State Bank of India v. Asstt. CIT [IT Appeal No.
1717 (Mum) of 2019, dt. 27-1-2021] : 2021 TaxPub(DT) 599 (Mum-Trib)
Assessee in default for non-deduction of TDS under section
201 read with section 192 on Leave Travel Concession where part journey
leg is outside India
Facts:
Assessee was held to be in default for non-deduction of TDS
under section 192 on its employee's claim of Leave Travel Concession. The
assessing officer and Commissioner (Appeals) held that while in the availing of
LTC benefit if part of the interim journey was outside India the entire
LTC is not claimable under section 10(5) read with rule 2B. Since the assessee
did not take this stand and did not effect TDS they were held in default under
section 201. For instance a journey from Mumbai - Kolkata - Singapore - Kolkata
- Mumbai return was read as a disallowable LTC journey as part of the journey
was circuitous and outside India. The issue was read thus by revenue no matter
even if the fare what was reimbursed to the employees under rule 2B and their
employment orders was the lowest airfare by the shortest distance viz. Mumbai -
Kolkata and Kolkata - Mumbai return for instance. Aggrieved assessee went in
higher appeal -
Held in favour of the assessee that as long as they had
followed rule 2B to reimburse the shortest airfare journey they were in bona
fide belief and cannot be held to be in default for non-deduction of
TDS under section 192 on LTC. The provision under rule 2B nowhere makes a
reference that the entire journey has to be only within India either.
The co-ordinate bench decisions which were rendered
contrary on this topic in favour of the revenue have not examined it from
the perspective whether there was a bona fide approach by the employer
while deducting TDS under section 192 on the estimated taxable income of the
employee. Once this bona fide intent was found no default can be read
under section 201.
Dissented:
ITAT Bench Jaipur order on 28-3-2017 which is reported in (2017) 81 taxmann.com 192 (Jaipur-Tribunal)
: 2017 TaxPub(DT) 1382 (Jp-Trib)
State Bank of India, Kanpur v. ACIT in ITA Nos. 138 to
140/Lkw/2015, dated 4-3-2016 of ITAT, Lucknow Bench : 2016 TaxPub(DT) 1330 (Luck-Trib)
Shri Om Prakash Mehta v. ITO in ITA No.
938/Chandigarh/2011, dt. 29-4-2013
The Madras High Court has also granted an interim order
instructing bankers not to effect TDS on or after 16-2-2015 on LTC if the
employee had visited a foreign country in the interim leg of the LTC.
Applied:
CIT v. Gwalior Rayon & Silk Mills Ltd. (1983) 140
ITR 832 (MP) : 1983 TaxPub(DT) 1042 (MP-HC)