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TMI Blog2024 (7) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... against assessee. - Shri Laxmi Prasad Sahu, Accountant Member And Shri Keshav Dubey, Judicial Member For the Appellant : Shri Raghavendra Chakravarthy, CA For the Respondent : Shri Subramanian S., Jt.CIT(DR)(ITAT), Bengaluru. ORDER PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER This appeal is filed by the assessee against the order dated 27.12.2023 of the Addl./JCIT(Appeals), Prayagraj for the AY 2015-16. 2. The brief facts of the case are that a survey u/s. 133A of the Act was conducted in the business premises of State Bank of India, Local Head Office on 26.12.2023. During the course of survey proceedings, it was noticed that the deductor provided the benefit of exemption u/s. 10(5) of the Act towards the reimbursement of Leave Travel Concession (LTC) to the employees for travel outside India. Accordingly, order was passed raising demand u/s. 201(1) 201(1A) of the Act for default in deducting tax as per the provisions of section 192(1) of the Act. It was noticed that SBI has filed appeal before various appellate fora and appeals have traversed upto Supreme Cout. The Hon ble Supreme Court in the case of State Bank of India v. ACIT in C.A. No.8181 of 2022 dated 04.11.2022 reported in [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order would not amount to income so as to enable the Bank to deduct tax at source. It is made clear that if the Writ Petition is dismissed, the employees are liable to pay tax on the amount paid by the Bank. 4. Considering the above judgments of Apex Court and Madras High Court, the DCIT (TDS) Circle 3(1), Bangalore treated the deductor as assessee in default for not deducting tax at source u/s. 192 r.w.s. 10(5) of the Act. Aggrieved by this order, the assessee filed appeal before the First Appellate Authority (FAA). 5. The ld. FAA has observed and dismissed the appeal stating as under:- 7.7 The amount received by the employees of the appellant-employer towards their LTC claims is not liable for the exemption as these employees had visited foreign countries which are not permissible under the law. 7.8 The provisions of law discussed above prescribe that the fare between the two points, within India will be given and the LTC which will be given will be of the shortest route between these two places, which have to be within India. 7.9 The purpose of LTC is to acquaint employees with Indian culture, as emphasized by the 6th Pay Commission. The scheme was not designed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of the Act . Therefore, I find no deficiency in the AO's orders. 7.14 Further, in relation to the computation of TDS liability, the appellant has not provided adequate support for its claim during the proceedings, and no documents have been submitted to validate its assertion about the applicable TDS rates for its employees. Consequently, the appellant's contention is rejected due to a lack of substantial evidence. 8. In view of the above, giving due regard to the decisions of the authorities relied on by the appellant, all grounds of appeal are dismissed. 6. Aggrieved from the above order, the assessee is in appeal before the ITAT. 7. The ld. AR reiterated submissions made before the lower authorities and submitted that assessee was under bonafide belief that tax was not required to be deducted on the foreign travel carried out by employees of assessee. The assessee is deducting TDS on salary payments regularly following the provisions laid down u/s. 192. He further submitted that recovery of demand be stayed till the date of final decision of the Apex Court is effected. He also submitted that assessee is willing to file petition u/s. 119(2)(a) of the Act for waiver of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes of this clause, family , in relation to an individual, means ( i ) the spouse and children of the individual ; and ( ii ) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual; 10. From the above section it is clear that if employees of the assessee travel within India and receive any value for any travel concession or assistance along with his family, is exempt from tax. Therefore there is no requirement of TDS on such value/assistance received from employer. However, in this case, we observe that employees of assessee have travelled outside India which is not exempt income n the hands of the assessee s employees. Therefore this value or assistance should be considered for TDS u/s. 192 of the Act. Similar issue has been decided by the coordinate Bench of the Tribunal in State Bank of India, Personal Banking Branch, New Delhi Ors. (supra) in which it has been held as under:- 3. At the outset, both the parties fairly submitted that the only issue in the appeal of the Revenue is whether TDS is liable to be deducted on the LTC paid to employees or not . 4. Both the parties fairly submitted that the issue is decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India to another place within India (though in their travel itinerary a foreign country was also involved), and secondly the payments which were actually made to these employees was for the shortest route of their travel between two designated places within India. In other words, no payment was made for foreign travel though a foreign leg was a part of the itinerary undertaken by these employees. 5. The above reasons given by the appellant-bank however, has not found favour either with the Assistant Commissioner of Income Tax or with the Commissioner of Income Tax (Appeals) or even the High Court. After examining the matter our considered opinion is that the view taken by the Delhi High Court and the Tribunal and even by the revenue in its initiation of proceedings cannot be faulted. The appellant whom we shall refer to as the assessee-employer ought to have deducted tax at source. 6. Let us first go through some of the relevant provisions of the Income Tax Act, 1961 (for short the Act ) and the Income Tax Rules, 1962 framed therein. Let us first take Section 192(1) of the Act which casts a statutory duty on the employer to deduct Tax at source from the salary of its employee: 192( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer or former employer for himself and his family, in connection with his proceeding, (a) on leave to any place in India; (b) to any place in India after retirement from service or after the termination of his service, shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely : [(i) where the journey is performed on or after the 1st day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination; (ii) where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the airconditioned first class rail fare by 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 clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims is not liable for the exemption as these employees had visited foreign countries which is not permissible under the law. 14. The provisions of law discussed above prescribe that the air fare between the two points, within India will be given and the LTC which will be given will be of the shortest route between these two places, which have to be within India. A conjoint reading of the provisions discussed herein with the facts of this case cannot sustain the argument of the appellant that the travel of its employees was within India and no payments were made for any foreign leg involved. 15. We do not want to get into the role of the travel agencies and the present dynamics of air fare, but it is difficult for us to accept that a person will avail foreign tour without paying any price for 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 fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olative of the Statute), that the intention and purpose of the scheme is also violated in the garb of tour within India, foreign travel is being availed. 21. The aforementioned order passed by the CIT(A) has rightly held that the obligation of deducting tax is distinct from payment of tax. The appellant cannot claim ignorance about the travel plans of its employees as during settlement of LTC Bills the complete facts are available before the assessee about the details of their employees travels. Therefore, it cannot be a case of bonafide mistake, as all the relevant facts were before the Assessee employer and he was therefore fully in a position to calculate the estimated income of its employees. The contention of Shri K.V. Vishwanathan, learned senior advocate that there may be a bonafide mistake 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 interf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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