STATE BANK OF INDIA HR SECTION ADMIN UNIT BRANCH,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-18(2) TDS C-3(1), BANGALORE

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ITA 1095/BANG/2017Status: DisposedITAT Bangalore28 September 2018AY 2011-127 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that exemption under Section 10(5) of the Income Tax Act is only for travel within India. Since employees traveled abroad, the assessee ought to have deducted TDS on the amounts paid.

What were the facts?

The assessee, State Bank of India, claimed exemption for Leave Travel Concession (LTC) paid to employees who traveled abroad. The Assessing Officer (AO) held the assessee in default for not deducting Tax at Source (TDS) on these amounts.

What were the issues?

Whether reimbursement of LTC for foreign travel is exempt under Section 10(5) and if the employer is liable for TDS default for not deducting tax on such payments.

Which sections of the Income-tax Act were involved?

Section 10(5),Section 201(1),Section 201(1A)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, BENGALURU BENCH A, BENGALURU

Before: SHRI. JASON P. BOAZ & SHRI. LALIET KUMAR

For Respondent: Shri. Siddappaji R. N. Addl. CIT

These are nine appeals, filed by three different assessees of State Bank of India group, for the assessment orders 2011-12 to 2013-14, against respective order of the CIT (A) -13, Bengaluru.

2.

The assessees have raised the following common grounds of appeal, but for change in the figures for the respective years :

ITA.1095 to 1103/Bang/2017 Page - 3 ITA.1095 to 1103/Bang/2017 Page - 4

3.

On 01.01.2018 the Ld. AR appeared before this Tribunal and requested for clubbing of these appeals and accordingly these appeals were clubbed and heard together and a common order is passed for the sake of convenience and brevity.

4.

Today none appeared on behalf of the assessee although notice was serviced and further on earlier occasion the assessees were represented by the counsel. Therefore in the absence of the appearance of the Ld. AR, we proceed to dispose the matters with the assistance of Ld. DR for Revenue and the material on record.

5.

At the outset, the Ld. DR submitted that the issues raised in the appeals of the assessee are covered against the assessee by the decision of the coordinate bench in the matter of Syndicate Bank v. ACIT [80 taxmann.com 179] where the Tribunal relying upon the its own decision in the assessees’ own case [67 taxmann.com 81] decided the issue against the assessees.

6.

We have heard the Ld. DR and perused the record. The CIT (A) in para 6.5 of his order had held as under : 6.5 I am in agreement with the A.O. that as per the provisions of Section 10(5) of the Act, only the reimbursement of expenses, which were incurred on travel of employees and his family to any place in India subject to certain conditions, are exempt. Since the employee of the assessee has travelled to foreign countries, the benefit of exemption available under section 10(5) of the Act cannot be granted. At the time of advancement of LTC amount, the employer may not have been aware of it, but at the time of settlement of bills of LTC/LFC, complete details are obtained by the employer and are available to it. Once it is noticed that the employee has visited foreign ITA.1095 to 1103/Bang/2017 Page - 5

countries and he is not entitled for exemption of reimbursement of LTC under section 10(5) of the Act, the employer ought to have deducted Tax at Source treating the amount as not exempt and as being part of the employee's total salary. Since the assessee has intentionally not deducted Tax at Source on a payment, to which the employee is not entitled for any exemption, the Assessing Officer has rightly held the assessee to be in default and raised the demand under section 20 1(1) and 201(1A) of the Act.

We have gone through the provision of law as well as the decision of the Tribunal in the matter of Syndicate Bank (supra) where in Para 8 of the order it was held as under: 8. As rightly highlighted by the Hon'ble Tribunal, Lucknow Bench (supra) and careful perusal of the provisions of s.10(5) of the Act, we are of the view that the said 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 employees to travel abroad under the garb of benefit of LTC available by virtue of s.10(5) of the Act. However, in the present case the employees of the assessee-Bank have travelled outside India and raised claims of their expenditure incurred therein. There is no dispute that the assessee-Bank may not be aware with the plan of travel of its employees initially, however, at the time of settlement of LTC/LFC bills, the employees should have placed comprehensive details before the assessee-Bank as to where they have travelled/visited and raised the claims, that means to say, the assessee-Bank was well aware of the fact that its employees have travelled in foreign countries too by availing LTC/LFC for which they were not entitled for exemption u/s. 10(5) of the Act. Such being the scenario, the assessee-Bank cannot now plead that it was under the bona fide belief that the amounts claimed were exempt u/s. 10(5) of the Act. Thus, the Assessing Officer(TDS) was within her domain to term/charge that the assessee-Bank was under obligation to deduct TDS on such payments. Since the assessee-Bank had ITA.1095 to 1103/Bang/2017 Page - 6 failed to do so, the A.O.(TDS) had rightly treated the assessee an 'assessee in default' u/s. 201(1) of the Act. The view taken by the coordinate bench hereinabove is in conformity with the provision of law in Section 10(5) of the Act and there is no distinguishable fact, brought to our notice by the DR for the revenue. As the facts and dispute raised before us, squarely covered by the decision of Syndicate Bank case (supra) therefore in our view, the appeals of the three assessment years of the assessee mentioned herein above in respect to AYs. 2011-12 to 2013-14 are required to be dismissed on merit.

7.

We may also like to point out that even otherwise the appeals of the assessee are liable to be dismissed on the ground of non- prosecution, as none appeared on behalf of the assessee before us despite service, hence the appeals are dismissed for non prosecution as well as on merits mentioned herein above.

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