TaxTMI 
TaxTMI 
2024 (2) TMI 919
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....law, the CIT(A) was justified in observing that first proviso to section 201(1) of the I.T. Act on production of Form 26A before the A.O as per law after giving categorical finding in para 4.13 of the appellate order that the benefit of proviso to section 201(1) of the I.T. Act is not available to the assessee particularly when the deductor assessee had never filed Form-26A of any Deductee/employee either before the Assessing Officer or even before the CIT(A)? 3. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in giving indirect contradictory finding that the Deductor assessee may not be treated as assessee in default in respect of those Deductee/employees who have filed their Income Tax Return particularly when offering of 'such receipt' as income in the Income Tax Return of the Deductees/employees have not been made a precondition to that? 4. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in not confirming the order of the Assessing Officer in entirely wherein the Assessing Officer has treated the assessee as an assessee in default u/s 201(1) in respect of the amount o....
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....his claim of the appellant is not correct. The responsibility of a deductor to deduct tax is distinct from the liability of a deductee to pay tax on such income. The onus cannot shift to the deductee. Moreover, it is not a case where the deductees have included the receipts under reference in their income and have declared the same in their Income Tax Return after paying tax on the same. Hence, benefit of proviso to section 201 is not available to the appellant. Accordingly, the argument put forth by the AR of the appellant that it amounts to double recovery of tax, is not acceptable. However, in cases where the deductees/employees of the bank have voluntarily included such LTC amounts in their Income Tax Return and considered the same in computation of their taxable income, the appellant may claim the benefit of proviso to section 201 on production of Form 26A before the AO as per law. The AO is directed to give an opportunity to the appellant to produce the same". 5. On careful perusal of the order of the learned Commissioner of Income-Tax(Appeals), we do not see any infirmity in the observations of the learned CIT(Appeals). Grounds raised by the Revenue are rejected. ....
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....rsement of Leave Travel concession involving foreign leg through circuitous route as long as the employees designated place is in India for his leave travel concession and he actually visits the place as designated. 3. That without prejudice to ground nos. 1 and 2 above and on the facts and circumstanced of the case and provisions of the law, the Ld. A.O as well as Ld CIT(A) erred in treating the bank as "assessee in default" 4. That consequential to our Ground nos. 1, 2 & 3 above, the ld.AO and Ld. CIT(A) erred in charging/confirming interest u/s 201(1A) of Rs. 50,119/- 5. That the appellants request be allowed to add, modify and delete any other ground(s) of appeal. Grounds in ITA No.2318/Del/2022: Sr. No. Grounds of Appeal Tax effect relating to each Ground of appeal 1. That on the facts and circumstances of the case and provisions of the law, the order dated 27/03/2018 passed by the Ld. A.O and confirmed by Ld. CIT(A), ignoring the stay granted by Hon'ble High Court of Madras, is bad in law and need to be quashed. Rs. 3,85,428/- 2. That without prejudice to ground no.1 above and on the facts an....
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....these two places. Admittedly, the employees of SBI in the present case, had done their travel not just within India but their journey involved a foreign leg as well. It was also not the shortest route, consequently, according to the Revenue this was not a travel from a designated place within India to another designated place in India and thus it was in violation of the statutory provisions and hence the payment made to its employees by the Bank could not be exempted, and the Bank ought to have deducted Tax at source, while making this payment. To give an example of one of the employees of the appellant who availed LTC taking a circuitous route of Delhi-Madurai-Columbo-Kuala Lampur-Singapore-Columbo-Delhi and his claim was fully reimbursed by the appellant and no tax was deducted under Section 192(1) for the same. 4. The appellant on the other hand through its counsel senior advocate Shri K.V. Vishwanathan, would argue that though the travel made by its employees under LTC did involve a foreign leg and admittedly a circuitous route as opposed to the shortest route was taken, yet two things go in the favour of the employees. Firstly, the employees of the appellant did trave....
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....ncluding the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed Provided further that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. 8. Section 10(5) which exempts payments received as LTC with which we are presently concerned. It reads 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- XXXXXX....
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....d (iii) where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed on or after the 1st day of October, 1997, between such places, the amount eligible for exemption shall be :- (A) where a recognised public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and (B) where no recognised public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail.]" 10. The appellant before us is a Public Sector Bank, namely, State Bank of India (SBI). The Revenue has held the appellant to be an "assessee in default", for not deducting the tax at source of its employees. 11. These proceedings started with a Spot Verification under Section 133A when it was discerned by the Revenue that some of the employees of the assessee-employer had claimed LTC even for their travel to places outside India. These employees, even though, raised a claim....
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....n will avail foreign tour without paying any price for it. We leave it at that. 16. It can be seen from the records that many of the employees of the appellants had undertaken travel to Port Blair via Malaysia, Singapore or Port Blair via Bangkok, Malaysia or Rameswaram via Mauritius or Madurai via Dubai, Thailand and Port Blair via Europe etc. It is very difficult to appreciate as to how the appellant who is the assessee-employer could have failed to take into account this aspect. This was the elephant in the room. 17. The contention of the Appellant that there is no specific bar under Section 10(5) for a foreign travel and therefore a foreign journey can be availed as long as the starting and destination points remain within India is also without merits. LTC is for travel within India, from one place in India to another place in India. There should be no ambiguity on this. 18. The second argument urged by the appellant that payments made to these employees was of the shortest route of their actual travel cannot be accepted either. It has already been clarified above, that in view of the provisions of the Act, the moment employees undertake travel with a....
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.... income' of its employees. The contention of Shri K.V. Vishwanathan, learned senior advocate that there may be a bonafide mistake by the assessee-employer in calculating the 'estimated income' cannot be accepted since all the relevant documents and material were before the assessee-employer at the relevant time and the assessee employer therefore ought to have applied his mind and deducted tax at source as it was his statutory duty, under Section 192(1) of the Act. 22. In conclusion we do not find any reason to interfere with the order passed by the Delhi High Court. The appeal is dismissed." 12. In the course of hearing, learned counsel appearing for the assessee submitted that Hon'ble Madras High Court has granted interim stay to All India |State Bank Officers Federation holding that any amount paid to petitioners ( State Bank Officers ) towards LTC or reimbursement of LTC would not amount to income so as to enable the bank to deduct tax at source. Learned counsel, therefore, submits that in view of the interim stay order of the Hon'ble Madras High Court, the bank is not liable for TDS. 13. We have perused the order of the Hon'ble Madras High Court in M....