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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No. 164/JP/2016
PER SHRI KUL BHARAT, JM.
This appeal by the assessee is directed against the order of ld. CIT (A)-3,
Jaipur dated 18.11.2015 pertaining to A.Y. 2012-13.
The Assessee has raised the following grounds of appeal :-
“The Bank objects to the order u/s 201(1) read with 201(1A) dated 18.11.2015 received on 01.01.2016 passed by the Commissioner of Income Tax Appeals-3 for the aforesaid assessment year on the following among other grounds:
The order of the Ld. CIT, on aspects agitated in this appeal, is bad in law, contrary to the provisions off law and facts of the case and without appreciation of the facts and circumstances of the case in their right perspective.
The Ld. CIT erred in passing an order under section201(1) /201(1A) and in raising demand of Rs. 10,29,292 (i.e. tax of Rs. 7,70,720 and interest of Rs. 2,58,292) on the basis that tax was not deducted at source on payment of Leave Travel Concession.
2 ITA No. 164/JP/2016 State Bank of India, Jaipur.
The Ld. CIT erred in not appreciating that the benefit of Leave Travel Concession is available to the Bank’s employee even in cases where the journey undertaken by an employee involves a foreign leg but the employee’s designated placed is in India and he actually visits the place as designed.
The ld. CIT erred in making the following observation, holding as under:
“ I have carefully considered the facts of the case, findings of the AO and submission of the appellant. In light of above my findings are as under:- I find that expense allowed by the Bank to 16 Employees for travel out of India (as part of LTC) is not covered by exemption under 10(5). Exemption was allowed by the Bank by treating the notional expenses on shortest route in India even though the employees did not ravel there at all. In fact they traveled outside the country which is not eligible for exemption u/s 10(5) at all the TDS should naturally be deducted on the same. Since the assessee failed to deduct the TDS on the same, AO right raised demand u/s 201(1) and interest u/s 201(1A). Accordingly appeal is dismissed.” The above observations are without any basis and are contrary to the facts of the case. The appellant objects to these observations/conclusions.
Without prejudice to the above, the Ld. CIT erred in not appreciating the bona fide belief of the Bank in granting benefit of Leave Travel Concession paid to the Bank’s employees who travelled out off India and held the Bank to be as assessee in default.
Without prejudice to the above, the Ld. CIT erred in not appreciating that the employee is entitled to 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 place as designated even in cases where the journey undertaken by an employee involves a foreign leg.
Without prejudice to the above, the Ld. CIT erred in applying a flat rate of 30% for computation of TDS instead of applying the actual income-tax rate applicable case of each employee.
Without prejudice to the above, the ld. CIT erred in computing interest for a period of 35 months (i.e. from 1 April 2011 to 28 February 2014) instead
3 ITA No. 164/JP/2016 State Bank of India, Jaipur.
of considering the actual date of payment of the LTC in case of each employee.
The ld. CIT erred in not appreciating the submissions made by the Bank in the correct perspective.
Each one of the above grounds of appeal is without prejudice to the other.
The Bank reserves the right to amend, alter or add to the grounds of appeal.”
At the outset, Ld. Representatives pointed out that identical grounds were
raised in assessee’s appeal pertaining to the assessment year 2013-14 and 2014-15
in ITA No. 145/JP/2017 and ITA No. 146/JP/2017. This fact is duly conceded by the
Ld. Counsel for the assessee.
The Ld. Counsel for the assessee submitted that the appeal pertaining to the
subsequent years have been decided by this Hon’ble Tribunal vide order dated
28/03/2017. Both the parties have agreed that the facts are identical in this year as
well.
We have heard the rival contentions, perused the material available on
record. The Co-ordinate Bench of this Hon’ble Tribunal in ITA No. 145/JP/2017 has
decided the issue by observing as under:-
“ 9. We have heard the rival submissions and perused the material available on record. The facts of the case are pari-materia with the decision of the Co-ordinate Bench in case of SBI vs DCIT, TDS, Kanpur (supra) wherein the relevant findings are as under:
“8. Having carefully examined the orders of the lower authorities in the light of the rival submissions and the documents placed on record, we
4 ITA No. 164/JP/2016 State Bank of India, Jaipur. find that as per provisions of section 10(5) of the Act, only that reimbursement of travel concession or assistance to an employee is exempted which was incurred for travel of the individual employee or his family members to any place in India. Nowhere in this clause it has been stated that even if the employee travels to foreign countries, exemption would be limited to the expenditure incurred to the last destination in India. For the sake of reference, we extract the provisions of section 10(5) of the Act as under:- “10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- [(5) in the case of an individual, the value of any travel concession or assistance received by, or due to, him: (a) From his employer for himself and his family, in connection with his proceeding on leave to any place in India: (b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,
Subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the central Government: 9. On perusal of this section, we are of the view that this provision was introduced in order to motivate the employees and also to encourage tourism in India and, therefore, the reimbursement of LTC/LFC was exempted, but there was no intention of the Legislature to allow the employee to travel abroad under the garb of benefit of LTC available by
5 ITA No. 164/JP/2016 State Bank of India, Jaipur. virtue of section 10(5) of the Act. Undisputedly, in the instant case the employees of the assessee have travelled outside India in different foreign countries and raised claim of their expenditure incurred therein. No doubt, the assessee may not be aware with the ultimate plan of travel of its employees, but at the time of settlement of the LTC/LFC bills, complete facts and available before the assessee as to where the employees have travelled, for which he has raised the claim ;meaning thereby the assessee was aware of the fact that its employees have travelled in foreign countries, for which he is not entitled for exemption under section 10(5) of the Act. Thus, the payment made to its employees is chargeable to tax and in that situation, the assessee is under obligation to deduct TD on such payment, but the assessee did not do so for the reasons best known to it. We have carefully examined the Circular placed by the Ld. Counsel for the assessee during the course of hearing, in which a reference was made to the interim order of the Hon’ble Madras High Court has permitted the banker not to deduct TDS on or after 16/2/2015 on the amount paid/reimbursed to the employees of the bank in respect of LTC/HTC availed where the employee has visited a foreign city/country, irrespective of the fact where the LFC bills were submitted and paid prior to 16/2/2015, meaning thereby this circular was passed consequent to the interim order of the Hon’ble Madras High Court. But in the present case, the journey was undertaken in the year 2012 and the bill were settled during that year; meaning thereby at the relevant point of time when the bills were settled, there was no order of the Hon’ble Madras High Court and the assessee was under obligation to deduct TDS on the reimbursement of expenditure incurred by the assessee on foreign travel. In the light of these facts, we are of the considered opinion that
6 ITA No. 164/JP/2016 State Bank of India, Jaipur. the Revenue has rightly held the assessee to be in default, as the assessee has not deducted TDS intentionally on the reimbursement of expenditure incurred on LTC/LFC. Moreover, the Ld. CIT(A) has directed the Assessing Officer to recalculate the liability of TDS at 10%. We , therefore, find no infirmity in the order of the Ld. CIT(A) and we confirm the same.” 10. Similarly, the decision of the Co-ordinate Bench in case of Om Prakash Gupta vs ITO (supra) also support the case of the Revenue wherein the Co- ordinate Bench has held as under:- “12. The said sub-section provides that where as individual had received travel concession or assistance from his employer or proceeding on leave to any place in India, both for himself and his family, then such concession received by the employee is not taxable in the hands of the employee. Similar exemption is allowed to an employee proceeding to any place in India after retirement of service or after the termination of his service. The provisions of the Act are in relation to the travel concession/assistance given for proceeding on leave to any place in India and the said concession is thus exempt only where the employee has utilized the travel concession for travel within India. Further under rule 2B of the Income Tax Rules the condition for allowing exemption under section 10(5) of the Act are laid down. The conditions are in respect of various modes of transport. However, the basic condition is that the employee is to utilize the travel concession in connection with is proceeding to leave to any place within India, either during the course of employment or even after retirement of service or after termination of service. Reading of section 10(5) of the Act and Rule 2B of the Rules in conjunction lays down the guidelines for claiming exemption in relation to the travel concession received by an employee from his employer or former employer, for proceeding on leave to any place in
7 ITA No. 164/JP/2016 State Bank of India, Jaipur.
India. The person is to undertake the journey to any place in India and thereafter return to the place of employment and is entitled to reimbursement of expenditure on such travel between the place of employment and destination in India. Rule 2B of the Rules further lays down the conditions that the amount to be allowed as concessions is not to exceed the air economy fair of the National Carrier by the shortest route to the destination in India. The said condition in no way provides that the assessee is at liberty to claim exemption out of his total ticket package spent on his overseas travel and part of the journey being within India. We find no merit in the claim of the assessee in the present case and we are in conformity with the observation of the CIT(A) in this regard, which has been reproduced by us in the paras hereinabove. In view thereof, we reject the claim of the assessee of exemption under section 10(5) of the Act. The ground of appeal No. 3 raised by the assessee is thus dismissed. 11. No contrary authority has been brought to the notice of the Bench. We, therefore, do not see any reason to deviate from the said view taken by the Co-ordinate Benches. In the result, the ground nos. 1-6 of the assessee’s appeal are dismissed. 10. Regarding ground no. 7, it is noted that the Ld. CIT(A) has already held that flat rate of 30% applied by AO in each case for computation of TDS liabilities not in accordance with the provisions of section 192 and the AO has been directed to compute TDS in case of each employee according to the tax slab in which each employee falls. This ground is thus in fructuous and is hereby dismissed. 11. Regarding ground no. 8, the Ld. CIT(A) has already the AO to compute interest u/s 201(1A) with reference to the actual date of payment of LTC in each case. This ground is thus in fructuous and is hereby dismissed. 12. In the result, we confirm the findings of the Ld. CIT(A) and the appeal of the assesee is dismissed.”
8 ITA No. 164/JP/2016 State Bank of India, Jaipur.
There is no change into facts and circumstances. Therefore, taking a
consistent view, we hereby dismiss the grounds raised in this appeal.
In the result, appeal of the assessee, in ITA No. 164/JP/2016 is dismissed.
Order is pronounced in the open court on Thursday, the 27th day of April 2017.
Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 27 /04/2017. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
The Appellant- State Bank of India, Jaipur Admin office I, A-5. 2. The Respondent – The ACIT (TDS), Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 164/JP/2016)
vkns'kkuqlkj@ By order,
सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत