2022 (8) TMI 746 - AT - Income Tax

Demand u/s 201(1)/ 201(1A) - period of limitation - non deduction of TDS u/s 192 on 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 was considered as part of taxable income of those employees - contention of Ld. Counsel for the assessee is that the order of assessment passed is beyond jurisdiction of the AO on account of being passed after prescribed period of limitation - HELD THAT - It can be appreciated that Ld CIT(A) has fallen in factual error in mentioning wrong dates of filing statement and thereby holding applicability of amended provisions. He considered the date of filing correctional statement to invoke the amended provisions which had come in to effect from 1/10/14. It can be observed that there is no dispute to the fact that in regard to present appellants, for assessment year 2010-11 summons were issued in January 2018 and the assessment orders u/s 201(1)/ 201(1A) of the Act have been passed on 30rd or 31st March 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. Judgment of Hon ble Gujarat High Court in Tata Teleservices vs. Union of India 2016 (2) TMI 414 - GUJARAT HIGH COURT relied by Ld. Counsel for appellant has held that Section 201(3) as amended by Finance Act (no. 2) of 2014 shall not be applicable retrospectively. 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.

Summary

Issues involved:
Three appeals by different branches of State Bank of India against order by Commissioner of Income Tax regarding reimbursement under Leave Fare Concession (LFC) scheme and TDS deduction. Jurisdictional issue due to limitation period for passing assessment orders under Section 201(1) of the Income Tax Act, 1961.

Analysis:

Issue 1: Reimbursement under LFC scheme and TDS deduction
The appeals were filed regarding reimbursement made under the LFC scheme to employees involving foreign travel and the denial of exemption under Section 10(5) of the Income Tax Act. The Assessing Officer (AO) observed that the exemption under Section 10(5) is available only for travel within India, not for international travel. The contention was that the exemption is for the amount incurred by the shortest route to the destination, and if the travel is circuitous, the exemption is available for the farthest destination through the shortest route.

Issue 2: Jurisdictional issue
The primary contention was that the assessment order was beyond the jurisdiction of the AO due to being passed after the prescribed period of limitation. It was argued that the AO had issued notices in January 2018, and the assessment orders were passed in March 2018, which exceeded the limitation period under Section 201(3) of the Act. The argument was supported by citing relevant case law and judgments, emphasizing that the amended provisions were not applicable retrospectively.

Analysis of the Judgment:
The Tribunal found that the assessment orders were indeed passed beyond the limitation period of two years as prescribed under Section 201(3) of the Act. The Tribunal referred to judgments by the Hon'ble Gujarat High Court and previous cases to support the conclusion that the amended provisions were not retrospective. The Tribunal also noted that the AO's jurisdiction was limited by the statutory time frame for passing assessment orders. Consequently, the first ground raised by the assessee was allowed, declaring the assessment order void ab initio.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned demands in the assessment orders due to the jurisdictional issue of passing assessment orders beyond the statutory limitation period. The judgment emphasized the importance of adhering to the prescribed timelines for passing assessment orders under the Income Tax Act.