2021 (9) TMI 114 - AT - Income Tax

Disallowance of leave travel concession u/s 10(5) - LTC amount spent on traveling in India - as per DR no exemption is available for the amount spent on foreign travel journey out of LTC, and therefore, there is no merit in the claim of the assessee - HELD THAT - As assessee drew our attention to a certificate from the State Bank of India wherein the Bank has given bifurcation of total amount of LTC given to the assessee as towards foreign travel, and towards domestic travelling. This detail was not with the assessee at the time of assessment, and could not be furnished when called for. Since, the same is now made available to the assessee by the Bank, the same is sought to be taken on record as additional evidence, and based on which, the claim of the assessee is to be allowed - since this detail was not made available to the AO at the time of assessment, and the AO has no occasion to consider the same, therefore in the interest of justice, we restore the issue back to the file of the AO to consider allowability or otherwise of claim - Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
Disallowance of leave travel concession under section 10(5) of the Income Tax Act, 1961.

Analysis:
The assessee appealed against the confirmation of disallowance of leave travel concession (LTC) amounting to ?2,94,594 under section 10(5) of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed the claim as the journey included foreign travel, making the exemption under section 10(5) inapplicable. The first appellate authority upheld the AO's decision. The assessee contended that the LTC expenses for both India and foreign countries were deductible, but faced challenges in obtaining detailed break-up from the employer, State Bank of India, due to administrative reasons. The bank later provided the bifurcation of LTC amount into foreign and domestic travel, which was submitted as additional evidence. The Tribunal noted that the AO did not have the opportunity to consider this evidence and, in the interest of justice, remanded the issue back to the AO for reevaluation based on the new evidence.

The Tribunal observed that the assessee availed LTC for travel in India and abroad but could not provide the break-up due to administrative constraints. The additional evidence from the State Bank of India showed ?1,44,762 for foreign travel and ?2,3,735 for domestic travel. As this evidence was not available during assessment and the AO did not consider it, the Tribunal decided to send the matter back to the AO for a fresh assessment considering the new evidence. The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of considering all relevant evidence in tax assessments.

In conclusion, the Tribunal ordered a reevaluation by the AO based on the additional evidence provided by the assessee regarding the bifurcation of LTC expenses for foreign and domestic travel. The decision highlighted the necessity of considering all relevant evidence in tax assessments to ensure a fair and just determination of tax liabilities.