Case Law Details
State Bank of India Vs ACIT (Supreme Court of India)
The Supreme Court granted leave and dismissed the appeal filed by the State Bank of India against the order dated 09.07.2019 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘G’, in ITA No. 5437/Del/2016 for Assessment Year 2013-14. All pending applications were also disposed of.
Read HC Judgment in this case: Employer Liable for TDS on Ineligible LTC Claims: Delhi HC
Before the Tribunal, the appellant had contended that it was not liable to deduct tax at source on payments made to its employees towards Leave Travel Concession (LTC) claims that did not satisfy the prescribed conditions. The appellant also argued that, having furnished the PAN details of the employees, the Assessing Officer should proceed against the employees if they had failed to disclose the amounts received as taxable income and had not paid tax thereon.
The Tribunal rejected these submissions. It held that, for claiming the benefit of the proviso to Section 201(1) of the Income-tax Act, it was the responsibility of the employer, being the deductor, to furnish all necessary particulars before the Assessing Officer. The Tribunal remanded the issue to the Assessing Officer for fresh adjudication after providing an opportunity of hearing to the assessee.
Before the Supreme Court, the appellant submitted that it had deducted tax at source only on that part of the LTC claims which, according to it, fell outside the LTC scheme. It was pointed out that employees had undertaken journeys to destinations in India through foreign countries, including Port Blair via Malaysia and Singapore, Port Blair via Bangkok and Malaysia, Rameswaram via Mauritius, Madurai via Dubai and Thailand, and Port Blair via Europe.
The Supreme Court observed that such journeys did not qualify for LTC claims, as under the LTC scheme the journeys were required to be undertaken within India and by the shortest route. Accordingly, the amounts received by the employees towards reimbursement of such LTC claims were not eligible for exemption, and the employer was liable to deduct tax at source on those payments.
The Court further observed that, since the appellant had deducted tax only on part of the amounts paid based on its own understanding, the finding that it was an assessee in default was justified. It also held that the Tribunal was correct in observing that the primary obligation to establish that the recipients had disclosed the LTC amounts as part of their taxable income and had paid tax thereon rested with the employer for claiming the benefit of the proviso to Section 201(1). The Court noted that the appellant had already been afforded an opportunity to establish its claim before the Assessing Officer pursuant to the Tribunal’s remand.
Holding that no substantial question of law arose for consideration, the Supreme Court dismissed the appeal.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Hon’ble Mr. Justice Shudhanshu Dhulia, pronounced the reportable order of the Bench comprising Hon’ble the Chief Justice of India, Hon’ble Mr. Justice S. Ravindra Bhat and His Lordship.
Leave granted.
The appeal stands dismissed in terms of the signed reportable order.
All pending applications also stand disposed of.
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