State Bank of India Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal, Ahmedabad Bench, allowed five appeals filed by different branches of State Bank of India against separate orders passed by the Commissioner of Income Tax (Appeals) under Section 250 of the Income Tax Act for different assessment years. Since common facts and issues were involved, the appeals were heard together and disposed of through a consolidated order.
The common issue before the Tribunal was whether the Assessing Officer was justified in treating the SBI branches as assessees in default under Section 201(1) and Section 201(1A) of the Income Tax Act for non-deduction of tax at source on Leave Travel Concession (LTC) reimbursement payments made to employees for foreign journeys or journeys involving a foreign leg.
SBI had provided LTC reimbursement facilities to employees. Following a Circular dated 15.04.2014 withdrawing overseas travel facilities under LTC, an employees’ association challenged the Circular before the Hon’ble Madras High Court. The Madras High Court stayed operation of the Circular and subsequently clarified through an interim order dated 16.02.2015 in W.P. No.11991 of 2014 that amounts paid towards LTC or reimbursement of LTC pursuant to the impugned order would not amount to income for the purpose of tax deduction at source during pendency of the writ proceedings.
