2026 (6) TMI 1384

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....peals) (in short "Ld. CIT(A)"), ADDL/JCIT(A)-2, Siliguri vide separate orders dated 11.02.2027 & 05.02.2026 relevant to Assessment Years 2016-17 and 2017-18 respectively. 2. The assessee has raised the following grounds of appeal: ITA No. 1582/Ahd/2026 (A.Y. 2016-17) In our case assessing officer has disallowed exemption u/s.10(5) of Income Tax Act, on the base of differences in interpretation of law and treated us an assessee in default and passed order against us u/s. 201(1) and 201(1A) of the Income Tax Act and we filed appeal against said order before CIT (Appeals), which is dismissed and order was issued u/s.250 of the Income Tax Act. The Kerala High Court has held in a recent judgement that State Bank of ....

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....u/s. 201(1) and 201(1A), we prefer to file appeal before ITAT and furnished facts of the case along with said appeal along with relevant documentary evidences and we demand the withdrawal of the same from your honour by allowing our appeal on the basis of grounds and evidences furnished by us 3. The facts of the case are that the assessee received Show Cause notices dated 13.03.2023 and 23.03.2023. Consequent thereto, an order under sections 201 and 201(1A) of the Income-tax Act, 1961 vide No. ITBA/COM/F/17/2022-23/1051785650(1) dated 31.03.2023 was passed against the assessee and a Notice of Demand under section 156 of the Act dated 31.03.2023 was served, raising a demand of Rs. 5,44,125/- (Rupees Five Lakh Forty-Four Thousand One Hundr....

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.... no dispute on this legal position and the same is duly acknowledged. However, the limited controversy before us is whether, in the peculiar facts of the present case, the assessee can be treated as an "assessee in default" under section 201(1) of the Act for non-deduction of tax at source during the relevant period. 13. The contention of the assessee has consistently been that during the year under consideration, it was bound by the interim orders passed by the Hon'ble Madras High Court in W.P. No.11991 of 2014, wherein vide order dated 16.02.2015 it was specifically clarified that the LFC payments would not amount to income so as to enable deduction of tax at source and further that if the writ petition was ultimately dismissed, ....

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....d 201(1A) of the Act. 16. More importantly, the Hon'ble Kerala High Court in ITA No.45 of 2025 (order dated 18th November 2025) has examined this issue in detail and has held in favour of the assessee. The relevant findings of the Hon'ble High Court, which have a direct bearing on the issue before us, are reproduced below for ready reference: "The interim order granted by this Court is explained to the effect that any amount paid to the petitioner towards LTC or re-imbursement of LTC pursuant to the impugned order would not amount to income so as to enable the Bank to deduct tax at source. It is made clear that if the writ petition is dismissed, the employees are liable to pay tax on the amount paid by Bank." "It ....