SBI SME PALLIPALAYAM BR,NAMAKKAL vs. JOINT COMMISSIONER OF INCOME TAX TDS, TDS RANGE- COIMBATORE, COIMBATORE

यकर अपीलीय अधिकरण, ‘ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI माननीय श्री यस. यस. विश्वनेत्र रवि, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 734/Chny/2026 यनिाारण वर्ा /Assessment Years: 2016-17 SBI LHO, Chennai, v. Deputy Commissioner of No.16, Circletophouse, Collegelane, Income Tax, Chennai-600 006. TDS Circle-3(1), [PAN: AAACS8577K] Chennai. आयकर अपील सं./ITA No. 742/Chny/2026 यनिाारण वर्ा /Assessment Years: 2016-17 SBI, CPPC, Chennai Branch v. Income Tax Officer, CEN Pension Processing Centre, TDS Ward-3(1), 2nd Floor, 1124 Kaliamman Koil Street, Chennai. Virugambakkam, Chennai-600 092. [PAN: AAACS8577K] आयकर अपील सं./ITA No. 2895/Chny/2026 यनिाारण वर्ा /Assessment Years: 2016-17 SBI SME Palipalayam BR v. Joint Commissioner of Income Bypass Road, Pallipalayam, Namakkal, Tax TDS, Pallipalayam, Tamil Nadu-638 006. TDS Range, [PAN: AAACS8577K] Coimbatore. आयकर अपील सं./ITA No. 1399/Chny/2026 यनिाारण वर्ा /Assessment Years: 2016-17 SBI Chinmaya Nagar, v. Income Tax Officer, No.5, Sayee Nagar, Chinmaya Nagar, TDS Ward-3(1), Chennai-600 092. Chennai. [PAN: AAACS8577K] आयकर अपील सं./ITA No. 1400/Chny/2026 यनिाारण वर्ा /Assessment Years: 2016-17 SBI SME Chennai Branch, v. Income Tax Officer, No.1832 Nd Floorsigappiachi Building, TDS Ward-3(1), Rukmini Lakshmipathy Road, Egmore, Chennai. Chennai-600 008. [PAN: AAACS8577K]

ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India आयकर अपील सं./ITA No. 1401/Chny/2026 यनिाारण वर्ा /Assessment Years: 2016-17 State Bank of India v. Deputy Commissioner of Branch SME Overseas, Tiruppur, Income Tax, No.13/13-1, Munsifsrinivasapuram, TDS Circle Uthukuli Road, Tiruppur, Coimbatore. Tamil Nadu-641 601. [PAN: AAACS8577K] आयकर अपील सं./ITA No. 716/Chny/2026 यनिाारण वर्ा /Assessment Years: 2017-18 SBI Industrial Finance BR v. Deputy Commissioner of KRM Plaza Ground Floor No.2, Income Tax, Harrington Road, Chennai-600 031. TDS Circle-3(1) [PAN: AAACS8577K] Chennai. आयकर अपील सं./ITA No. 746/Chny/2026 यनिाारण वर्ा /Assessment Years: 2017-18 SBI, CPPC, Chennai Branch v. Income Tax Officer, CEN Pension Processing Centre, TDS Ward-3(1), 2nd Floor, 1124 Kaliamman Koil Street, Chennai. Virugambakkam, Chennai-600 092. [PAN: AAACS8577K] आयकर अपील सं./ITA No. 3869/Chny/2026 यनिाारण वर्ा /Assessment Years: 2017-18 State Bank of India v. Joint Commissioner of Income Branch: Attur, MGP Building, Kamarajanar Tax TDS, Road, Attur, Salem, TDS Range, Tamil Nadu-636 102. Coimbatore. [PAN: AAACS8577K] आयकर अपील सं./ITA No. 3870/Chny/2026 यनिाारण वर्ा /Assessment Years: 2017-18 SBI SMECC v. Income Tax Officer, No.16, State Bank of India, TDS Ward-3(1), Whannels Road, Egmore, Chennai. Chennai-600 008. [PAN: AAACS8577K]

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India आयकर अपील सं./ITA No. 2894/Chny/2026 यनिाारण वर्ा /Assessment Years: 2017-18 SBI SME Palipalayam BR v. Joint Commissioner of Income Bypass Road, Pallipalayam, Namakkal, Tax TDS, Pallipalayam, Tamil Nadu-638 006. TDS Range, [PAN: AAACS8577K] Coimbatore. आयकर अपील सं./ITA No. 1402/Chny/2026 यनिाारण वर्ा /Assessment Years: 2017-18 State Bank of India v. Deputy Commissioner of Branch SME Overseas, Tiruppur, Income Tax, No.13/13-1, Munsifsrinivasapuram, TDS Circle Uthukuli Road, Tiruppur, Coimbatore. Tamil Nadu-641 601. [PAN: AAACS8577K] आयकर अपील सं./ITA No. 1486/Chny/2026 यनिाारण वर्ा /Assessment Years: 2017-18 State Bank of India v. Income Tax officer, Branch: Attur, MGP Building, Kamarajanar TDS, Road, Attur, Salem, Salem. Tamil Nadu-636 102. [PAN: AAACS8577K] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. Dinesh Nair, C.A, by Virtual, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Ms. Anshu Sharawat, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 13.08.2026 घोषणाकीतारीख /Date of Pronouncement : 19.08.2026 आदेश / O R D E R PER GAGAN GOYAL, AM:

The below mentioned appeals have been filed by the appellant assessee for A.Y.- 2016-17 & 2017-18 contesting the order of Ld. First Appellate Authority indicated Column-E, herein below: - Page 3 of 22

ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India CIT(A) Order Details / S. No. Appeal Nos. A.Y.s Appellant Respondent Addl. JCIT(A)-2 A B C D E F SBI LHO, Chennai, No.16, DIN & Order No. ITBA / Deputy Commissioner ITA No. 734 / Circletophouse, APL / S / 250 / 2025-26 / of Income Tax, 1. Chny / 2026 2016-17 Collegelane, 1083576259(1) dated TDS Circle-3(1), Chennai-600 006. 11.12.2025 Chennai. [PAN: AAACS8577K] SBI, CPPC, Chennai Branch CEN Pension Processing Centre, DIN & Order No. ITBA / ITA No. 742 / 2nd Floor, 1124 Income Tax Officer, APL / S / 250 / 2025-26 / 2. Chny / 2026 2016-17 Kaliamman Koil TDS Ward-3(1), 1083581342(1) dated Street, Chennai. 11.12.2025 Virugambakkam, Chennai-600 092. [PAN: AAACS8577K] SBI SME Palipalayam BR Bypass Road, ITA No. 2895 DIN & Order No. ITBA / Joint Commissioner of Pallipalayam, / Chny / NFAC / S / 250 / 2025-26 / Income Tax TDS, 3. 2016-17 Namakkal, 2026 1087464836(1) dated TDS Range, Pallipalayam, Tamil 17.03.2026 Coimbatore. Nadu-638 006. [PAN: AAACS8577K] SBI Chinmaya Nagar, ITA No. 1399 DIN & Order No. ITBA / No.5, Sayee Nagar, Income Tax Officer, / Chny / APL / S / 250 / 2025-26 / 4. 2016-17 Chinmaya Nagar, TDS Ward-3(1), 2026 1084674703(1) dated Chennai-600 092. Chennai. 12.01.2026. [PAN: AAACS8577K] SBI SME Chennai Branch, No.1832 Nd Floorsigappiachi ITA No. 1400 DIN & Order No. ITBA / Income Tax Officer, Building, / Chny / APL / S / 250 / 2025-26 / 5. 2016-17 TDS Ward-3(1), Rukmini 2026 1084675158(1) dated Chennai. Lakshmipathy Road, 12.01.2026 Egmore, Chennai-600 008. [PAN: AAACS8577K] State Bank of India Branch SME Overseas, Tiruppur, ITA No. 1401 DIN & Order No. ITBA / Deputy Commissioner No.13/13-1, / Chny / APL / S / 250 / 2025-26 / of Income Tax, 6. 2016-17 Munsifsrinivasapuram, 2026 1086181970(1) dated TDS Circle Uthukuli Road, 18.02.2026 Coimbatore. Tiruppur, Tamil Nadu-641 601. [PAN: AAACS8577K]

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India SBI Industrial Finance BR KRM Plaza Ground DIN & Order No. ITBA / Deputy Commissioner ITA No. 716 / Floor No.2, APL / S / 250 / 2025-26 / of Income Tax, 7. 2017-18 Chny / 2026 Harrington Road, 1083576893(1) dated TDS Circle-3(1) Chennai-600 031. 11.12.2025. Chennai. [PAN: AAACS8577K] SBI, CPPC, Chennai Branch CEN Pension Processing Centre, DIN & Order No. ITBA / 2nd Floor, 1124 Income Tax Officer, ITA No. 746 / APL / S / 250 / 2025-26 / 8. 2017-18 Kaliamman Koil TDS Ward-3(1), Chny / 2026 1083583081(1) dated Street, Chennai. 11.12.2025 Virugambakkam, Chennai-600 092. [PAN: AAACS8577K] State Bank of India Branch: Attur, MGP DIN & Order No. ITBA / Joint Commissioner of ITA No. 3869 Building, Kamarajanar NFAC / S / 250 / 2024-25 / Income Tax TDS, 9. / Chny / 2017-18 Road, Attur, Salem, 1069388994(1) dated TDS Range, 2026 Tamil Nadu-636 102. 04.10.2024 Coimbatore. [PAN: AAACS8577K] SBI SMECC No.16, State Bank of India, DIN & Order No. ITBA / ITA No. 3870 Income Tax Officer, Whannels Road, APL / S / 250 / 2025-26 / 10. / Chny / 2017-18 TDS Ward-3(1), Egmore, 1083580448(1) dated 2026 Chennai. Chennai-600 008. 11.12.2025 [PAN: AAACS8577K] SBI SME Palipalayam BR Bypass Road, DIN & Order No. ITBA / Joint Commissioner of ITA No. 2894 Pallipalayam, NFAC / S / 250 / 2025-26 / Income Tax TDS, 11. / Chny / 2017-18 Namakkal, 1087469726(1) dated TDS Range, 2026 Pallipalayam, Tamil 17.03.2026 Coimbatore. Nadu-638 006. [PAN: AAACS8577K] State Bank of India Branch SME Overseas, Tiruppur, No.13/13-1, DIN & Order No. ITBA / Deputy Commissioner ITA No. 1402 Munsifsrinivasapuram, APL / S / 250 / 2025-26 / of Income Tax, 12. / Chny / 2017-18 Uthukuli Road, 1086182232(1) dated TDS Circle 2026 Tiruppur, 18.02.2026 Coimbatore. Tamil Nadu-641 601. [PAN: AAACS8577K] State Bank of India DIN & Order No. ITBA / ITA No. 1486 Income Tax officer, Branch: Attur, MGP APL / S / 250 / 2025-26 / 13. / Chny / 2017-18 TDS, Building, Kamarajanar 1085296545(1) dated 2026 Salem. Road, Attur, Salem, 29.01.2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India Tamil Nadu-636 102. [PAN: AAACS8577K]

GROUDS OF APPEAL

ITA No. 734/Chny/2026 1. The Learned Commissioner of Income-tax (Appeals) ("CIT(A)") erred in confirming the order of the Assessing Officer ("AO") holding the appellant to be an assessee in default for failing to deduct tax at source under section 192 of the Income-tax Act, 1961 ('the Act). 2. The CIT (A) erred in not appreciating that the Appellant had issued e-Circular no. CDO/P&HRD-PM/7/2014-15 dated 15th April 2014 stating that the employees shall not be entitled to visit overseas countries/ centers as part of leave travel concession ("LTC") which Circular was challenged by the All India State Bank Officers Federation & Ors before the Madras High Court by way of a writ petition (WP no. 11991 of 2014) and that the Madras High Court had vide its order dated 25th April 2014 granted interim stay of the Circular. 3. The CIT (A) further erred in not appreciating that tax was not deducted at source by the Appellant on the LTC paid to its employees during the year under consideration in view of the specific interim directions issued by the Hon'ble Madras High Court in its order dated 16th February 2015 by which the Court held that the LTC paid or reimbursed would not amount to income and that no tax was to be deducted thereon. The CIT (A) ought to have appreciated that if the LTC was not to be treated as income of the employees as per the order of the Hon'ble Madras High Court, the same even otherwise would not require withholding of tax under section 192 of the Act. 4. The CIT (A) further erred in not appreciating that the Madras High Court vide its said order dated 16th February 2015 having directed the Appellant not to deduct at source on LTC had further stated that if the writ petition challenging the Circular was dismissed, the employees would be liable to pay tax on the LTC amount paid by the Appellant and, therefore, the CIT (A) ought to have quashed the order of the AO holding the Appellant to be an assessee in default. 5. The CIT (A) erred in not quashing the order of the AO holding the Appellant to be an assessee in default for the reason that the Appellant, even if it wanted to, could not have deducted tax at source on LTC paid during the year under consideration in view of the orders of the Hon'ble Madras High Court till the time they were in force as acting contrary to the orders of the Hon'ble Court would have amounted to contempt of Court. 6. The CIT (A) erred in not following the judgment of the Hon'ble Kerala High Court in State Bank of India v. CIT (ITA no. 45 of 2025) where the Hon'ble Court after considering the above set of facts held that the Appellant was justified in not deducting tax at source in view of the interim directions issued by the Madras High Court asking the Appellant not to deduct tax at source. 7. The CIT (A) erred in observing that the legal obligation to deduct tax was reinstated once the interim order passed by the Hon'ble Madras High Court was vacated without appreciating that the order of the Single Judge of the Hon'ble Madras High Court was challenged before the Division bench and later the Division bench's order before the Hon'ble Supreme Court and that the Hon'ble Supreme Court in SLP(C) no. 16734 of 2023 has ordered the Appellant bank from not making any recoveries from its employees during the pendency of the petition. 8. Without prejudice to above grounds, the CIT (A) erred in not holding that the Appellant could not have been deemed to be an assessee in default under section 201(1) of the Act if the Page 6 of 22

ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee. The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing. ITA NO.742/Chny/2026 1 The Learned Commissioner of Income-tax (Appeals) ("CIT(A)") erred in confirming the order of the Assessing Officer ("AO") holding the appellant to be an assessee in default for failing to deduct tax at source under section 192 of the Income tax Act, 1961 ('the Act'). 2 The CIT (A) erred in not appreciating that the Appellant had issued e-Circular no. CDO/P&HRD-PM/7/2014-15 dated 15 April 2014 stating that the employees shall not be entitled to visit overseas countries/ centers as part of leave travel concession ("LTC") which Circular was challenged by the All-India State Bank Officers Federation & Ors. before the Madras High Court by way of a writ petition (WP no. 11991 of 2014) and that the Madras High Court had vide its order dated 25 April 2014 granted interim stay of the Circular. 3 The CIT (A) further erred in not appreciating that tax was not deducted at source by the Appellant on the LTC paid to its employees during the year under consideration in view of the specific interim directions issued by the Hon'ble Madras High Court in its order dated 16" February 2015 by which the Court held that the LTC paid or reimbursed would not amount to income and that no tax was to be deducted thereon. The CIT (A) ought to have appreciated that if the LTC was not to be treated as income of the employees as per the order of the Hon'ble Madras High Court, the same even otherwise would not require withholding of tax under section 192 of the Act 4 The CIT (A) further erred in not appreciating that the Madras High Court vide its said order dated 16 February 2015 having directed the Appellant not to deduct at source on LTC had further stated that if the writ petition challenging the Circular was dismissed, the employees would be liable to pay tax on the LTC amount paid by the Appellant and, therefore, the CIT (A) ought to have quashed the order of the AO holding the Appellant to be an assessee in default. 5 The CIT (A) erred in not quashing the order of the AO holding the Appellant to be an assessee in default for the reason that the Appellant, even if it wanted to, could not have deducted tax at source on LTC paid during the year under consideration in view of the Hon’ble Madras High Court till the time they were in force as acting contrary to the orders of the Hon'ble Court would have amounted to contempt of Court. 6 The CITIA) erred in not following the judgment of the Hon'ble Kerala High Court in State Bank of India v. CIT (ITA no. 45 of 2025) where the Hon'ble Court after considering the above set of facts held that the Appellant was justified in not deducting tax at source in view of the interim directions issued by the Madras High Court asking the Appellant not to deduct tax at source 7. The CIT(A) erred in observing that the legal obligation to deduct tax was reinstated once the interim order passed by the Hon'ble Madras High Court was vacated without appreciating that the order of the Single Judge of the Hon'ble Madras High Court was challenged before the Division bench and later the Division bench's order before the Hon'ble Supreme Court and that the Hon'ble Supreme Court in SLP(C) no. 16734 of 2023 has ordered the Appellant bank from not making any recoveries from its employees during the pendency of the petition. Without prejudice to above grounds, the CIT (A) erred in not holding that the Appellant could not have been deemed to be an assessee in default under section 201(1) of the Act if the employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee.

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing. ITA No.2895/Chny/2026 1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the penalty levied under section 271C of the Income-tax Act, 1961.

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India

ITA NO.1399/Chny/2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing.

ITA No.1400/Chny/2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee. The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing. ITA No.1401/Chny/2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India 8. Without prejudice to above grounds, the CIT (A) erred in not holding that the Appellant could not have been deemed to be an assessee in default under section 201(1) of the Act if the employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee. The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing.

ITA No.716/Chny/2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India that the Hon'ble Supreme Court in SLP(C) no. 16734 of 2023 has ordered the Appellant bank from not making any recoveries from its employees during the pendency of the petition. 8. Without prejudice to above grounds, the CIT (A) erred in not holding that the Appellant could not have been deemed to be an assessee in default under section 201(1) of the Act if the employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee. The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing.

ITA No.746/Chny/2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India 7. The CIT(A) erred in observing that the legal obligation to deduct tax was reinstated once the interim order passed by the Hon'ble Madras High Court was vacated without appreciating that the order of the Single Judge of the Hon'ble Madras High Court was challenged before the Division bench and later the Division bench's order before the Hon'ble Supreme Court and that the Hon'ble Supreme Court in SLP(C) no. 16734 of 2023 has ordered the Appellant bank from not making any recoveries from its employees during the pendency of the petition. 8. Without prejudice to above grounds, the CIT (A) erred in not holding that the appellant could not have been deemed to be an assessee in default under section 201(1) of the Act if the employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee. The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing. ITA No.3869/Chny/2026 1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the penalty levied under section 271C of the Income-tax Act, 1961. 2. The Ld. CIT (A) passed the Order for AY 2016-17 instead of AY 2017-18 even though the Form 35 clearly shows the FY as 2016-17 (AY 2017-18) 3. The learned CIT (A) failed to appreciate that the Appellant had acted under and in compliance with the interim directions of the Hon'ble Madras High Court dated 16 February 2015 directing that no tax be deducted at source on LTC paid / reimbursed to employees, and therefore the alleged failure, if any, was fully supported by reasonable cause within the meaning of section 273B. 4. The learned CIT(A) ought to have held that where the Appellant acted in obedience to a subsisting order of a Constitutional Court, no penalty under section 271C could be levied, since such conduct can never amount to willful neglect, contumacious default, or deliberate defiance of law. 5. The learned CIT(A) failed to appreciate that deduction of tax in breach of the interim directions of the Hon'ble Madras High Court would itself have amounted to disobedience of the Court's order and could have exposed the Appellant to contempt proceedings; hence, the Appellant had more than sufficient and reasonable cause for not deducting tax. 6. The learned CIT(A) failed to appreciate that the Hon'ble Madras High Court and also clarified that, in the event the writ petition failed, the tax liability would fall upon the employees, thereby reinforcing that the Appellant's conduct was under judicial sanction and devoid of any revenue-evasive intent. 7. The learned CIT (A) erred in not appreciating that the issue was, in any event, debatable and legally contentious, and therefore penalty under section 271C, being penal in nature, was wholly unsustainable.

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India

ITA No.2894/Chny/2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India

ITA No.1402/Chny/2026

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India entitled to visit overseas countries/ centers as part of leave travel concession ("LTC") which Circular was challenged by the All-India State Bank Officers Federation & Ors. before the Madras High Court by way of a writ petition (WP no. 11991 of 2014) and that the Madras High Court had vide its order dated 25th April 2014 granted interim stay of the Circular. 3. The CIT (A) further erred in not appreciating that tax was not deducted at source by the Appellant on the LTC paid to its employees during the year under consideration in view of the specific interim directions issued by the Hon'ble Madras High Court in its order dated 16th February 2015 by which the Court held that the LTC paid or reimbursed would not amount to income and that no tax was to be deducted thereon. The CIT (A) ought to have appreciated that if the LTC was not to be treated as income of the employees as per the order of the Hon'ble Madras High Court, the same even otherwise would not require withholding of tax under section 192 of the Act. 4. The CIT (A) further erred in not appreciating that the Madras High Court vide its said order dated 16th February 2015 having directed the Appellant not to deduct at source on LTC had further stated that if the writ petition challenging the Circular was dismissed, the employees would be liable to pay tax on the LTC amount paid by the Appellant and, therefore, the CIT (A) ought to have quashed the order of the AO holding the Appellant to be an assessee in default. 5. The CIT (A) erred in not quashing the order of the AO holding the Appellant to be an assessee in default for the reason that the Appellant, even if it wanted to. could not have deducted tax at source on LTC paid during the year under consideration in view of the orders of the Hon'ble Madras High Court till the time they were in force as acting contrary to the orders of the Hon'ble Court would have amounted to contempt of Court. 6. The CIT (A) erred in not following the judgment of the Hon'ble Kerala High Court in State Bank of India v. CIT (ITA no. 45 of 2025) where the Hon'ble Court after considering the above set of facts held that the Appellant was justified in not deducting tax at source in view of the interim directions issued by the Madras High Court asking the Appellant not to deduct tax at source. 7. The CIT(A) erred in observing that the legal obligation to deduct tax was reinstated once the interim order passed by the Hon'ble Madras High Court was vacated without appreciating that the order of the Single Judge of the Hon'ble Madras High Court was challenged before the Division bench and later the Division bench's order before the Hon'ble Supreme Court and that the Hon'ble Supreme Court in SLP(C) no. 16734 of 2023 has ordered the Appellant bank from not making any recoveries from its employees during the pendency of the petition. 8. Without prejudice to above grounds, the CIT (A) erred in not holding that the Appellant could not have been deemed to be an assessee in default under section 201(1) of the Act if the employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee. The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing. ITA No.1486/Chny/2026 1. The Learned Commissioner of Income-tax (Appeal) ("CIT(A)") erred in confirming the order of the Assessing Officer ("AO") holding the appellant to be an assessee in default for failing to deduct tax at source under section 192 of the Income-tax Act, 1961 ('the Act'). 2. The CIT(A) erred in not appreciating that the Appellant had issued e-Circular no CDO/P&HRD-PM/7/2014-15 dated 15th April 2014 stating that the employees shall not be

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India entitled to visit overseas countries/centers as part of leave travel concession (LTC) which Circular was challenged by the All-India State Bank Officers Federation & Ors. before the Madras High Court by way of a writ petition (WP no. 11991 of 2014) and that the Madras High Court had vide its order dated 25th April 2014 granted interim stay of the Circular. 3. The CIT(A) further erred in not appreciating that tax was not deducted at source by the Appellant on the LTC paid to its employees during the year under consideration in view of the specific interim directions issued by the Hon'ble Madras High Court in its order dated 16th February 2015 by which the Court held that the LTC paid or reimbursed would not amount to income and that no tax was to be deducted thereon The CIT(A) ought to have appreciated that if the LTC was not to be treated as income of the employees as per the order of the Hon'ble Madras High Court, the same even otherwise would not require withholding of tax under section 192 of the Act. 4. The CIT (A) further erred in not appreciating that the Madras High Court vide its said order dated 16th February 2015 having directed the Appellant not to deduct at source on LTC had further stated that if the writ petition challenging the Circular was dismissed, the employees would be liable to pay tax on the LTC amount paid by the Appellant and, therefore, the CIT (A) ought to have quashed the order of the AO holding the Appellant to be an assessee in default. 5. The CIT (A) erred in not quashing the order of the AO holding the Appellant to be an assessee in default for the reason that the Appellant, even if it wanted to, could not have deducted tax at source on LTC paid during the year under consideration in view of the orders of the Hon'ble Madras High Court till the time they were in force as acting contrary to the orders of the Hon'ble Court would have amounted to contempt of Court. 6. The CIT (A) erred in not following the judgment of the Hon'ble Kerala High Court in State Bank of India v. CIT (ITA no. 45 of 2025) where the Hon'ble Court after considering the above set of facts held that the Appellant was justified in not deducting tax at source in view of the interim directions issued by the Madras High Court asking the Appellant not to deduct tax at source. 7. The CIT(A) erred in observing that the legal obligation to deduct tax was reinstated once the interim order passed by the Hon'ble Madras High Court was vacated without appreciating that the order of the Single Judge of the Hon'ble Madras High Court was challenged before the Division bench and later the Division bench's order before the Hon'ble Supreme Court and that the Hon'ble Supreme Court in SLP(C) no. 16734 of 2023 has ordered the Appellant bank from not making any recoveries from its employees during the pendency of the petition. 8. Without prejudice to above grounds, the CIT (A) erred in not holding that the Appellant could not have been deemed to be an assessee in default under section 201(1) of the Act if the employee had furnished the return of income, taken into account such sum for computing income and paid the tax due on income declared by the employee. The appellant craves leave to add, amend, alter or delete and/or modify the above grounds of appeal before or during the course of hearing.

ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India mentioned (Supra) by various TDS assessing authorities. In these orders it was held that the amount paid by the employer, i.e., SBI on foreign LTC is not exempt u/s. 10(5) of the Act, hence the same is liable for TDS u/s. 192 of the Act treating it a part of salary only. 3. The appellants mentioned (Supra) being aggrieved with the same preferred an appeal before the Ld. CIT (A)s, who in turn confirmed the orders passed by the TDS assessing authorities and the appeals filed were dismissed. The appellants being further aggrieved preferred the present appeals before us. We have gone through the orders of TDS assessing authorities, the orders of Ld. CIT (A)s and submissions of the appellants along with the grounds taken before us. It is observed that the issue involved is identical in all the appeals and the principal issue, i.e., taxability of foreign LTC has already been decided by the Hon’ble Madras High Court in favour of the Revenue and the same has been confirmed by the Hon’ble Supreme Court also. But the Hon’ble Supreme Court has stayed the recovery of tax by SBI from its employees. 4. As mentioned, (supra), for the sake of clarity and better appreciation of the matter, we are reproducing herein below the relevant extracts of the orders/events on account of the Hon’ble Jurisdictional High Court and Apex Court orders as under:- Sequence of events and judgments. S. No. Event Date Event & Impact Reference Page Submitted Nos. to CIT(A) Event: SBI issues circular stating that LFC with foreign travel will not be 1. 15.04.2014 permitted. Annexure-1 1 No Impact: Employees cannot travel overseas. Event: Madras High court stays SBI Circular. Condition: if the writ petition is 2. 25.04.2014 dismissed, the LFC amount will be Annexure-2 2 to 3 Yes refunded by the employees. Impact: Employees can travel overseas. 3. Nov-2014 SBI started applying TDS provision. No Event: Madras High Court says LFC cannot be treated as income. Condition: if the writ petition is dismissed, the Annexure-3 4. 16.02.2015 4 to 6 Yes employees are liable to pay tax on the amount paid by the Bank. Impact: SBI had to stop TDS application. Event: Madras High Court removes the 5. 24.06.2022 Annexure-4 7 to 28 No stay on SBI Circular dated 15.04.2014.

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India Impact: SBI circular dt. 15.04.2014 is valid and therefore overseas LFC travel not permitted. Event: Madras High Court gives interim relief to SBI Officers. Condition: No recovery shall be affected from their 6. 08.08.2022 salary and also that no coercive No proceedings shall be instituted by any authorities against them during the pendency of the Writ Appeal. Event: Hon’ble Supreme Court judgment 7. 04.11.2022 No held LFC to be taxable. Event: Madras High court set aside judgment dated 24.06.2022. Condition: Annexure-5 8. 08.06.2023 Association and SBI to discuss and 29 to 41 No settle amicably within 3 months. Impact: Foreign LFC continues. Event: SBI approaches Supreme Court who grants a stay on judgment dt. 08.06.2023. Condition: However, the 9. 28.08.2023 petitioner Bank shall not make any Annexure-6 42 to 43 Yes recoveries from its employees during the pendency of the present Writ Petition. Impact: Foreign LFC Stopped. 10. 27.02.2024 Event: ITAT Delhi holds SBI in default. No Event: Delhi High Court holds SBI in 11. 11.07.2024 No default. Event: SBI approaches Supreme Court against ITAT & Delhi High Court order and gets a stay on the ITAT / Delhi High 12. 02.12.2024 Annexure-7 44 to 45 Yes Court Order. Condition The demand notices issued by the tax department shall remain stayed. Hon’ble Kerala High Court decision – SBI cannot be treated as assessee in 13. 18.11.2025 Annexure-8 46 to 64 No default in view of Madras High Court Judgement. Hon’ble ITAT Order in the matter of SBI own case wherein it is held that SBI 14. 28.03.2025 Annexure-9 65 to 69 No. cannot be treated as assessee in default in view of Madras High Court Judgement

ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India following the Supreme Court’s decision. For as soon as the stay is vacated, the legal obligation to deduct tax is reinstated. The deductor was required to comply with the provision of TDS as confirmed by the Hon’ble Supreme Court of India. The stay only provides temporary relief from the obligation. Once the legal position is clarified the obligation to deduct tax and the consequences of the past failure become applicable. The deductor is liable to pay the TDS and interest for all periods where the deduction legally required to be made but not made. While there was no active stay order preventing the deduction, the appellant neither deducted tax on LFC nor made recovery. 6. As regards interest under section 201(1A) of the Income Tax Act, 1961, charging of interest is mandatory and there is no scope of not charging the same. Charging of interest, being consequential in nature, does not require separate adjudication. However, the appellant can file petition for the period when recovery of TDS was stayed by the Hon’ble High Courts and the Hon’ble Supreme Court or where the employee concerned has discharged the liability by paying self- assessment tax. In view of the above facts and observations thereon, the grounds raised by the appellants are dismissed except ground no. 8 relating to interest u/s. 201(1A) of the Act is partly allowed for statistical purposes only. 7. In the result, the appeal of the appellants are dismissed on substantive issue and partly allowed for statistical purposes only on the issue of interest u/s. 201(1A) of the Act. Order pronounced on the 19th day of August, 2026, in Chennai.

Sd/- Sd/- (यस. यस. विश्वनेत्र रवि) (गगन गोयल) (S.S. VISWANETHRA RAVI) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 19th August, 2026. KB

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ITA Nos.734, 742, 2895, 1399, 1400 & 1401/Chny/2026 (2016-17) ITA Nos.716, 746, 3869, 3870, 2894, 1402 & 1486/Chny/2026 (2017-18) State Bank of India आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF Digitally signed K BABU by K BABU Date: 2026.08.24 14:56:13 +05'30'

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