TaxTMI 
TaxTMI 
2016 (3) TMI 282
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....unds raised in I.T.A. No. 138/LKW/2015 as under:- 1. That the Learned Commissioner of Income Tax (Appeal) has erred on facts and in law in holding that LTC paid to the employees involving foreign travel as well does not qualify for exemption u/s, 10(5) of the I.T. Act. 2. That the Learned Commissioner of Income Tax (Appeal) has erred on facts and in law in holding that the Assessing Officer was right in holding the assessee liable for TDS on the payment of LTC to the employees. 3. That the Learned Commissioner of Income Tax (Appeal) has failed to appreciate that the foreign travel was not the only destination but was part of the package and circuitous route offered by the travel agency under the package availed by....
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....ncluded in the journey, the assessee was asked to explain as to why he may not be treated as assessee in default for not deducting TDS on the said amount of LFC reimbursement. Since no reply was filed by the assessee, the Assessing Officer treated the assessee to be in default in respect of payments mentioned in the assessment orders and was also directed to pay the same. Interest under section 201(1A) of the Act was also charged. 3. Aggrieved, the assessee preferred appeals before the ld. CIT(A) with the submission that the Assessing Officer has not appreciated the bona fide plea of the bank in granting benefit of LTC paid to the bank employees to travel out of India. It was further contended that the employee is entitled for exemption ....
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....e should not be held to be in default for non-deduction of TDS on the amount of LFC to its employees. 6. The ld. D.R., on the other hand, has contended that as per provisions of section 10(5) of the Act, only that reimbursement of expenses, which were incurred on travel of employees and his family to any place in India subject to certain limits, are exempt. Since the employee of the assessee has travelled to foreign countries, the benefit of exemption available under section 10(5) of the Act cannot be granted to the employees. No doubt, at the time of advancement of LTC amount, the employer may not be knowing, but at the time of settlement of bills of LTC/LFC complete details must have been obtained by the employer and once it is noted t....
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....bers to any place in India. Nowhere in this clause it has been stated that even if the employee travels to foreign countries, exemption would be limited to the expenditure incurred to the last destination in India. For the sake of reference, we extract the provisions of section 10(5) of the Act as under:- 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- [(5) in the case of an individual, the value of any travel concession or assistance received by, or due to, him,- (a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India ; (b) from his employer or forme....
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....n that situation, the assessee is under obligation to deduct TDS on such payment, but the assessee did not do so for the reasons best known to it. We have also carefully examined the Circular placed by the ld. counsel for the assessee during the course of hearing, in which a reference was made to the interim order of the Hon'ble Madras High Court dated 16.2.2015. Through the interim order, the Hon'ble Madras High Court has permitted the bankers not to deduct TDS on or after 16.2.2015 on the amount paid/reimbursed to the employees of the bank in respect of LTC/HTC availed where the employee has visited a foreign city/country, irrespective of the fact whether the LFC bills were submitted and paid prior to 16.2.2015; meaning thereby this Circu....