assessee in default' for alleged non-deduction of TDS on reimbursement towards leave travel concession.3. Direction to produce Form No. 26A for LTC claim inclusion in employees' returns.4. Confirmation of interest levy under section 201(1A) of the Act.Issue 1: Denial of exemption under section 10(5) for reimbursement of Leave Travel Concession involving foreign leg:The assessee, State Bank of India, appealed against the order of the Ld. CIT(A) confirming the denial of exemption under section 10(5) for reimbursement of Leave Travel Concession involving a foreign leg. The argument was based on the employee's designated place being in India for LTC and actual visitation to that place. The Ld. AR cited a decision of the Lucknow Bench of ITAT and an appeal to the High Court, indicating that the outcome would follow the High Court's decision.Issue 2: Treatment of the bank as 'assessee in default' for alleged non-deduction of TDS on reimbursement towards leave travel concession:The main contention here was the bank being treated as 'assessee in default' for not deducting TDS on LTC reimbursement. The Ld. AR argued that without an inquiry by the Assessing Officer regarding the tax payment by the recipient, the assessee cannot be deemed in default. Reference was made to relevant case laws to support this argument. The Ld. DR emphasized the necessity of the assessee furnishing required details and certificates under section 201(1) of the Act, highlighting non-compliance by the assessee.Issue 3: Direction to produce Form No. 26A for LTC claim inclusion in employees' returns:The Ld. CIT(A) directed the bank to produce Form No. 26A for LTC claim inclusion in employees' returns, which the bank contested. The argument was that the Assessing Officer could collect evidence from the Income Tax Department based on information already provided by the bank during assessment proceedings. This issue was linked to the broader question of compliance with statutory requirements.Issue 4: Confirmation of interest levy under section 201(1A) of the Act:The Ld. CIT(A) confirmed the action of the Assessing Officer to levy interest under section 201(1A) of the Act. This decision was challenged by the appellant based on the grounds raised in the appeal. The Tribunal's analysis focused on the compliance of the assessee with the provisions of the Act and the requirements for exemption from being deemed as an assessee in default under section 201(1).In conclusion, the Tribunal set aside the impugned order and remanded the issue to the Assessing Officer for re-adjudication. The Tribunal directed the assessee to provide all relevant information required by law and afforded an opportunity to be heard. The appeal of the assessee was allowed for statistical purposes, aligning with the legal principles and precedents cited during the proceedings.