State Bank of India Vs DCIT (Supreme Court of India)
The matter concerns the levy of tax and interest under Sections 201(1) and 201(1A) of the Income Tax Act, 1961, for failure to deduct tax at source (TDS) under Section 192(1) on reimbursement of Leave Travel Concession (LTC) involving foreign travel. A survey under Section 133A conducted on 26.12.2013 revealed that the assessee had not deducted TDS on LTC reimbursements granted to employees who had undertaken overseas travel. The Assessing Officer consequently raised a demand of tax and interest, holding that exemption under Section 10(5) was confined to travel within India.
Read HC Judgment in this case: Karnataka HC Upholds TDS Demand on Foreign LTC as Section 10(5) Inapplicable
The assessee contended that LTC was exempt under Section 10(5) and further argued that, due to interim orders of the Madras High Court and subsequently the Supreme Court concerning withdrawal of LTC/HTC involving foreign travel, it could not deduct TDS. The Karnataka High Court rejected this contention, holding that the obligation to deduct TDS is distinct from granting the perquisite and that the issue was no longer res integra in view of the Supreme Court’s earlier decision in State Bank of India v. Assistant Commissioner of Income Tax (2023) 1 SCC 162.
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