STATE BANK OF BIKANER AND JAIPUR, NOW- SBI, KOTA V. INCOME TAX OFFICER (TDS), KOTA

ITA 1227/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6898 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 26-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P P MEENA JCIT A
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Bonafide belief
• Section: 201(1); 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 1227/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 STATE BANK OF BIKANER AND JAIPUR (NOW STATE BANK OF INDIA) PLOT NO. B-33, SMALL SCALE INDUSTRIAL AREA, KOTA. CUKE VS. THE ITO (TDS), KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: JDHSO3243C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SMT. PANKAJ JAIN (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI P.P. MEENA (JCIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/01/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 07/01/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), KOTA DATED 31.08.2018 FOR ASSESSMENT YEAR 2 013-14 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL :- 1. THE CIT(APPEALS) KOTA HAS REJECTED OUR APPEAL A GAINST THE DEMAND RAISED BY THE ITO TDS, KOTA FOR NOT GIVING LTC BENE FIT UNDER SECTION 10(5) DUE TO FOREIGN DESTINATION IS INVOLVED IN LFC PAYMENT MADE BY ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 2 BANK OF HIS OFFICERS I.E, THE PLACES OF TRAVEL ARE NOT SITUATED IN INDIA, IT CANNOT BE TERMED AS THE SHORTEST ROUTE TO THE DEST INATION IN INDIA, AND THE NATIONAL CARRIER IS NOT INVOLVED/USED FOR PURPO SES OF THE AIR TRAVEL. THE ITO(TDS), KOTA PASSED AN ORDER DATED 12.01.2015 UNDER SECTION 201(1) READ WITH SECTION 201(1A) OF RS. 369393/- FO R DEPOSIT AS ASSESSEE ON DEFAULT AND TREATING THE LTC PAYMENTS M ADE TO EMPLOYEES OF CORPORATE OFFICE DURING FINANCIAL YEAR 2012-13 A S TAXABLE AND HAS TREATED THE ASSESSEE BANK AS AN ASSESSEE IN DEFAULT FOR PURPOSE OF SECTION 201 AND ALSO CHARGE INTT U/S 201(1A) WHICH WAS NOT JUSTIFY, UNDER THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD ITO (TDS) AND LD. CIT(APPEALS), KOTA HAS ERRED IN HOLDI NG THAT THE APPELLANT WAS RESPONSIBLE FOR DEDUCTION TAX AT SOUR CES ON LTC/LFC BILL REIMBURSEMENT AND CREATING A DEMAND OF RS. 369393/- IN THE HANDS OF THE APPELLANT ALLEGING SHORT DEDUCTION. 2. THE APPELLANT HAS SUBMITTED VARIOUS SUBMISSION F OR NO DEDUCTION OF TAX AT SOURCES ON LTC/LFC WHICH WAS NOT CONSIDERED BY THE ITO(TDS), KOTA AND IN SAME THE COMMISSIONER OF THE INCOME TAX (APPEALS), KOTA AND REJECTED OUR APPEALS ON SAME GROUNDS, WE REQUES T THAT THIS IS NO ASSESSEE DEFAULT AND OTHER GROUNDS OFF APPEAL WILL BE SUBMITTED AT THE TIME OF HEARING. 3. THE APPELLANT PRAYS THAT THE ADDITION OF RS. 369 393/- MADE IN RESPECT OF LTA DISALLOWED BY THE INCOME TAX OFFICER , (TDS), KOTA TO BE DELETED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ITO(T DS) OBSERVED THAT THE ASSESSEE BANK HAS MADE REIMBURSEMENT OF LFC/LTC CLAIM OF ITS CERTAIN EMPLOYEES WHO AS PART OF THEIR LFC/LTC HAVE SUBMITTED CLAIM ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 3 TOWARDS TRAVEL WHICH ALSO INCLUDED FOREIGN LEG OF T HE TRAVEL. THE ITO(TDS) REFERRING TO THE PROVISIONS OF SECTION 10( 5) OF THE INCOME TAX ACT AND RULE 2B OF INCOME TAX RULES, 1962 HELD THAT THE EXEMPTION FOR LTC/LFC IS AVAILABLE ONLY FOR VISIT TO ANY PLACE I N INDIA, PROVIDED THAT THE AMOUNT EXEMPT UNDER THIS CLAUSE SHALL IN NO CAS E EXCEED THE AMOUNT OF EXPENSES ACTUALLY INCURRED FOR THE PURPOS E OF SUCH TRAVEL. THEREFORE, THE ASSESSEE BANK WAS HELD AS ASSESSEE IN DEFAULT FOR NOT DEDUCTING THE TDS ON THE REIMBURSEMENT TO THE EXTEN T OF JOURNEY PERFORMED BY THESE FIVE OFFICERS OUTSIDE OF INDIA. ACCORDINGLY, AN ORDER UNDER SECTION 201(1)/201(IA) WAS PASSED DETERMINING THE TAX AND INTEREST LIABILITY OF RS. 369393/-. 3. ON APPEAL BY THE ASSESSEE BANK, THE LD. CIT(A) R ELYING ON THE DECISION OF THE COORDINATE BENCH IN CASE OF SBI VS. ACIT(TDS) 81 TAXMAN.COM 192 HELD THAT THE ITO(TDS) HAS RIGHTLY H ELD THE ASSESSEE BANK TO BE IN DEFAULT IN SO FAR AS SHORT DEDUCTION OF TAX U/S 201 AND INTEREST U/S 201(1A) OF THE ACT UPTO THE EXTENT OF REIMBURSEMENT MADE TO ITS OFFICERS FOR FOREIGN TRAVEL LEG OF LTC CLAIM . 4. THE LD AR WAS HEARD WHO HAS SUBMITTED THAT THE A SSESSEE BANK WAS UNDER A BONAFIDE BELIEF THAT NO TDS IS REQUIRED TO BE DEDUCTED AS THE DESIGNATED PLACE OF TRAVEL IS IN INDIA EVEN THO UGH THE TRAVEL CLAIM INCLUDE TRAVEL TO A FOREIGN COUNTRY. PER CONTRA, T HE LD DR HAS SUBMITTED THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS BEFORE THE COORDINATE JAIPUR BENCH IN CASE OF SBI VS. ACIT(TDS ) WHICH HAS RIGHTLY BEEN FOLLOWED BY THE LD CIT(A). ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 4 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) HAS FOLLOWED TH E DECISION TAKEN BY THE COORDINATE BENCH IN CASE OF SBI VS. ACIT(TDS) 8 1 TAXMAN.COM 192 WHERE (SPEAKING THROUGH ONE OF US), WE HAVE HELD AS UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE CASE ARE PARI -MATERIA WITH THE DECISION OF THE COORDINATE BENCH IN CASE OF SBI (SU PRA) WHEREIN THE RELEVANT FINDINGS ARE AS UNDER: '8. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOW ER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS AND THE DOCUMENT S PLACED ON RECORD, WE FIND THAT AS PER PROVISIONS OF SECTION 1 0(5) OF THE ACT, ONLY THAT REIMBURSEMENT OF TRAVEL CONCESSION OR ASS ISTANCE TO AN EMPLOYEE IS EXEMPTED WHICH WAS INCURRED FOR TRAVEL OF THE INDIVIDUAL EMPLOYEE OR HIS FAMILY MEMBERS TO ANY PL ACE IN INDIA. NOWHERE IN THIS CLAUSE IT HAS BEEN STATED THAT EVEN IF THE EMPLOYEE TRAVELS TO FOREIGN COUNTRIES, EXEMPTION WOULD BE LI MITED TO THE EXPENDITURE INCURRED TO THE LAST DESTINATION IN IND IA. FOR THE SAKE OF REFERENCE, WE EXTRACT THE PROVISIONS OF SECTION 10( 5) OF THE ACT AS UNDER: 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEA R OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAU SES SHALL NOT BE INCLUDED [(5) IN THE CASE OF AN INDIVIDUAL, THE VALUE OF ANY TRAVEL CONCESSION OR ASSISTANCE RECEIVED BY, OR DUE TO, HIM, ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 5 (A ) FROM HIS EMPLOYER FOR HIMSELF AND HIS FAMILY, IN CONNECT ION WITH HIS PROCEEDING ON LEAVE TO ANY PLACE IN INDIA ; (B ) FROM HIS EMPLOYER OR FORMER EMPLOYER FOR HIMSELF AN D HIS FAMILY, IN CONNECTION WITH HIS PROCEEDING TO ANY PLACE IN I NDIA AFTER RETIREMENT FROM SERVICE OR AFTER THE TERMINATION OF HIS SERVICE, SUBJECT TO SUCH CONDITIONS AS MAY BE PRESCRIBED (IN CLUDING CONDITIONS AS TO NUMBER OF JOURNEYS AND THE AMOUNT WHICH SHALL BE EXEMPT PER HEAD) HAVING REGARD TO THE TRAVEL CONCES SION OR ASSISTANCE GRANTED TO THE EMPLOYEES OF THE CENTRAL GOVERNMENT: 9. ON PERUSAL OF THIS SECTION, WE ARE OF THE VIEW T HAT THIS PROVISION WAS INTRODUCED IN ORDER TO MOTIVATE THE EMPLOYEES A ND ALSO TO ENCOURAGE TOURISM IN INDIA AND, THEREFORE, THE REIM BURSEMENT OF LTC/LFC WAS EXEMPTED, BUT THERE WAS NO INTENTION OF THE LEGISLATURE TO ALLOW THE EMPLOYEES TO TRAVEL ABROAD UNDER THE GARB OF BENEFIT OF LTC AVAILABLE BY VIRTUE OF SECTION 10 (5) OF THE ACT. UNDISPUTEDLY, IN THE INSTANT CASE THE EMPLOYEES OF THE ASSESSEE HAVE TRAVELLED OUTSIDE INDIA IN DIFFERENT FOREIGN C OUNTRIES AND RAISED CLAIM OF THEIR EXPENDITURE INCURRED THEREIN. NO DOU BT, THE ASSESSEE MAY NOT BE AWARE WITH THE ULTIMATE PLAN OF TRAVEL O F ITS EMPLOYEES, BUT AT THE TIME OF SETTLEMENT OF THE LTC/LFC BILLS, COMPLETE FACTS ARE AVAILABLE BEFORE THE ASSESSEE AS TO WHERE THE E MPLOYEES HAVE TRAVELLED, FOR WHICH HE HAS RAISED THE CLAIM; MEANI NG THEREBY THE ASSESSEE WAS AWARE OF THE FACT THAT ITS EMPLOYEES H AVE TRAVELLED IN FOREIGN COUNTRIES, FOR WHICH HE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 10(5) OF THE ACT. THUS, THE PAYMENT MADE TO ITS EMPLOYEES IS CHARGEABLE TO TAX AND IN THAT SITUATION, THE ASS ESSEE IS UNDER ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 6 OBLIGATION TO DEDUCT TDS ON SUCH PAYMENT, BUT THE A SSESSEE DID NOT DO SO FOR THE REASONS BEST KNOWN TO IT. WE HAVE ALS O CAREFULLY EXAMINED THE CIRCULAR PLACED BY THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING, IN WHICH A REFERENCE WAS MADE TO THE INTERIM ORDER OF THE HON'BLE MADRAS HIGH COURT DATE D 16.2.2015. THROUGH THE INTERIM ORDER, THE HON'BLE MADRAS HIGH COURT HAS PERMITTED THE BANKERS NOT TO DEDUCT TDS ON OR AFTER 16.2.2015 ON THE AMOUNT PAID/REIMBURSED TO THE EMPLOYEES OF THE BANK IN RESPECT OF LTC/HTC AVAILED WHERE THE EMPLOYEE HAS V ISITED A FOREIGN CITY/COUNTRY, IRRESPECTIVE OF THE FACT WHET HER THE LFC BILLS WERE SUBMITTED AND PAID PRIOR TO 16.2.2015; MEANING THEREBY THIS CIRCULAR WAS PASSED CONSEQUENT TO THE INTERIM ORDER OF THE HON'BLE MADRAS HIGH COURT. BUT IN THE PRESENT CASE, THE JOU RNEY WAS UNDERTAKEN IN THE YEAR 2012 AND THE BILLS WERE SETT LED DURING THAT YEAR; MEANING THEREBY AT THE RELEVANT POINT OF TIME WHEN THE BILLS WERE SETTLED, THERE WAS NO ORDER OF THE HON'BLE MAD RAS HIGH COURT AND THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT TDS ON THE REIMBURSEMENT OF EXPENDITURE INCURRED BY THE ASSESS EE ON FOREIGN TRAVEL. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE REVENUE HAS RIGHTLY HELD THE ASSESSEE TO B E IN DEFAULT, AS THE ASSESSEE HAS NOT DEDUCTED TDS INTENTIONALLY ON THE REIMBURSEMENT OF EXPENDITURE INCURRED ON LTC/LFC. M OREOVER, THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO RE CALCULATE THE LIABILITY OF TDS AT 10%. WE, THEREFORE, FIND NO INF IRMITY IN THE ORDER OF THE LD. CIT(A) AND WE CONFIRM THE SAME.' ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 7 10. SIMILARLY, THE DECISION OF THE COORDINATE BENCH IN CASE OF OM PRAKASH GUPTA (SUPRA) ALSO SUPPORTS THE CASE OF THE REVENUE WHEREIN THE COORDINATE BENCH HAS HELD AS UNDER: '12. THE SAID SUB-SECTION PROVIDES THAT WHERE AN IN DIVIDUAL HAD RECEIVED TRAVEL CONCESSION OR ASSISTANCE FROM HIS E MPLOYER FOR PROCEEDING ON LEAVE TO ANY PLACE IN INDIA, BOTH FOR HIMSELF AND HIS FAMILY, THEN SUCH CONCESSION RECEIVED BY THE EMPLOY EE IS NOT TAXABLE IN THE HANDS OF THE EMPLOYEE. SIMILAR EXEMP TION IS ALLOWED TO AN EMPLOYEE PROCEEDING TO ANY PLACE IN INDIA AFT ER RETIREMENT OF SERVICE OR AFTER THE TERMINATION OF HIS SERVICE. TH E PROVISIONS OF THE ACT ARE IN RELATION TO THE TRAVEL CONCESSION/ASSIST ANCE GIVEN FOR PROCEEDING ON LEAVE TO ANY PLACE IN INDIA AND THE S AID CONCESSION IS THUS EXEMPT ONLY WHERE THE EMPLOYEE HAS UTILIZED TH E TRAVEL CONCESSION FOR TRAVEL WITHIN INDIA. FURTHER UNDER R ULE 2B OF THE INCOME TAX RULES THE CONDITION FOR ALLOWING EXEMPTI ON UNDER SECTION 10(5) OF THE ACT ARE LAID DOWN. THE CONDITI ONS ARE IN RESPECT OF VARIOUS MODES OF TRANSPORT. HOWEVER, THE BASIC C ONDITION IS THAT THE EMPLOYEE IS TO UTILIZE THE TRAVEL CONCESSION IN CONNECTION WITH HIS PROCEEDING TO LEAVE TO ANY PLACE WITHIN INDIA, EITHER DURING THE COURSE OF EMPLOYMENT OR EVEN AFTER RETIREMENT OF SE RVICE OR AFTER TERMINATION OF SERVICE. READING OF SECTION 10(5) OF THE ACT AND RULE 2B OF THE RULES IN CONJUNCTION LAYS DOWN THE GUIDEL INES FOR CLAIMING EXEMPTION IN RELATIONS TO THE TRAVEL CONCESSION REC EIVED BY AN EMPLOYEE FROM HIS EMPLOYER OR FORMER EMPLOYER, FOR PROCEEDING ON LEAVE TO ANY PLACE IN INDIA. THE PERSON IS TO UNDER TAKE THE JOURNEY TO ANY PLACE IN INDIA AND THEREAFTER RETURN TO THE PLACE OF EMPLOYMENT AND IS ENTITLED TO REIMBURSEMENT OF EXPE NDITURE ON ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 8 SUCH TRAVEL BETWEEN THE PLACE OF EMPLOYMENT AND DES TINATION IN INDIA. RULE 2B OF THE RULES FURTHER LAYS DOWN THE C ONDITIONS THAT THE AMOUNT TO BE ALLOWED AS CONCESSION IS NOT TO EXCEED THE AIR ECONOMY FAIR OF THE NATIONAL CARRIER BY THE SHORTES T ROUTE TO THE DESTINATION IN INDIA. THE SAID CONDITION IN NO WAY PROVIDES THAT THE ASSESSEE IS AT LIBERTY TO CLAIM EXEMPTION OUT OF HI S TOTAL TICKET PACKAGE SPENT ON HIS OVERSEAS TRAVEL AND PART OF TH E JOURNEY BEING WITHIN INDIA. WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE IN THE PRESENT CASE AND WE ARE IN CONFORMITY WITH THE OBSE RVATION OF THE CIT (APPEALS) IN THIS REGARD, WHICH HAS BEEN REPROD UCED BY US IN THE PARAS HEREINABOVE. IN VIEW THEREOF, WE REJECT T HE CLAIM OF THE ASSESSEE OF EXEMPTION UNDER SECTION 10(5) OF THE AC T. THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE IS THUS DISM ISSED.' 11. NO CONTRARY AUTHORITY HAS BEEN BROUGHT TO THE NOTI CE OF THE BENCH. WE, THEREFORE, DONOT SEE ANY REASON TO DEVIATE FROM THE SAID VIEW TAKEN BY THE COORDINATE BENCHES. IN THE RESULT, THE GROUNDS NO. 1-6 OF THE ASSESSEE'S APPEAL ARE DISMISSED. 6. IN ABSENCE OF ANY CONTRARY AUTHORITY, FOLLOWING THE CONSISTENT VIEW TAKEN BY THE CO-ORDINATE BENCHES REFERRED SUPR A, THE ORDER OF THE LD CIT(A) IS HEREBY AFFIRMED WHERE HE HAS HELD THE ASSESSEE BANK TO BE ASSESSEE IN DEFAULT FOR SHORT-DEDUCTION OF TDS ON L FC/LTC CLAIM RELATING TO FOREIGN LEG OF THE TRAVEL OF ITS EMPLOY EES BEING NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(5) R/W RULE 2B. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. ITA NO. 1227/JP/2018 STATE BANK OF BIKANER AND JAIPUR VS. ITO(TDS) 9 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/01/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/01/2019. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- STATE BANK OF BIKANER AND JAIPUR, KO TA. 2. IZR;FKHZ@ THE RESPONDENT- ITO(TDS), KOTA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 1227/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR