State Bank of India Vs CIT (Appeals) (ITAT Agra)
Summary: ITAT Agra allowed State Bank of India’s appeal and deleted the demand raised under Sections 201(1) and 201(1A) for AY 2016-17 concerning LFC reimbursements involving foreign travel. The Tribunal noted that the Supreme Court in SBI vs. ACIT, CA No. 8181 of 2022 dated 04.11.2022, had finally held that LTC involving a foreign leg was not exempt under Section 10(5) and that SBI was required to deduct tax under Section 192(1).
However, the payments in the present case related to the period from 15.02.2016 to 24.02.2016, when an interim order dated 16.02.2015 of the Madras High Court was operative. That order restrained SBI from deducting tax at source on the relevant LTC reimbursements. ITAT Agra held that SBI was bound to comply with the High Court’s directions and had no option but not to deduct TDS; deduction contrary to the judicial order could have amounted to contempt. The Tribunal also noted that the Madras High Court subsequently rendered its final decision in All India State Bank Officers Association vs. SBI on 14.06.2022.
Although the substantive issue concerning foreign-leg LTC had ultimately attained finality in favour of the Revenue through the Supreme Court decision, SBI could not be treated as an assessee in default for payments made while the binding interim restraint was operative. Accordingly, the demand was deleted and the appeal was allowed.
