2002 (7) TMI 224 - AT - Income Tax

Summary

Issues involved: Appeal against order under s. 201/201(1A) of the Act regarding LTA exemption.

Summary:
The assessee appealed against the order upholding default under s. 201/201(1A) of the Act for not deducting tax on Leave Travel Allowance (LTA) claimed as exempt under s. 10(5). The AO held the assessee in default despite submission of employee-filled proforma supporting LTA disbursement. The first appellate authority affirmed the AO's decision.

The assessee contended that no requirement exists u/r Act to demand railway ticket copies, citing employee-filled forms as proof of LTA disbursement genuineness. The counsel argued that the employer's duty is to deduct tax on estimated income of employees under s. 192, relying on relevant case laws. The Departmental Representative claimed LTA exemption is subject to actual employee utilization, asserting the assessee's default under s. 201(1).

After considering both sides, it was found that the Revenue disputed the assessee's entitlement to LTA exemption under s. 10(5). The AO disallowed relief due to lack of further evidence from employees, alleging LTA amounts were not spent on journeys. However, no evidence was presented to disprove employee declarations. Previous exemptions granted under similar circumstances were noted. The Tribunal concluded that the assessee's actions were honest and fair, as evidenced by past exemptions and employee certifications. Lack of evidence to prove non-utilization of LTA by employees led to the appeal being allowed, with the assessee not deemed in default under s. 201 and interest under s. 201(1A) not levied.