State Bank of India Vs DCIT (ITAT Ahmedabad)
Summary: The Income Tax Appellate Tribunal, Ahmedabad Bench, considered seventeen appeals filed by 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, 1961. Since common facts and issues were involved, the appeals were heard together and disposed of through a consolidated order. The common issue was whether the SBI branches could be treated as “assessees in default” under Section 201(1) and Section 201(1A) for not deducting TDS on Leave Travel Concession (LTC) payments relating to foreign journeys or journeys involving a foreign leg.
The Tribunal recorded that SBI had been providing reimbursement of LTC to its employees. Following SBI’s Circular dated 15.04.2014, overseas travel facilities under LTC were withdrawn. The Circular was challenged before the Madras High Court. The High Court initially stayed its operation and subsequently, by interim order dated 16.02.2015 in W.P. No.11991 of 2014, clarified that LTC amounts paid pursuant to the interim order would not amount to income so as to enable the Bank to deduct tax at source, while stating that if the writ petition were dismissed, the employees would be liable to pay tax on the amount paid by the Bank.
