Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Sanjay Arora & Ms. Kavitha Rajagopal
Appellant by: Shri A. Kumar, Advocate Respondent by: Smt. J.M. Jamuna Devi, Sr. D.R. Date of Hearing: 06.03.2024 Date of Pronouncement: 31.05.2024 O R D E R Per: Sanjay Arora, AM This Appeal by the Assessee is directed against the Order dated 19-07-2022 by the Commissioner of Income Tax (Appeals), Income Tax Department [CIT(A)], confirming the order under sections 201(1) and 201(1A) of the Income Tax Act, 1961 (the Act) dated 17.12.2020 for Assessment Year (AY) 2014-15.
At the outset, it was observed that the appeal, filed on 13.10.2022, is delayed by 24 days. The condonation petition, filed alongwith, is in the form of a sworn affidavit dated 07.10.2022. The assessee explains that the same was received on 19.07.2022 per email, an electronic record u/s. 286 of the Information Technology Act, 2000 (21 of 2000). Transmission per email, as per sec. 12 thereof, must be, to the complete, acknowledged. Rule 127 of the Income Tax Rules, 1962 does not contain any provision which deems the communication as complete by mere transmission. Reliance is also placed on Collector, Land Acquisition vs. Mst. Katji
(AY : 2014-15) State Bank of India v. ACIT and Ors., 66 STC 228 (SC), advocating adoption of a liberal approach in construing the expression ‘sufficient cause’ inasmuch as the litigant does not stand to gain by filing an appeal late. It being admitted that the email received on 19.7.2022 was not noticed by the concerned staff, so that it came to light only later on being down- loaded by the tax consultants, we do not think it necessary to traverse the realm of whether the transmission amounts to service, as stated in r. 127 (supra), in view of the Act 21 of 2000. Interplay of these sections will have to be considered for the purpose. As we see it, the matter is principally factual, as the question of existence or otherwise of ‘sufficient cause’ invariably is. It is nobody’s case, nor could be, that the email, even if it came to the notice of the staff, it would yet be entitled to ignore it as it did not amount to ‘service’ in terms of the Act 21 of 2000, or the Courts not take cognizance of the said omission. In the absence of any mala fides, allowing the assessee the benefit of doubt, we consider it appropriate to condone the 24-day delay. The appeal was, accordingly, admitted for being heard on merits.
The short point arising in this appeal is the maintainability of the order u/ss. 201 & 201(1A) dated 17.12.2020 for financial year (f.y.) 2013-14, since confirmed in first appeal. The assessee-bank failing to deduct tax at source on the reimbursement of Leave Travel Concession (LTC) to it's employees, which did not satisfy the condition of being for travel within India, i.e., for exemption u/s. 10(5) of the Act r/w r. 2B of the Income Tax Rules, 1962, the assessee was deemed to be in default for the tax liability u/s. 192 r/w s. 4, as well as for the compensatory interest u/s. 201(1A) thereon. The assessee does not dispute the same per se; the issue rather having been since settled by the Hon'ble Apex Court (in CA No. 8181/2022, dated 4.11.2022), but contests the demand raised in view of the restraint order by the Hon'ble High Court of Madras dated 25.04.2014 (in WP No. 11991/2014). Per the same, as claimed, employees challenging the withdrawal of the Circular by Indian Bank’s Association (IBA) permitting foreign travel as part of LTC (i.e., as long as the travel originated 2 | P a g e (AY : 2014-15) State Bank of India v. ACIT and terminated in India), by Circular dated 07.04.2014, sought directions for non- deduction of tax at source as well, undertaking to pay the tax if finally found payable. The Hon'ble Court, allowing this prayer, held as under: ‘5. There is no dispute that the Bank would be paying LTC amount to the concerned officers pursuant to the interim order granted by this Court. Interim Order is subject to the result of the writ petition. The learned counsel for the petitioner is correct in his contention that there is no taxable income for deduction at source.
The interim order granted by this Court is explained to the effect that any amount paid to the petitioner towards LTC or re-imbursement of LTC pursuant to the impugned order would not amount to income so as to enable the Bank to deduct tax at source. It is made clear that if the writ petition is dismissed, the employees are liable to pat tax on the amount paid by the Bank.’ The interim relief, which was to continue till the disposal of the WP, was reiterated in MP 02/2024, dated 24/2/2015, and confirmed by the Division Bench of the Hon'ble Court vide it’s order dated 08/8/2022 (in WA No. 1653/2022), holding as: ‘7. Consequently, it is ordered that, the appellant Federation / officers are protected to the extent that, during pendency of this appeal, no recovery shall be effected from their salary and also that, no consequential coercive proceedings shall be instituted by any of the authorities against them. The benefit which is withdrawn by the Management and which is not interfered in writ petition, can not be and is not directed to be continued to be extended to the appellants, during pendency of the appeal.’ 4. We have heard the parties, and perused the material on record, given our careful consideration to the matter.
4.1 In our view, the assessee’s case, seeking refuge in the orders by the Hon'ble High Court, is wholly without merit. Neither the Hon'ble High Court was called upon to, nor has it expressed any opinion in the matter, i.e., the taxability of LTC under the Act in the hands of the employees where the travel involves a visit to a foreign land, i.e., involves a foreign leg. The dispute before it, i.e., the validity of the withdrawal of it’s Circular by IBA permitting LTC on travel involving a foreign leg, is a private one, in which the Revenue has no locus standi. No directions, accordingly, were issued by it to the Revenue. All the Hon'ble Court did was to, impending the resolution of the issue before it, balance the interest of both the sides to the dispute, 3 | P a g e
(AY : 2014-15) State Bank of India v. ACIT i.e., the employees and the assessee-employer, on the employees undertaking to discharge the tax liability at their end, where and to the extent the said withdrawal was found valid. That is, kept the tax deduction at source by the assessee under abeyance with a view to balance the interest of both the sides. The question of the taxability of LTC was not in issue. A decision is an authority for what it actually decides (viz. Goodyear India Ltd. vs. State of Haryana & Anr. [1991] 188 ITR 402 (SC); Mavilayi Service Cooperative Bank Ltd. & Ors. v. CIT [2021] 431 ITR 1 (SC)).
4.2 The order of the Hon'ble High Court is thus in the nature of a compromise arrangement, arrived at under it’s aegis. Nothing more and, nothing less. There is no estoppel against law, which in the instant case, the Income Tax Law, is a public law. Rather, even if therefore the Hon'ble Court had expressed a view – which we reiterate it has not, and which would only be in appropriate proceedings before it, it would be of no consequence inasmuch as the Hon'ble Apex Court has finally ruled thereon, holding the said LTC as not satisfying the requirement of law, which is to be strictly observed, and not tax-exempt. Where the parties take recourse to litigation, they deliberately undertake the risk of being unsuccessful and, accordingly, are liable for consequences that may follow.
4.3 Without prejudice to the foregoing, the directions in WP No. 11991/2014 by the Hon'ble Court are dated 25/4/2014, i.e., fall in fy 2014-15. The year for which the assessee is deemed to be in default for not deducting tax at source, is fy 2013-14, during which the impugned payment/reimbursement had already taken place. How we wonder, then, even as observed by us during hearing – to no answer, the said directions, even assuming the same to restrain the Revenue – which, we are emphatic, do not, have a retrospective effect, for the assessee to draw mileage therefrom? We have already clarified that there is no estopple against law, and any such directions could be only in appropriate proceedings and, in any case, stand since reversed.
(AY : 2014-15) State Bank of India v. ACIT We are conscious that the withdrawal of it’s Circular by IBA, which is under challenge, is vide Circular dated 07/4/2014, i.e., during fy 2014-15. The same, rather than detract from, validates the afore-stated. That is, the said withdrawal, as indeed the stay on it’s operation, comes into effect from a later date, with no bearing on the concluded transactions, i.e., occurring during fy 2013-14, and w.r.t. which the assessee is deemed to be in default. The Revenue in fact stands impleaded in the proceedings before the Hon’ble Court only on 07/3/2018. True, the earlier Circular permitting LTC was operative prior to 07/4/2014, but, then, the same renders the ruling by the Hon’ble Court, w.r.t. the assessee makes out a case, irrelevant? The taxability or otherwise of LTC is to be decided w.r.t. the relevant provisions of law.
4.4 The assessee’s challenge, thus, whichever way one may look at it, is frivolous; in fact, deserving imposing cost, particularly considering that the matter has since received consideration by the Hon'ble Apex Court. Be that as it may, it may well be that the individual employees had honoured their undertaking (i.e., to the Hon'ble Court), which led it to direct in the manner it did, and deposited the tax payable on the relevant LTC to the credit of the Central Government. Equally, it may also be that the Revenue, to which such bar was not applicable, has since collected the said tax from the concerned employee/s inasmuch as TDS is but one mode of tax recovery. Where so, the assessee’s liability is restricted only to the interest component u/s. 201(1A) of the Act, i.e., for the delay in remittance of the tax that ought to have been deducted u/s. 192 of the Act, and its payment by the payee-employee (refer: Hindustan Coco Cola Beverages P. Ltd. v. CIT [2007]293 ITR 226 (SC)), as indeed provisos to ss. 201 and 201(1A)). The burden, needless to add, to prove the facts, i.e., the discharge of the tax due – which shall have to be employee-wise, with credible material, and to the satisfaction of the Assessing Officer (AO), would be on the assessee. To that extent, as indeed the interest thereon, save that corresponding to the actual delay, the assessee shall not be deemed to be in default.