State Bank of India Vs DCIT (Karnataka High Court)
The Karnataka High Court condoned a delay of 90 days in filing the appeal under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal dated 28.06.2024 for AY 2016-17. The appeal arose from proceedings where penalty and interest were imposed under Sections 201(1) and 201(1A) for failure to deduct TDS under Section 192(1) on reimbursement of Leave Travel Concession (LTC) granted to employees who undertook foreign travel.
Read SC Interim Order in this case: SC Stays TDS Demand Notices Against SBI in Foreign LTC Reimbursement Case
A survey under Section 133A revealed that TDS had not been deducted on LTC reimbursements involving overseas travel. The assessee contended that such LTC was exempt under Section 10(5), and further argued that due to interim orders of the Madras High Court and the Supreme Court concerning withdrawal of foreign LTC benefits, it could not deduct TDS.
The High Court rejected these contentions, holding that the obligation to deduct TDS is distinct from granting the perquisite. Relying on the Supreme Court’s decision in State Bank of India v. Assistant Commissioner of Income Tax (2023) 1 SCC 162, the Court noted that LTC involving foreign travel is not exempt under Section 10(5), which applies only to travel within India. Since the issue was no longer res integra and the employer had full knowledge of employees’ travel details, failure to deduct TDS could not be treated as a bona fide mistake.
