TaxTMI 
2026 (11) TMI 526
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....ioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi ["learned CIT(A)"] for the assessment year 2016-17. 2. The sole grievance of the assessee is against the levy of penalty under section 271C of the Act for non-deduction of tax at source on reimbursement of Leave Fare Concession ("LFC")/Leave Travel Concession ("LTC") to the employees. 3. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is the Commercial Branch of State Bank of India in Bangalore. Pursuant to the survey conducted under section 133A of the Act in the business premises of State Bank of India, Local Head Office, on 26.12.2013, it was noticed that State Bank of India considered the reimbursement of LFC....
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....de its order dated 04.11.2022 passed in Civil Appeal No. 8181 of 2022. The AO-TDS noted that the Hon'ble Supreme Court, vide its order, held that the moment an employee undertakes travel with a foreign leg, it is not travel within India and hence not covered under the provisions of section 10(5) of the Act. Accordingly, the AO/TDS held that the reimbursement made by the assessee to its employee on LTC availed for foreign tour is to be brought to tax as a taxable perquisite and hence the deductor was liable to deduct TDS on such payment. Since the assessee in the present case failed to deduct TDS on reimbursement of LTC to employees for travel outside India and has been treated as an "assessee in default", the AO-TDS held that the assessee i....
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.... would have exposed the Bank to contempt proceedings. The learned AR further submitted that the Hon'ble Kerala High Court in an appeal filed by the State Bank of India in ITA No. 45 of 2025 against the decision of the Tribunal for the assessment year 2016-17 after considering the interim directions of the Hon'ble Madras High Court vide order dated 16.02.2015 and the decision of the Hon'ble Supreme Court, placed reliance upon by the Revenue, vide its order dated 18.11.2025 held that in view of the interim directions of the Hon'ble Madras High Court the assessee bank could not have made any deduction of tax from the reimbursement of LTC to the employees. The learned AR submitted that the Hon'ble Kerala High Court accordingly decided the issue....
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.... the Act has been correctly levied as the issue of non-deduction of tax on reimbursement of LTC to the employees towards foreign travel is now covered by the decision of the Hon'ble Supreme Court. 8. We have considered the submissions of both sides and perused the materials available on record. In the present case, there is no dispute regarding the fact that for the year under consideration, the assessee did not deduct the tax at source on the reimbursement of LFC/LTC to the employees towards foreign travel. Accordingly, the assessee was treated as "assessee in default" under section 201(1) of the Act and tax and interest were levied under the provisions of the said section. We find that in quantum proceedings, the assessee's appeal is c....
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....Hon'ble Kerala High Court in State Bank of India vs. CIT, in ITA No. 45 of 2025, vide order dated 18.11.2025, after taking into consideration the interim directions of the Hon'ble Madras High Court vide order dated 16.02.2015 and the decision of the Hon'ble Supreme Court in Civil Appeal No. 8181 of 2022 held that for the financial year 2015-16, the assessee was bound by the interim directions of the Hon'ble Madras High Court to not deduct any tax on reimbursement of LTC to the employees for foreign travel. Accordingly, the Hon'ble Kerala High Court disagreed with the findings of the Tribunal in treating the assessee as "assessee in default" for non-deduction of tax on reimbursement of LTC to the employees. From the perusal of the said decis....