2019 (1) TMI 637 - AT - Income Tax

TDS u/s 192 - Short deduction of tax U/s 201 and interest u/s 201(1A) - reimbursement made to Officers for foreign travel leg of LTC claim - assessee bank default for short-deduction of TDS on LFC/LTC claim relating to foreign leg of the travel of its employees - eligibility for exemption u/s 10(5) r/w Rule 2B - Held that - As decided in SBI vs. ACIT(TDS) 2019 (1) TMI 145 - ITAT JAIPUR the order of the ld CIT(A) is hereby affirmed where he has held the assessee bank to be assessee in default for short-deduction of TDS on LFC/LTC claim relating to foreign leg of the travel of its employees being not eligible for exemption under section 10(5) r/w Rule 2B. The grounds of appeal taken by the assessee are accordingly dismissed.

Summary

Issues:
Appeal against order of ld. CIT(A) for Assessment Year 2013-14 regarding LTC benefit under section 10(5) for foreign destination in LFC Payment, rejection of appeal against demand raised by ITO TDS, disallowance of LTA, and determination of tax and interest liability.

Analysis:
1. The appeal was filed by the assessee against the order of ld. CIT(A) for Assessment Year 2013-14. The grounds of appeal included the rejection of LTC benefit under section 10(5) for a foreign destination in LFC Payment. The ITO TDS had raised a demand for not giving LTC benefit under section 10(5) due to the involvement of a foreign destination in LFC Payment made by the bank's officers. The ITO TDS passed an order under section 201(1) read with section 201(1A) for deposit as Assessee on default. The CIT(A) upheld the decision, resulting in a demand of &8377; 369393. The appellant contended that no TDS was required to be deducted as the designated place of travel was in India, even though the travel claim included a foreign country. The Tribunal found that the assessee was aware of the employees' foreign travel but did not deduct TDS intentionally, as required by law.

2. The ITO(TDS) observed that the assessee bank reimbursed LFC/LTC claims of certain employees, including a foreign leg of travel. Referring to Section 10(5) of the Income Tax Act and Rule 2B of Income Tax Rules, the ITO(TDS) held that the exemption for LTC/LFC is only available for visits to places in India. The bank was held as "assessee in default" for not deducting TDS on the reimbursement for travel outside India. An order was passed under Section 201(1)/201(IA) determining the tax and interest liability of &8377; 369393.

3. On appeal, the ld. CIT(A) relied on a decision of the Coordinate Bench in a similar case and upheld the ITO(TDS) decision. The appellant argued that no TDS was required as the travel was to a designated place in India. The Tribunal noted that the employees traveled to foreign countries, and the assessee bank was aware of this fact during the settlement of LTC/LFC bills. The Tribunal upheld the decision that the assessee was in default for not deducting TDS on the reimbursement of expenditure incurred on foreign travel.

4. The Tribunal found that the facts of the case were similar to previous decisions by the Coordinate Bench. The Tribunal confirmed the CIT(A)'s decision that the assessee was in default for short-deduction of TDS on LFC/LTC claim related to foreign travel. The grounds of appeal taken by the assessee were dismissed, and the appeal was ultimately rejected.

In conclusion, the Tribunal affirmed the decision that the assessee bank was in default for not deducting TDS on the reimbursement related to foreign travel, as it did not qualify for exemption under section 10(5) r/w Rule 2B. The appeal was dismissed, and the order was pronounced on 07/01/2019.