State Bank of India LCPC Vs ACIT/DCIT /TDS (ITAT Patna)
The Income Tax Appellate Tribunal, Patna Bench, considered an appeal filed by State Bank of India against the order of the Addl/JCIT(A)-3, Hyderabad, passed under section 250 of the Income Tax Act, 1961 for AY 2016-17. The assessee had challenged the treatment of the bank as an assessee in default under section 201(1) for non-deduction of TDS on Leave Fare Concession (LFC) payments involving foreign travel. The Assessing Officer had passed an order dated 31.03.2023 under sections 201(1) and 201(1A), treating the assessee as an assessee in default in respect of LFC payments amounting to ₹9,65,024/-.
The assessee submitted before the Tribunal that the issue was affected by proceedings before the Madras High Court concerning SBI’s circulars relating to overseas travel under LTC/LFC. It relied upon the interim stay and subsequent orders of the Madras High Court and submitted that its non-deduction of TDS was based on the judicial proceedings and a bona fide belief regarding the applicability of section 10(5). It was also submitted that SLP No. 16734/2023 against the Madras High Court order dated 08.06.2023 remained pending before the Supreme Court.
The Tribunal noted, however, that the Supreme Court had already decided against the employees on the issue of exemption under section 10(5) where LTC travel involved a foreign leg. In State Bank of India vs. Assistant Commissioner of Income-tax, the Supreme Court held that LTC is for travel within India and that travel involving a foreign leg does not fall within section 10(5). The Supreme Court also held that the employer could not claim a bona fide mistake in calculating estimated income where the relevant travel documents were available to it and that deduction of tax was its statutory obligation under section 192(1).
