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The Tax Publishers 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)

The Tax Publishers

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)