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2022 (8) TMI 219 - AT - Income TaxAssessee in Default for non deduction of TDS - Validity of order u/s 201(1) and 201(1A) - period of limitation - TDS u/s 192 - re-imbursement made under Leave Fare Concession ( LTD ) scheme of the State Bank of India to employees who have carried out circuitous tour, covering foreign destination - benefit of exemption u/s 10(5) - AO denied the benefit of Section 10(5) observing that the bank was bound to deduct tax u/s 192 - Assessee argued that order of assessment passed is beyond jurisdiction of the AO on account of being passed after prescribed period of limitation - HELD THAT - There is no dispute to the fact that for assessment year 2010-11 summons was issued on 20.01.2018 and notice u/s 201(1)/ 201(1A) of the Act were issued on 29.01.2018 while in case also the summons were issued on 20.01.2018 and notice was issued on 29.01.2018. The assessment orders u/s 201(1)/ 201(1A) of the Act have been passed on 05.03.2018. There is no doubt that Section 201(3) of the Act provides that the assessment orders under sub section 1 of Section 201 against assessee in default for failure to deduct the whole or any part of the tax from a person resident in India can be passed before expiry of two years from the end of financial year in which the payment is made. Co-ordinate Bench at Delhi in the case of HCL Technologies Ltd. 2020 (7) TMI 643 - ITAT DELHI has also relied the Hon ble Gujarat High Court judgment 2016 (2) TMI 414 - GUJARAT HIGH COURT . The distinction attempted to be brought by Ld. Sr. DR by submitting that under the un-amended sub section 3 of Section 201 there were two clauses and first clause provided two years limitation was in case where statement of TDS were filed and there was limitation of six years where no such statement is filed and has no foundation because in the present case admittedly the statement was filed by the assessee and the question was only with regard to the issue if TDS was required to be deducted in cases involving payment of LTC reimbursements to employees who had taken circuitous routes involving travel abroad to one or more domestic destinations. There is no doubt in the mind of Bench that the impugned order of assessment passed was without jurisdiction as the same was passed beyond the limitation period of two years and accordingly the ground no. 1 as raised stands allowed in favour of the assessee declaring assessment order to be void ab initio requiring no further determination of issues.
Issues Involved:
1. Jurisdiction and limitation of the assessment order under Section 201(1)/(1A) of the Income Tax Act, 1961. 2. Denial of exemption under Section 10(5) for Leave Travel Concession (LTC) involving foreign travel. 3. Treatment of the bank as an assessee in default for non-deduction of TDS on LTC reimbursements. 4. Charging of interest under Section 201(1A). Detailed Analysis: 1. Jurisdiction and Limitation of the Assessment Order: The primary contention was whether the assessment order passed by the Assessing Officer (AO) was beyond the prescribed period of limitation. The appellant argued that the order dated 05.03.2018 was barred by limitation, citing Section 201(3) as amended by Finance (No. 2) Act, 2009, which provided a limitation period of two years from the end of the financial year in which the TDS statement was filed. The appellant had filed the TDS return for F.Y. 2010-11 by 15.05.2011, making the last date for passing the order 31.03.2014. The Tribunal referenced the Gujarat High Court's judgment in Tata Teleservices vs. Union of India, which held that the amendment to Section 201(3) by Finance Act (No. 2) of 2014 was not retrospective. Therefore, the Tribunal concluded that the assessment order was passed beyond the limitation period and was void ab initio. 2. Denial of Exemption under Section 10(5) for LTC Involving Foreign Travel: The AO had denied the exemption under Section 10(5), stating that the benefit is available only for travel within India. The AO observed that the employees had undertaken circuitous journeys involving foreign travel, which disqualified them from the exemption. The First Appellate Authority (FAA) upheld this view, stating that the tax exemption benefit goes out of the realm of Section 10(5) when the journey involves foreign travel. The Tribunal noted that the issue of TDS on LTC claims was pending before the Supreme Court and that the Delhi High Court had stayed the judgment against the present assessee. Additionally, the Mumbai Tribunal in a similar case had held that the employer could not be faulted for non-deducting TDS on LTC claims involving foreign travel. 3. Treatment of the Bank as an Assessee in Default for Non-Deduction of TDS: The AO treated the bank as an assessee in default under Section 201(1)/(1A) for not deducting TDS on LTC reimbursements involving foreign travel. The FAA confirmed this, stating that the bank was obligated to deduct TDS on such reimbursements. The Tribunal, however, did not delve into this issue in detail as the primary ground of limitation was decided in favor of the assessee. 4. Charging of Interest under Section 201(1A): The FAA had upheld the AO's decision to charge interest under Section 201(1A) for short deduction of TDS. The Tribunal, having declared the assessment order void ab initio due to being time-barred, did not find it necessary to address this issue further. Conclusion: The Tribunal allowed the appeals, setting aside the impugned assessment orders on the ground that they were passed beyond the prescribed period of limitation. Consequently, it did not require further determination of the other issues raised. The order was pronounced in the open court on 3rd August 2022.
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