TaxTMI 
TaxTMI 
2020 (3) TMI 118
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....as noticed that the assessee herein has extended exemption u/s 10(5) of the Act in respect of travel undertaken by the employees to foreign destination also. 4. Since the travel undertaken outside India is not eligible for exemption u/s 10(5) of the Act, the survey officials held that assessee should have deducted TDS on the LTC amount also without granting exemption u/s 10(5) of the Act. Since there was default on the part of the assessee in not deducting TDS for payments made towards foreign travel, an order u/s 201(1) was passed in the hands of the assessee. Subsequently penalty order u/s 271C of the Act was passed levying a penalty of Rs. 2,56,835/-. The ld CIT(A) also confirmed the penalty so levied and hence the assessee has filed this appeal before the Tribunal. 5. At the time of hearing the ld AR placed his reliance on the order dated 18/11/2019 passed by the Tribunal in ITA No.118/Bang/2019 SBI, Gigani Branch and Others and submitted that, on an identical set of facts, the co-ordinate bench of Tribunal has deleted the penalty levied u/s 271C of the Act. He submitted that the Tribunal, in the above said case, has followed the decision rendered by another coordinate bench....
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....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 case of CIT v. I.T.I. Ltd. (2009) 183 Taxman 219 (SC) and CIT v. Larsen & Toubro Ltd. [2009] 181 Taxman 71 (SC) wherein it was held that the beneficiary of exemption under section 10(5) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s). Therefore, it was held that an assessee-employer is under no statutory obligation under the incometax Act, 1961, and/or the Rules to collect evidence to show that its employee(s) had actually utilized the amount(s) paid towards leave' travel concession(s)/conveyance allowance. 11. We thus find that there is nothing specific which has been provided by CBDT in its circular issued under section 192 ....
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....ssee'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 of the opinion that the assessee bank has undertaken reasonable steps in terms of verifying the assessee's claim towards their LFC claims and is aware of employees travelling to foreign countries as part of their travel itinerary but at the same time, there is an error of judgment on part of the assessee bank in understanding and applying the provisions of section 10(5) of the Act. Therefore, we are unable to accept the Revenue's contention that the assessee bank has not deducted the tax intentionally, fully knowing that the LFC is applicable for travel in India only and no foreign travel is allowable as it is a case of error of judgment and no malafide can be assumed on part of the bank. Further,nothing has been brought on record which in any ways suggest connivance on part of the assessee bank or forged claims submitted by ....
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....deration and thus found that the additions made were debatable and would lead credence to the bonafides of the assessee. It thus held that the matter of imposing penalty under Section 271(1)(c) of the Act, was not exigible in the case on hand. 7. The Tribunal placed reliance on decision of the 'TAT, Mumbai in the case of Nayan Builders & Developers (P.) Ltd. v. ITO [IT Appeal No. 2379/Mum/2009, dated 18-3- 2011], which had also held that "the admission of substantial questions of law by the High Court lends credence to the bona fides of the assessee in claiming deduction. Once it turns out that the claim of the assessee could have been considered for deduction as per a person properly instructed in law and is not completely debarred at all, the mere fact of confirmation of disallowance would not per se lead to the imposition of penalty." 8. The assessee in the present case had disclosed all the materials on which it was claiming deduction. The matter as to whether the deduction was to be given or not, was taken up by the revenue authorities and it was held that certain deductions claimed by the assessee were to be disallowed. It is not disputed that the questions regardin....