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TMI Blog2024 (2) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... s High Court in its interim order held that if the writ petition is dismissed, the employees are liable to pay tax on the amount paid by the bank. However, the Hon'ble Supreme Court in the case of the assessee in [ 2022 (11) TMI 426 - SUPREME COURT] affirmed the order of the Hon'ble Delhi High Court in holding that the assessee is liable to deduct tax at source on the payments made to its employees towards LTC bills. In view of the decision of the Hon'ble Supreme Court, the interim stay granted by the Hon'ble Madras High Court is of no help to the assessee bank. Thus, respectfully following the decision of the Hon'ble Supreme Court, we hold that the assessee is in default within the meaning of section 201(1)(1A) for non deduction of tax under Section 192 of the Act on the reimbursement of LTC (Leave Travel Concession) /LFC (Leave Fare Concession) and HTC (Home Travel Concession). Appeals of the assessee are dismissed. - SH. KUL BHARAT, JUDICIAL MEMBER AND DR. B. R. R. KUMAR, ACCOUNTANT MEMBER For the Assessee : Sh. Vivek Gupta, CA For the Revenue : Ms. Dipti Kandola, Sr. DR ORDER PER BENCH: The present appeals have been filed by the assessee against the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be no question of TDS on this payment. All the same, LTC has to be availed by an employee within certain limitations, prescribed by the law. Firstly, the travel must be done from one designated place in India to another designated place within India. In other words, LTC is not for a foreign travel. Secondly, LTC is given for the shortest route between these two places. Admittedly, the employees of SBI in the present case, had done their travel not just within India but their journey involved a foreign leg as well. It was also not the shortest route, consequently, according to the Revenue this was not a travel from a designated place within India to another designated place in India and thus it was in violation of the statutory provisions and hence the payment made to its employees by the Bank could not be exempted, and the Bank ought to have deducted Tax at source, while making this payment. To give an example of one of the employees of the appellant who availed LTC taking a circuitous route of Delhi-Madurai- Columbo-Kuala Lampur-Singapore-Columbo-Delhi and his claim was fully reimbursed by the appellant and no tax was deducted under Section 192(1) for the same. 4. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed Provided further that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. 8. Section 10(5) which exempts payments received as LTC with which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shortest route to the place of destination; and (iii) where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed on or after the 1st day of October, 1997, between such places, the amount eligible for exemption shall be: (A) where a recognised public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and (B) where no recognised public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail.] 10. The appellant before us is a Public Sector Bank, namely, State Bank of India (SBI). The Revenue has held the appellant to be an assessee in default , for not deducting the tax at source of its employees. 11. These proceedings started with a Spot Verification under Section 133A when it was discerned by the Revenue that some of the employees of the assessee-employer had claimed LTC even for their travel to places outside India. These employees, even though, raised a cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or it. We leave it at that. 16. It can be seen from the records that many of the employees of the appellants had undertaken travel to Port Blair via Malaysia, Singapore or Port Blair via Bangkok, Malaysia or Rameswaram via Mauritius or Madurai via Dubai, Thailand and Port Blair via Europe etc. It is very difficult to appreciate as to how the appellant who is the assessee-employer could have failed to take into account this aspect. This was the elephant in the room. 17. The contention of the Appellant that there is no specific bar under Section 10(5) for a foreign travel and therefore a foreign journey can be availed as long as the starting and destination points remain within India is also without merits. LTC is for travel within India, from one place in India to another place in India. There should be no ambiguity on this. 18. The second argument urged by the appellant that payments made to these employees was of the shortest route of their actual travel cannot be accepted either. It has already been clarified above, that in view of the provisions of the Act, the moment employees undertake travel with a foreign leg, it is not a travel within India and hence not covered under the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istake by the assessee-employer in calculating the estimated income cannot be accepted since all the relevant documents and material were before the assessee-employer at the relevant time and the assessee employer therefore ought to have applied his mind and deducted tax at source as it was his statutory duty, under Section 192(1) of the Act. 22. In conclusion we do not find any reason to interfere with the order passed by the Delhi High Court. The appeal is dismissed. 5. We have perused the order of the Hon'ble Madras High Court in MP No.2 of 2014 in WP No. 1199/2014 dated 16.02.2015 referred by the ld. AR and observed that a writ petition was filed challenging the circular issued by the SBI to the effect that officers/employees would not be entitled to visit Overseas Countries/Centers as part of LTC /HTC. In the interim order passed by the Hon'ble Madras High Court, it has been held that any amount paid to the petitioner towards LTC/reimbursement of LTC pursuant to the impugned order would not amount to income so as to enable the bank to deduct tax at source. We further observed that the Hon'ble Madras High Court in its interim order held that if the writ petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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