TaxTMI 
TaxTMI 
2024 (7) TMI 215
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.... of section 192(1) of the Act. It was noticed that SBI has filed appeal before various appellate fora and appeals have traversed upto Supreme Cout. The Hon'ble Supreme Court in the case of State Bank of India v. ACIT in C.A. No.8181 of 2022 dated 04.11.2022 reported in [2022] 144 taxmann.com 131 (SC) has held as under:- " .......... LTC is for travel within India, from one place in India to another place in India." (para 13) ".... in view of the provisions of the Act, the moment employees undertake travel with a foreign leg, it is not a travel within India and hence not covered under the provisions of section 10(5) of the Act." (para 14) "A foreign travel also frustrates the basic purpose of LTC. The basic objective of the LTC scheme was to familiarise a civil servant or a Government employee to gain some perspective of Indian culture by traveling in this vast country. It is for this reason that the 6th Pay Commission rejected the demand of paying cash compensation in lieu of LTC and also rejected the demand of foreign travel in its report dated March, 2008" (para 15)." " .......... The appellant cannot claim ignorance about the travel plans of i....
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.... 7.8 The provisions of law discussed above prescribe that the fare between the two points, within India will be given and the LTC which will be given will be of the shortest route between these two places, which have to be within India. 7.9 The purpose of LTC is to acquaint employees with Indian culture, as emphasized by the 6th Pay Commission. The scheme was not designed to permit foreign travel, as highlighted in the Commission's report. The obligation to deduct tax is distinct from the payment of tax. The appellant cannot plead ignorance. as during LTC bill settlement, all relevant travel details are available. Therefore it cannot be deemed a bona fide mistake, given the appellant- employer's access to complete facts. 7.10 The Management Board of the appellant-employer, through a Circular dated 15.04.2014, withdrew the LTC/ LFC facility covering overseas travel for its employees. Subsequently, employees filed Writ Petition No. 11991 of 2014 against this decision. The Hon'ble Madras High Court, in its order dated 24.06.2022, finally dismissed the writ petition, asserting that the Income Tax department is empowered to invoke provisions for Tax....
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....d submitted that assessee was under bonafide belief that tax was not required to be deducted on the foreign travel carried out by employees of assessee. The assessee is deducting TDS on salary payments regularly following the provisions laid down u/s. 192. He further submitted that recovery of demand be stayed till the date of final decision of the Apex Court is effected. He also submitted that assessee is willing to file petition u/s. 119(2)(a) of the Act for waiver of interest charges u/s. 201(1A)(i). He also referred to the orders of Hon'ble Madras High Court in the case of All India State Bank Officers Federation & Ors. V. SBI in WP No.11991/2014 dated 24.06.2022 and in W.A. No.1653/2022 dated 08.08.2022 and Hon'ble Supreme Court order in the case of State Bank of India & Anr. V. All India State Bank Officers Federation & Ors. Dated 28.08.2023 and Circulars issued by SBI for grant of LTC to employees from time to time which are placed on record. 8. The ld. DR relied on the order of lower authorities and submitted that the assessee's employees have travelled outside India and they have been allowed expenditure towards LTC which are not exempt u/s. 10(5) of the Act. Even as pe....
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....pt income n the hands of the assessee's employees. Therefore this value or assistance should be considered for TDS u/s. 192 of the Act. Similar issue has been decided by the coordinate Bench of the Tribunal in State Bank of India, Personal Banking Branch, New Delhi & Ors. (supra) in which it has been held as under:- "3. At the outset, both the parties fairly submitted that the only issue in the appeal of the Revenue is "whether TDS is liable to be deducted on the LTC paid to employees or not". 4. Both the parties fairly submitted that the issue is decided in favour of Revenue in assessee's own case by the Hon'ble Supreme Court. We find that the issue is decided by the Hon'ble Supreme Court in the case of SBI Vs. ACIT in Civil Appeal No.8181 of 2022 dated 04.11.2022 wherein the Hon'ble Supreme Court affirming the decision of the Hon'ble Delhi High Court and the Tribunal held that the assessee ought to have deducted tax at source on the payments made to its employees as LTC. While holding so, Hon'ble Supreme Court held as under: "2. The question which has fallen for our consideration is whether the appellant was in default for not ded....
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....s) or even the High Court. After examining the matter our considered opinion is that the view taken by the Delhi High Court and the Tribunal and even by the revenue in its initiation of proceedings cannot be faulted. The appellant whom we shall refer to as the 'assessee-employer' ought to have deducted tax at source. 6. Let us first go through some of the relevant provisions of the Income Tax Act, 1961 (for short 'the Act') and the Income Tax Rules, 1962 framed therein. Let us first take Section 192(1) of the Act which casts a statutory duty on the employer to deduct Tax at source from the salary of its employee: "192(1) Any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income- tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year." 7. The consequences of failure to deduct tax at source when it is due, is given in Section 201, which reads as follows:- "Consequences of failure to deduct or pay. 201.....
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.... day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination; (ii) where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the airconditioned first class rail fare by the shortest route to the place of destination; and (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 ....
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....test route between these two places, which have to be within India. A conjoint reading of the provisions discussed herein with the facts of this case cannot sustain the argument of the appellant that the travel of its employees was within India and no payments were made for any foreign leg involved. 15. We do not want to get into the role of the travel agencies and the present dynamics of air fare, but it is difficult for us to accept that a person 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....
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....t the obligation of deducting tax is distinct from payment of tax. The appellant cannot claim ignorance about the travel plans of its employees as during settlement of LTC Bills the complete facts are available before the assessee about the details of their employees' travels. Therefore, it cannot be a case of bonafide mistake, as all the relevant facts were before the Assessee employer and he was therefore fully in a position to calculate the 'estimated 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." 5. We have perused the order of the Hon'ble Madras High Court in MP No.2 of 2014 in WP No.1199/2014 dated 16.02.2015 ref....