STATE BANK OF INDIA,RBO ,FARRUKHABAD vs. ITO(TDS), ALIGARH

ITA 667/AGR/2026Status: DisposedITAT Agra22 October 2026AY 2015-1615 pages
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What did the Tribunal hold?

The Tribunal held that the assessee bank cannot be treated as an assessee in default under section 201(1) for short deduction of tax on LFC payments made to its employees for foreign travel on 23.07.2014. The reasoning is that the Hon'ble Madras High Court had issued an interim order on 25.04.2014, which was operative during the relevant period. The assessee bank was judicially bound by this interim direction and therefore could not have deducted tax at source without acting contrary to the judicial command. The subsequent Supreme Court order for AY 2013-14, regarding substantive taxability, does not retrospectively convert an act performed in obedience to a binding judicial order into a statutory default. The Tribunal respectfully followed the judgment of the Hon'ble Kerala High Court and coordinate bench orders, which had examined the issue and distinguished the Supreme Court judgment based on assessment year and the period of interim protection. Consequently, interest under section 201(1A), being founded upon the default under section 201(1), cannot survive. The demands raised under sections 201(1) and 201(1A) were set aside. The substantive taxability of LFC involving foreign leg travel was not decided, nor was the tax liability of the employees, as these were not the subject matter of the appeal.

What were the facts?

The assessee, State Bank of India (SBI), is in appeal against the order of the CIT(A) for Assessment Year 2015-16. The CIT(A) had confirmed an addition of Rs. 1,43,968/- made by the Assessing Officer (AO) under sections 201(1) and 201(1A) of the Income Tax Act, 1961. This addition was for the assessee's failure to deduct TDS on reimbursements made to employees for Leave Fare Concession (LFC) travel to foreign countries on 23.07.2014. A TDS survey was conducted on 07.03.2019. The AO issued show cause notices, but the assessee failed to comply, leading to the demand. The assessee's appeal before the CIT(A) was dismissed. The present appeal before the ITAT is filed by the assessee, who remained unrepresented at the hearing.

What were the issues?

1. Whether the assessee bank can be treated as an assessee in default under section 201(1) and 201(1A) for short deduction of tax on employee LFC reimbursements for foreign travel during the period when interim directions from the Hon'ble Madras High Court were operative? (Question of law and fact, concerning Sections 201(1) and 201(1A)). Assessee's Contentions (as per grounds of appeal, though not argued due to absence): - The CIT(A) erred in not properly adjudicating all grounds of appeal, failing to consider written submissions, explanations, and documentary evidence, and passing a non-speaking and incomplete order. - The CIT(A) failed to independently examine objections and legal submissions, including judicial precedents, and did not record findings on specific prayers for deletion of demand. - The CIT(A)'s failure to adjudicate grounds denied effective appellate remedy and violated natural justice. Revenue's Contentions: - The Hon'ble Supreme Court, in State Bank of India v. ACIT (AY 2013-14), held the assessee bank in default for not deducting TDS on LFC payments. - The revenue prayed for dismissal of the assessee's appeal.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA (DB

Before: SUNIL KUMAR SINGH & BRAJESH KUMAR SINGH

For Respondent: Shri Anil Kumar,Sr. DR
Hearing: 15.10.2026Pronounced: 22.10.2026

PER:SUNIL KUMAR SINGH, J.M. This appeal is directed against the impugned order dated 01.07.2026 passed in appeal No NFAC/2013-14/10123304by the ld. Commissioner of Income Tax, Appeal/ ADDL/JCIT (A)-6 KOLKATA [(hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2015-16, wherein, ld CIT(A) has dismissed assessee’s appeal, confirming the addition of Rs. 1,43,968/- made vide assessment order dated 29.03.2022 passed u/s 201(1) and 201(1A) of the Act.

ITA 667/Agr/2026

2.

The brief facts of the case are that the assessee is a public sector bank(SBI). A TDS survey was conducted by the department at the premises of the assessee on 07.03.2019. It came to the notice of the assessing officer

The order continues below.

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