State Bank of India Vs DCIT (TDS) (Karnataka High Court)
In this case before the Karnataka High Court, State Bank of India filed an appeal u/s 260A challenging the order of the ITAT which had upheld demands raised under Sections 201(1) & 201(1A). The matter arose from a survey conducted u/s 133A at the Bank’s local head office on 26.12.2013, during which it was found that the Bank had reimbursed Leave Travel Concession (LTC) claims to its employees who had undertaken journeys that included foreign travel. AO held that such reimbursements did not qualify for exemption u/s 10(5), which specifically confines the exemption to journeys within India, & consequently treated the Bank as an assessee in default for failure to deduct TDS u/s 192.
The Bank argued that LTC payments were exempt u/s 10(5) & contended that it had even issued a circular on 15.04.2014 withdrawing LTC involving foreign travel, but its operation had been stayed by the Madras High Court in writ proceedings, & subsequently by the Supreme Court in an SLP. The Bank therefore claimed that, since it was prevented from withdrawing the benefit of foreign travel LTC by virtue of the interim orders, no liability u/s 201(1) or 201(1A) could be imposed upon it.
