State Bank of India Vs ITO (ITAT Ahmedabad)
SBI Cannot Be Treated as Assessee-in-Default for Obeying High Court’s No-TDS Direction on Foreign-Leg LTC: Ahmedabad ITAT
Summary: The Income Tax Appellate Tribunal, “C” Bench, Ahmedabad, considered four appeals filed by three different branches of State Bank of India against separate orders of the Commissioner of Income Tax (Appeals) passed under section 250 of the Income-tax Act. The appeals were ITA Nos. 1817 and 1818/Ahd/2026 for AY 2017-18 and ITA Nos. 1847-1848/Ahd/2026 for AYs 2016-17 and 2017-18. Since common facts and issues were involved, the appeals were heard together and disposed of by a consolidated order.
The common issue was whether the SBI branches could be treated as assessees in default under sections 201(1) and 201(1A) of the Act for non-deduction of TDS on Leave Travel Concession (LTC) reimbursements paid to employees for foreign journeys or journeys involving a foreign leg.
SBI had been providing LTC reimbursement to its employees. Pursuant to a Circular dated 15.04.2014, overseas travel facilities under LTC were withdrawn. The Circular was challenged before the Hon’ble Madras High Court by the employees’ association. The Madras High Court stayed operation of the Circular on 25.04.2014 and subsequently issued an interim order dated 16.02.2015 in W.P. No.11991 of 2014. The interim directions clarified that LTC amounts paid pursuant to the impugned order would not amount to income so as to enable the Bank to deduct tax at source and that, if the writ petition was dismissed, the employees would be liable to pay tax on the amount paid by the Bank.
