STATE BANK OF INDIA,CHANDIGARH vs. INCOME TAX OFFICER (TDS-1), CHANDIGARH

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ITA 624/CHANDI/2024Status: DisposedITAT Chandigarh25 March 2025AY 2016-171 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal first addressed the issue of jurisdiction. It held that the appeals were maintainable as they were filed against the orders of the CIT(A) which had confirmed the findings of the AO. The Tribunal clarified that it has the power to hear appeals against orders passed by the CIT(A) under Section 253 of the Income Tax Act, 1961. Regarding the substantive issue, the Tribunal found that the payments made by the State Bank of India to its employees towards travel and composite allowances were not in the nature of salary income. The Tribunal reasoned that these allowances were intended to reimburse employees for expenses incurred in performing their duties for the employer. Since these were reimbursements of expenditure and not perquisites or benefits provided to employees, they did not constitute taxable income. Therefore, the SBI was not obligated to deduct TDS on these amounts under Section 192 of the Act. The Tribunal allowed the appeals, directing the deletion of the demands raised under Section 201(1) and 201(1A) of the Act.

What were the facts?

The appeals concern assessment years 2013-14 and 2014-15 (ITA Nos. 375 & 376/Chd/2023) and assessment year 2016-17 (multiple appeals). The appellant is the State Bank of India (SBI), and the respondents are various Income Tax Officers (TDS) and Deputy Commissioners/Assistant Commissioners of Income Tax (TDS) in Chandigarh and Ludhiana. The core issue revolves around the TDS obligations of the SBI concerning payments made to its employees towards their travel and composite allowances. The Assessing Officers (AOs) initiated proceedings under Section 201(1) and 201(1A) of the Income Tax Act, 1961, holding the SBI as an assessee in default for not deducting TDS on these allowances. The SBI contested these findings before the CIT(A), which upheld the AO's orders. Consequently, the SBI has filed these appeals before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the Tribunal has the jurisdiction to entertain the present appeals, given that the orders under challenge were passed by the CIT(A) and not the AO, and the appeals are filed by the assessee (SBI) against the orders of the CIT(A) upholding the AO's findings regarding TDS default. (Question of law) 2. Whether the payments made by the State Bank of India to its employees towards travel and composite allowances are in the nature of salary, attracting TDS obligations under Section 192 of the Income Tax Act, 1961, or if they are reimbursements of expenses incurred by employees for the employer's benefit, thereby not being taxable income and not requiring TDS. (Question of mixed law and fact) Assessee's Contentions: The assessee argued that the payments for travel and composite allowances were reimbursements of expenses incurred by employees for the employer's business purposes. Therefore, these amounts were not in the nature of salary income and were not taxable, consequently not attracting TDS provisions. The assessee relied on various High Court and ITAT judgments, including the decision in CIT vs. M.L. Chibber, 157 ITR 409 (Del), and CIT vs. Oriental Insurance Co. Ltd., 324 ITR 347 (Del), to support its claim that reimbursements of expenditure are not taxable income. Revenue's Contentions: The revenue contended that these allowances were part of the employees' remuneration and, therefore, taxable as salary. The AO and CIT(A) had held the SBI to be an assessee in default for failure to deduct TDS on these payments. The revenue relied on the orders passed by the lower authorities.

Which sections of the Income-tax Act were involved?

Section 192,Section 201(1),Section 201(1A),Section 253

AI-generated summary — verify with the full judgment below

Heard together (7 matters)

ITA No. 173/Chd/2024
ITA No. 421/Chd/2024
ITA No. 493/Chd/2024
ITA No. 622/Chd/2024
ITA No. 623/Chd/2024
ITA No. 624/Chd/2024
ITA No. 625/Chd/2024

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अधिकरण, चण्डीगढ़ न्यायपीठ “बी”, चण्डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE श्री ललित कुमार, न्यायिक सदस्य एवं श्री कृणवन्त सहाय, लेखा सदस्य BEFORE: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM

आयकर अपील सं. / ITA No. 375 & 376 /Chd/2023 निर्धारण वर्ष / Assessment Year : 2013-14 & 2014-15

| State Bank of India | बनाम | The ITO (TDS-1) | Local Head Office | | Chandigarh | Sector 17B, Chandigarh | | स्थायी लेखा सं./ PAN NO: AAACS8577K | प्रत्यर्थी / Respondent | अपीलार्थी/Appellant |

आयकर अपील सं. / ITA No. 173/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

| State Bank of India | बनाम | The DCIT / ACIT-TDS | Main Branch | | Chandigarh | Sector 17B, Chandigarh | | स्थायी लेखा सं./PAN NO: AAACS8577K | प्रत्यर्थी / Respondent | अपीलार्थी/Appellant |

आयकर अपील सं. / ITA No. 421/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

| State Bank of India | बनाम | The DCIT / ACIT-TDS | Local Head Office | | Chandigarh | Sector 17B, Chandigarh | | स्थायी लेखा सं./PAN_NO: AAACS8577K | प्रत्यर्थी / Respondent | अपीलार्थी/Appellant |

आयकर अपील सं. / ITA No. 493/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

| State Bank of India | बनाम | The DCIT / ACIT-TDS | CPPC, Sector 7, Madhya Marg | | Chandigarh | Chandigarh (Now At CPPC Branch | AO Building, Plot No. 1 and 2 | Sector-5) Panchkula- 134101 | | स्थायी लेखा सं./ PAN NO: AAACS8577K | प्रत्यर्थी / Respondent | अपीलार्थी/Appellant |

आयकर अपील सं. / ITA No. 622/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

| State Bank of India | बनाम | The DCIT / ACIT-TDS | Punjab University Branch (0742), | | Chandigarh | Sector 14, Chandigarh 160014 | | स्थायी लेखा सं./ PAN NO: AAACS8577K | प्रत्यर्थी / Respondent | अपीलार्थी/Appellant |

आयकर अपील सं. / ITA No. 623/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

State Bank of India SMECCC Branch (05022) SCO 43-48, Third Floor Sector 17B Chandigarh स्थायी लेखा सं./PAN_NO: AAACS8577K अपीलार्थी/Appellant बनाम The DCIT / ACIT-TDS Chandigarh प्रत्यर्थी / Respondent

आयकर अपील सं. / ITA No. 624/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

State Bank of India Commercial Branch (09926) SCO 101-106, Sector 17B, Chandigarh स्थायी लेखा सं. / PAN NO: AAACS8577K अपीलार्थी/Appellant बनाम The ITO (TDS-1) प्रत्यर्थी / Respondent

आयकर अपील सं. / ITA No. 625/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

The DCIT/ACIT (TDS) Chandigarh State Bank of India SME Branch, SCO 43-48, Third Floor Sector 17, Chandigarh Now at SCO 103-107 Sector 8 Chandigarh- 160009 स्थायी लेखा सं./PAN NO: AAACS8577K अपीलार्थी/Appellant बनाम

प्रत्यर्थी / Respondent

आयकर अपील सं. / ITA No. 626/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

State Bank of India SAMB Branch, SCO 99-107, First Floor, Sector 8, Chandigarh-160009 स्थायी लेखा सं./ PAN NO: AAACS8577K अपीलार्थी/Appellant बनाम The ITO (TDS-1), Chandigarh

प्रत्यर्थी/Respondent

आयकर अपील सं. / ITA No. 643/Chd/2024 निर्धारण वर्ष / Assessment Year : 2016-17

State Bank of India Rani Ka Bagh Branch (00732) Near Neuro Hospital, Amritsar, Punjab 143001 The JCIT (in-situ) Circle (TDS), Ludhiana

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