State Bank of India Currency Vs ITO (ITAT Ahmedabad)
ITAT Deletes TDS Default Demand Because Bank Followed Binding High Court Interim Orders; No Section 201 Liability on LTC Payments Because Judicial Orders Restrained TDS Deduction; ITAT Holds Assessee Cannot Be Treated in Default Because TDS Obligation Yielded to Court Orders; TDS Demand on Foreign-Leg LTC Payments Deleted Because Bank Acted Under Interim Judicial Protection.
The ITAT Ahmedabad considered two appeals filed by the assessee against orders of the Commissioner of Income Tax (Appeals) for Assessment Years 2016-17 and 2017-18 concerning proceedings under Sections 201(1) and 201(1A) of the Income-tax Act relating to non-deduction of tax at source on Leave Fare Concession/Leave Travel Concession (LFC/LTC) payments made to employees.
The Assessing Officer had treated the assessee-bank as an “assessee in default” on the ground that tax under Section 192 had not been deducted on LTC reimbursements granted to employees who undertook journeys involving a foreign leg. According to the Assessing Officer, exemption under Section 10(5) read with Rule 2B of the Income Tax Rules is available only for travel within India. Reliance was placed on the Supreme Court judgment in State Bank of India v. Assistant Commissioner of Income Tax dated 04.11.2022, wherein it was held that LTC exemption is restricted to travel from one place in India to another place in India and ceases once the journey includes a foreign destination.
