Appeal granted due to time limit breach, voiding assessment orders & dismissing exemption denial and TDS issues.

The Tribunal allowed the appeals, setting aside the assessment orders as they were passed beyond the prescribed period of limitation. The decision rendered the assessment order void ab initio, leading to the dismissal of other issues raised, including denial of exemption for foreign travel under Section 10(5) and treatment of the bank as an assessee in default for non-deduction of TDS on LTC reimbursements. The order was pronounced on 3rd August 2022.

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Issues Involved:
1. Jurisdiction and limitation of the assessment order under Section 201(1)/(1A) of the Income Tax Act, 1961.
2. Denial of exemption under Section 10(5) for Leave Travel Concession (LTC) involving foreign travel.
3. Treatment of the bank as an assessee in default for non-deduction of TDS on LTC reimbursements.
4. Charging of interest under Section 201(1A).

Detailed Analysis:

1. Jurisdiction and Limitation of the Assessment Order:
The primary contention was whether the assessment order passed by the Assessing Officer (AO) was beyond the prescribed period of limitation. The appellant argued that the order dated 05.03.2018 was barred by limitation, citing Section 201(3) as amended by Finance (No. 2) Act, 2009, which provided a limitation period of two years from the end of the financial year in which the TDS statement was filed. The appellant had filed the TDS return for F.Y. 2010-11 by 15.05.2011, making the last date for passing the order 31.03.2014. The Tribunal referenced the Gujarat High Court's judgment in Tata Teleservices vs. Union of India, which held that the amendment to Section 201(3) by Finance Act (No. 2) of 2014 was not retrospective. Therefore, the Tribunal concluded that the assessment order was passed beyond the limitation period and was void ab initio.

2. Denial of Exemption under Section 10(5) for LTC Involving Foreign Travel:
The AO had denied the exemption under Section 10(5), stating that the benefit is available only for travel within India. The AO observed that the employees had undertaken circuitous journeys involving foreign travel, which disqualified them from the exemption. The First Appellate Authority (FAA) upheld this view, stating that the tax exemption benefit goes out of the realm of Section 10(5) when the journey involves foreign travel. The Tribunal noted that the issue of TDS on LTC claims was pending before the Supreme Court and that the Delhi High Court had stayed the judgment against the present assessee. Additionally, the Mumbai Tribunal in a similar case had held that the employer could not be faulted for non-deducting TDS on LTC claims involving foreign travel.

3. Treatment of the Bank as an Assessee in Default for Non-Deduction of TDS:
The AO treated the bank as an assessee in default under Section 201(1)/(1A) for not deducting TDS on LTC reimbursements involving foreign travel. The FAA confirmed this, stating that the bank was obligated to deduct TDS on such reimbursements. The Tribunal, however, did not delve into this issue in detail as the primary ground of limitation was decided in favor of the assessee.

4. Charging of Interest under Section 201(1A):
The FAA had upheld the AO's decision to charge interest under Section 201(1A) for short deduction of TDS. The Tribunal, having declared the assessment order void ab initio due to being time-barred, did not find it necessary to address this issue further.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned assessment orders on the ground that they were passed beyond the prescribed period of limitation. Consequently, it did not require further determination of the other issues raised. The order was pronounced in the open court on 3rd August 2022.

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