TaxTMI 
TaxTMI 
2020 (2) TMI 880
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.... These cases were heard together and we deem it convenient to pass a common order. 2. Leave Travel Allowance (LTA) is the most common element of compensation adopted by employers to remunerate employees due to the tax benefits attached to it. An LTA is the remuneration paid by an employer for Employee's travel in the country, when he is on leave with the family or alone. LTA amount is tax free. Section 10(5) of the Income-Tax Act, 1961, read with Rule 2B (Commonly known as LTA Rules), provides for the exemption and outlines the conditions subject to which LTA is exempt. As per LTA Rules, LTA exemption can be claimed where the employer provides LTA to employee for leave to any place in India taken by the employee and their family. Such exemption is limited to the extent of actual travel costs incurred by the employee. Travel within India only allowed- As per LTA Rules, travel has to be undertaken within India and overseas destinations are not covered for exemption. Sec.10(5) of the Act reads thus:- "Section: 10 ( 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 h....
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....t eligible for exemption shall be :- (2) The exemption referred to in sub-rule (1) shall be available to an individual in respect of two journeys performed in a block of four calendar years commencing from the calendar year 1986 : [Provided that nothing contained in this sub-rule shall apply to the benefit already availed of by the assessee in respect of any number of journeys performed before the 1st day of April, 1989 except to the extent that the journey or journeys so performed shall be taken into account for computing the limit of two journeys specified in this sub-rule.] (3) Where such travel concession or assistance is not availed of by the individual during any such block of four calendar years, an amount in respect of the value of the travel concession or assistance, if any, first availed of by the individual during first calendar year of the immediately succeeding block of four calendar years shall be eligible for exemption. Explanation : The amount in respect of the value of the travel concession or assistance referred to in this sub-rule shall not be taken into account in deter-mining the eligibility of the amount in respect of the va....
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....aid to the Government till the date on which the same is paid to the credit of the Central Government. Over and above the obligation u/s.200 of the Act, the Assessee is also liable for imposition of penalty u/s.271-C of the Act for the failure to deduct Tax at source. The provisions of Sec.271-C reads thus: "Section: 271C. 1) If any person fails to- a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVIIB; Or b) pay the whole or any part of the tax as required by or under- i. sub-section (2) of section 115-O; or ii. the second proviso to section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. 2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." 6. However, Section 273B of the Act provides that in case the payer proves to the revenue department that there was some reasonable cause for the failure to deduct tax then the penalty under Section 271C is waived off. Sec.273-B reads thus:- "Section 273B - Penalty not to b....
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....astened only on 44 the person who do not have good and sufficient reason for not deducting tax at source. Only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax. The burden, of course, is on the person to prove such good and sufficient reason. In each of the 104 cases before us, we find that non-deduction of tax at source took place on account of controversial addition. The concept of aggregation or consolidation of the entire income chargeable under the head "Salaries" being exigible to deduction of tax at source under Section 192 was a nascent issue. It has not be considered by this Court before. Further, in most of these cases, the tax- deductor-assessee has not claimed deduction under Section 40(a)(iii) in computation of its business income. This is one more reason for not imposing penalty under Section 271C because by not claiming deduction under Section 40(a)(iii), in some cases, higher corporate tax has been paid to the extent of Rs. 906.52 lacs (see Civil Appeal No. 1778/06 entitled CIT v. The Bank of Tokyo-Mitsubishi Ltd.). In some of the cases, it is undisputed that each of the expatriate employees have paid direc....
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.... irrespective of the fact that en-route the journey is out of India, the entire LTA is exempt. Aggrieved by the orders of the CIT(A) the Assessee is in appeal before the Tribunal. There is a delay ranging from11 days to 56 days in filing these appeals by the Assessee which has been explained in an affidavit filed by the Assistant Manager of the respective appellant branches stating that the delay occasioned due to getting administrative approval for filing appeals. The delay is nominal and there has been no want of diligence on the part of the appellant. The delay in filing appeals is therefore condoned. 11. As far as the merits of the case relating to imposition of penalty u/s.271C of the Act, the learned counsel for the Assessee submitted that the Hon'ble ITAT Jaipur Bench in the case of State Bank of India Vs. ACIT (2019) 101 taxmann.com 61 (Jaipur-Trib.) wherein on identical default of non-deduction of tax at source on perquisite not exempt u/s.10(5) of the Act and imposition of penalty for such failure u/s.271C of the Act, the ITAT Jaipur deleted penalty imposed u/s.271C of the Act, observing as follows:- "10. We also refer to Hon'ble Supreme Court decisions in....
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....g in a nature of thumb rule and TDS exemption of LFC was thus allowed almost mechanically year after year. To our mind, it is important to be consistent but at the same time, one needs to be mindful of what been submitted by the employees towards their LFC claims. It appears that the assessee bank has looked at these 12 employees' claim broadly, as in other cases, in terms of actual travel being undertaken, the designated place being in India and the amount of claim not exceeding the economy fare of the national carrier by the shortest route to the place of destination. However, the Revenue's case is that what the assessee bank has failed to consider is that the travel plan includes the foreign leg of travel and corresponding travel expenses which is not eligible for exemption under section 10(5) of the Act. However, the assessee's bank explanation to this effect is that section 10(5) and Rule 2B doesn't place a bar on travel to a foreign destination during the course of travel to a place in India and there is nothing explicit provided therein to prohibit such travel in order to deny the exemption. Having considered the rival submissions and facts on record, we are ....
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....the Hon'ble Karnataka High Court in the case of CIT Vs. Ankita Electronics Pvt. Ltd. 379 ITR 50 (Kar) wherein it was held that the admission of substantial question of law by the High Court lends credence to the bona fides of the assessee in his action and hence no penalty can be imposed on such additions/defaults. 13. The learned DR relied on the order of CIT(A) and further drew our attention to a decision of ITAT Bangalore Bench in the case of Syndicate Bank in ITA No.532 to 536/Bang/2019 order dated 12.7.2019, wherein this tribunal remanded the question of imposition of penalty to the CIT(A) for fresh consideration to see parity of facts between the case of the Assessee and the decision of ITAT Jaipur Bench in the case of State Bank of India (supra). 14. We have carefully considered the rival submissions. The facts of the case of the Assessee in these appeals is identical to the case decided by the Jaipur Bench of ITAT in the case of State Bank of India(supra) and therefore the ratio laid down therein will squarely apply to the facts of the Assessee's case and therefore following the ratio laid down therein, the penalty imposed is liable to be cancelled. The Hon'ble Karnat....