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TMI Blog2020 (3) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is aggrieved by the decision of ld CIT(A) in confirming the penalty levied by the AO u/s 271C of the Act. 3. We heard the parties and perused the record. The assessee is a banking institution. A survey u/s 133A of the Act was conducted in the hands of the assessee in order to verify compliance of TDS provisions. It was noticed that the assessee has provided LTC facility to its employees and some of the employees have undertaken foreign travel by availing LTC facility. The exemption granted u/s 10(5) of the Act was available only to travel undertaken within India. It was noticed that the assessee herein has extended exemption u/s 10(5) of the Act in respect of travel undertaken by the employees to foreign destination also. 4. Since the travel undertaken outside India is not eligible for exemption u/s 10(5) of the Act, the survey officials held that assessee should have deducted TDS on the LTC amount also without granting exemption u/s 10(5) of the Act. Since there was default on the part of the assessee in not deducting TDS for payments made towards foreign travel, an order u/s 201(1) was passed in the hands of the assessee. Subsequently penalty order u/s 271C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pparent that the addition is certainly debatable. In such circumstances no penalty can be levied u/s 271C'. In this regard the learned counsel for the Assessee placed reliance on the decisionvf the Hon'ble Karnataka High Court in the case of CIT v. Ankita Electronics Pvt. Ltd. 379 ITR 50 (Kar) wherein it was held that the admission of substantial question of law by the High Court lends credence to the bona .fides of the assessee in his action and hence no penalty can be imposed on such additions/defaults. He also placed reliance on a decision of the Hon 'ble ITAT Jaipur Bench in the case of State Bank of India Vs. ACIT (2019) 101 taxmann.com 61 (Jaipur-Trib.) wherein on identical default of non deduction of tax at source on perquisite not exempt u/s.10(5) of the Act and imposition of penalty for such failure u/s.271C of the Act, the ITAT Jaipur deleted penalty imposed u/s.271C of the Act, observing as follows:- 10. We also refer to Hon'ble Supreme Court decisions in case of CIT v. I.T.I. Ltd. (2009) 183 Taxman 219 (SC) and CIT v. Larsen Toubro Ltd. [2009] 181 Taxman 71 (SC) wherein it was held that the beneficiary of exemption under section 10(5) is an indiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by the employees towards their LFC claims. It appears that the assessee bank has looked at these 12 employees' claim broadly, as in other cases, in terms of actual travel being undertaken, the designated place being in India and the amount of claim not exceeding the economy fare of the national carrier by the shortest route to the place of destination. However, the Revenue's case is that what the assessee bank has failed to consider is that the travel plan includes the foreign leg of travel and corresponding travel expenses which is not eligible for exemption under section 10(5) of the Act. However, the assessee's bank explanation to this effect is that section 10(5) and Rule 2B doesn't place a bar on travel to a foreign destination during the course of travel to a place in India and there is nothing explicit provided therein to prohibit such travel in order to deny the exemption. Having considered the rival submissions and facts on record, we are of the opinion that the assessee bank has undertaken reasonable steps in terms of verifying the assessee's claim towards their LFC claims and is aware of employees travelling to foreign countries as part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Karnataka High Court and the question whether the Assessee is guilty of non deduction of tax at source or not is to be decided in such appellate proceedings. In this background of facts, the question is whether penalty can be imposed on the Assessee u/s.271C of the Act. The Hon 'ble Karnataka High Court in the case of Ankita Electronics Pvt.Ltd. (supra) had an occasion to deal with identical issue and the Court held as follows:- 6. While dismissing the appeal, the Tribunal has observed that the additions in respect of which penalty under Section 271(1)(c) of the Act was levied, have been admitted by the High Court for consideration and thus found that the additions made were debatable and would lead credence to the bonafides of the assessee. It thus held that the matter of imposing penalty under Section 271(1)(c) of the Act, was not exigible in the case on hand. 7. The Tribunal placed reliance on decision of the 'TAT, Mumbai in the case of Nayan Builders Developers (P.) Ltd. v. ITO [IT Appeal No. 2379/Mum/2009, dated 18-3- 2011], which had also held that the admission of substantial questions of law by the High Court lends credence to the bona fides of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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