SBI Ambernath East Br Vs ACIT (ITAT Mumbai)
Summary : The Income Tax Appellate Tribunal, Mumbai, allowed 39 appeals filed by State Bank of India through its branches and TAN holders for assessment years 2016-17 and 2017-18. Of these, 21 challenged demands under sections 201(1) and 201(1A), while 18 challenged penalties under section 271C. The disputes arose from Leave Fare Concession reimbursements to employees whose designated destinations were in India but whose journeys included a foreign leg. SBI had treated the eligible reimbursements as exempt under section 10(5) read with Rule 2B and had not deducted tax under section 192. The authorities treated the payments as taxable salary, sustained the TDS demands and interest, and imposed penalties. The first appellate authorities also refused to condone delays in 11 penalty appeals, although they considered and rejected those appeals on merits as well.
The Tribunal accepted that the Supreme Court had settled the substantive issue against SBI: LFC involving a foreign leg did not qualify for exemption under section 10(5), and tax was deductible under section 192. However, the present appeals concerned the separate question whether SBI could be treated as an assessee in default for payments made while the Madras High Court’s interim direction dated 16.02.2015 was operative. That direction expressly stated that the LFC amounts would not be treated as income so as to enable deduction of tax at source and clarified that, if the writ petition failed, the employees would be liable to pay tax. The Tribunal held that this was an express restraint upon deduction, rather than merely a stay of recovery. SBI could not comply with that direction and simultaneously deduct tax from the covered payments.
