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TMI Blog2020 (7) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... lculating the estimated tax liability of its employees, it always consider LTC claim as exempt under section 10(5) and the same position. Being followed and accepted consistently in the past years, was followed in the current financial year as well. However, for the first time, after the survey by the tax departments this issue arose for consideration and after the judgment of the Tribunal, the matter got clarified and the assessee bank has duly complied and deposited the outstanding demand along with interest and has taken corrective steps in subsequent years as well. We are of the considered view that there was reasonable cause in terms of section 273B of the Act for not deducting tax by the assessee Bank. In the result, the penalty's levied under section 271C is hereby directed to be deleted. - Decided in favour of assessee. - ITA No.2378/Bang/2019 - - - Dated:- 30-6-2020 - Shri. B. R. Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri Muralidhara H, C.A For the Respondent : Shri Manjeet Singh, Addl. CIT ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the appellant was under bona fide belief that there is no tax liability on LTC inasmuch as the appellant was only reimbursing the LTC claim and no TDS was attracted on the same under the facts and circumstances of the case and thereby appellate order sustaining penalty is liable to be set aside. 8. Without prejudice to the above, the Commissioner of Income Tax (Appeals) has grossly erred in upholding penalty u/s 271C of the Act without appreciating the fact that the appellant was under bona fide belief that there is no tax liability on LTC inasmuch as the same methodology was being followed by the appellant for more than 2 decades under the facts and circumstances of the case and thereby appellate order sustaining penalty is liable to be set aside. 9. Without prejudice to the above, the Commissioner of Income Tax (Appeals) has grossly erred in upholding penalty u/s 271C of the Act without appreciating the fact that the appellant was under bona fide belief that there is no tax liability on LTC inasmuch as the appellant was being guided by Indian Bank Association and the appellant had all along been followed the same principle without any change under the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable cause for applicability of provisions of section 273B, and not deducting tax at source from the payment towards LTC consisting of foreign travel. 5. Aggrieved by order of Ld.CIT(A), assessee is in appeal before us now. 6. At the outset, Ld.AR submitted that, identical issue has been considered by coordinate bench of this Tribunal by order dated 18/11/2019 in assessee s own case for assessment years 2011-12 to 2013-14 on identical issue. It has been submitted that these appeals also arose out of the same survey operation dated 26/12/2013 as in the present case. 7. Referring to paragraph 2 at page 3 of the order is, Ld.AR submitted that assessee had filed explanation by letter dated 09/11/2017 explaining reasons and reasonable cause to support the sufficient cause, however, Ld.AO is did not consider the same. 8. Ld.AR submitted that assessee was under bona fides belief and view that there is no liability for assessee to deduct TDS on LTC reimbursement which included foreign travel, made to its employees since the same was covered and exempted under Section 10 (5) read with Rule 2B of Rules. It was submitted by assessee is that it being a nationalised bank and gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial question of law by the High court lends credence to the bona fides of the acsessee in his action and hence no penalty can he 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. coin 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. 12009] 183 Taxman 219 (SQ and CIT v. Larsen Toubro Ltd 120091 181 Taxman 71 (SC) wherein it was held that the beneficiary of exemption under section 10(5) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s). Therefore, it was held that an assesseee- employer is under no statutory obligation under the income-tax Act, 1961, and/or the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stination. However, the Revenues ease 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 bank explanation to this effect is that section 10(5) and Rule 28 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 hank has undertaken reasonable steps in terms of verifying the assessee's claim towards their LTC claims and is aware of employees travelling to foreign countries as part of their travel itinerary but at the same time, there is an error of judgment on part of the assessee bank in understanding and applying the provisions of section 10(5) of the Act. Therefore, we tire unable to accept the Revenues contention that the assessee bank has not deducted the tax intentionally, fully knowing that the LTC is applicable for travel in India onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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