TaxTMI 
TaxTMI 
2025 (5) TMI 2306
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....FC] provided by the appellant to certain employees of INR 4,30,870, where LFC was paid for a journey where the designated place was in India but the same also involved some en-route foreign travel being undertaken by the employee. 2. The learned CIT(A) erred in not appreciating that the benefit of exemption under section 10(5) is available to the appellant's employees' even in cases where the journey undertaken by an employee involves a foreign leg, as employee's designated place is in India only and he actually visits the designated place in India. Ruling of the Madras High Court 3. The learned CIT(A) erred in not appreciating that the Bank did not deduct tax at source on the reimbursement of LFC amounts to its employees under the specific directions of the Hon'ble High Court of Madras in its Interim Order dated 16.02.2015 in W.P. No. 11991 of 2014. 4. The learned CIT(A) erred in not appreciating that in terms of the directions of the Hon'ble High Court of Madras, the amount of LFC paid to the employees would not amount to income for the purpose of deducting tax at source and if the writ petition is dismissed, the employees w....
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....in such cases, should adopt a liberal and broad-minded approach, so as to fulfill the objective of the legislation and not in a manner as to snatch away the benefit intended to be given by the Legislature. Interpretation favorable to the appellant to be adopted 12. Without prejudice to the above, the learned CIT(A) erred in not appreciating that it is a well settled principle in law that if two views are possible then the view which is favorable to the appellant is to be adopted. Thus, the learned CIT(A) erred in not accepting the favorable view that LFC reimbursements, involving foreign leg restricted only to designated place India portion is not taxable under section 10(5) read with Rule 2B. Exemption for Indian leg 13. Without prejudice to the above, the learned CIT(A) erred in not appreciating that if at all the LFC payments involving a foreign leg are to be held as taxable, the employee is entitled for exemption under section 10(5) to the extent of expenses incurred for travel in India where the employee's designated place is in India and he actually visits the designated place in India. as designated. Tax Rate and Interest unde....
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....been decided in favor of the Appellant Bank by a jurisdictional appellate authority (i.e. the Hon'ble ITAT - Mumbai), was not appreciated by the learned CIT(A). Bona fide belief 7. The learned CIT(A) erred in not appreciating that the appellant was of the bona fide belief that it was not liable to deduct tax at source in respect of LFC reimbursements provided to employees and accordingly, the appellant cannot be held to be an assessee in default within the meaning of section 201. 8. The learned CIT(A) erred in not appreciating that in terms of section 192 once an employer has honestly and fairly formed an opinion and arrived at the estimated taxable income and applied TDS accordingly, it cannot be considered as an assessee in default. 9. The learned CIT(A) erred in not appreciating that section 192 contemplates deduction only in cases where the salary accrues and the same is paid to an employee; in other words, accrual as well as payment must co-exist in order to attract the provisions of Section 192 as is also held in (2001) SCC OnLine AP 886. Incentive provisions are to be construed liberally 10. Without prejudice to the a....
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.... foreign travel undertaken by these employees while claiming LFC for end destination within the country. Accordingly, total non-deduction of tax u/s 201(1A) was worked out at Rs. 50,964/- and interest u/s 201(IA) was determined at Rs. 48,925/-, resulting in total TDS default of Rs. 99,889/ -. 5. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). Vide order dated 21.03.2024, Ld. CIT(A) dismissed the appeal, subject to the following directions: "i. The recovery of tax must be stayed by the AO till the stay of the Apex Court is vacated. ii. The appellant is advised to file petition u/s 119 (2) (a) of the Act for waiver of interest charged u/s 201(1A) (i) of the Income-tax Act, 1961 for the period, recovery of TDS was stayed by the High Court and Supreme Court. ii. The appellant is directed to file the computation of income and TDS rate applicable to each employee separately and the AO must rectify the order and reduce excess demands raised if any." 6. Aggrieved with the order of Ld. CIT(A), the assessee filed an appeal before the Tribunal. Before us, Ld. AR has submitted that the assessee was bound by the specif....
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....ia cover the following: ● travel to foreign destinations, including travel via foreign destinations while availing LTC facility may not be allowed. Circulars dated 07 April 2014 and 15 April 2014 (as enumerated at Sr. Nos. 1 and 2 of the table above) were challenged by the All India State Bank Officers' Federation and the All India Bank Officers' Confederation by filing a Writ Petition before the Hon'ble Madras High Court (WP No. 11991 of 2014). 25 April 2024 14 to 16 of the paper book) Interim Order dated 25 April 2014 passed by the Hon'ble Madras High Court in WP. No. 11991 of 2014. The Hon'ble Madras High Court vide its Order dated 25 April 2014, granted an interim stay on the operation of the impugned Circulars in view of the undertaking given by the Petitioners. The relevant extract of the Order 25 April 2014 passed by the Single Judge Bench of the Hon'ble Madras High Court is reproduced hereunder: Today, the petitioners have filed an affidavit before this Court wherein they have stated in paragraph Nos. 2 & 3 as follows: The petitioners have sought for interim stay of the impugned circular dated 07.04.201....
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....igh Court in WP No. 11991 of 2014. In terms of this Order, the Hon'ble High Court dismissed the Writ Petition filed by the Petitioners and upheld the validity of the Circulars dated 07 April 2014 and 15 April 2014. It may be noted that it was only on 24 June 2022 i.e., much after the date of reimbursement of LFC for the year under consideration by the Appellant to its employees, that the Writ Petition filed before the Hon'ble High Court of Madras was dismissed and the validity of the said two circulars upheld. 106 to 111 of the paper book) Writ Appeal No. 1653 of 2022 filed of by the All India State Bank Officers Federation, the All India Bank Officers Confederation and one Mr. K. Bhavanisankar to the Hon'ble Madras High Court. The Petitioners filed a further Writ Appeal (WA No. 1653 of 2022) to the Hon'ble Madras High Court challenging the Order dated 24 June 2022 passed by the Single Judge Bench. 08 August 2022 (112 to 114 of the paper book) Order dated 08 August 2022 passed by the Division Bench of the Hon'ble Madras High Court in WA No. 1653 of 2022. admitting the writ appeal. On 08 August 2022, the following o....
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....d 08 June 2023 dismissed the challenge to the validity of the Circulars dated 07 April 2014 and 15 April 2014. Thus, only in June 2023, the validity of the Circulars was upheld which again it is submitted is under dispute since the SLP filed by the Appellant is still pending adjudication before the Hon'ble Supreme Court. 6. Thus, it is submitted that the Appellant cannot be faulted for any act, which could not be completed at the relevant point in time due to the specific directions of the Court, which were binding on the Bank and violation of which, would have rendered the Bank liable for contempt of Court. 7. In view of the above, it is submitted that the Appellant was under a bonafide belief for non-deduction of tax at source duly bound by the directions of the Hon'ble Madras High Court and hence it cannot be considered as an 'assessee in default' in terms of section 201(1) of the Act. It is further submitted that the Appellant itself in terms of the Affidavit filed with the Hon'ble Madras High Court pointed out that the Petitioners of the Writ Petition ought to have impleaded the income-tax authorities as parties to said Writ Petition since....
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....e Assessing Officer in light of the stay granted by the Hon'ble Supreme Court vide Order dated 28 August 2023 and the pendency of this issue before the Hon'ble Supreme Court. 7. On the other hand, Ld. DR has strongly relied on the orders of lower authorities and has argued that the matter regarding exemption of LFC has been subsequently decided by the Hon'ble Apex Court against the bank officers' associations and, therefore, LFC claimed by the employees for visiting the foreign destinations enroute is taxable, and hence, the bank was liable to deduct TDS on the same. 8. We have heard the rival submissions and perused the material placed before us. We have also gone through various decisions of the coordinate benches cited by the assessee for the same assessment year, i.e. AY 2016-17. Specifically, in the case of State Bank of India v/s CIT(A) in ITA No. 514/Agr/2024, it has been held by the coordinate bench at Agra as under: 4. At the same time, it could be seen that the impugned payments pertain to LFC granted by assessee bank for the period 15-02-2016 to 24-02-2016 when the operation of interim order dated 16-02-2015 of Hon'ble High Court of Mad....