State Bank Of India, Bangalore V. Income Tax Officer (TDS), Ward- 3(2), Bangalore

ITA 1640/BANG/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9425 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 16-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: MURALIDHARA H
• Keywords: Rule of consistency; Non-deduction of tax; Wrong claim; TDS
• Section: 10(14); 133A; 133(6); 201(1); 201; 192; 10; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: BENGALURU BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER I.T.A NO.1640/BANG/2019 (ASSESSMENT YEAR: 2012-13) STATE BANK OF INDIA, HORAMAVU BRANCH, #2, MVR SURYAKANTHI, MUNIREDDY LAYOUT, HORAMAVU MAIN ROAD, BENGALURU 560 043. [PAN: BLRS 34343B] VS. THE INCOME TAX OFFICER (TDS), WARD-3(2), BENGALURU. ( /APPELLANT ) ( /RESPONDENT ) / APPELLANT BY : SHRI MURALIDHARA H, C.A / RESPONDENT BY : SMT. R. PREMI, JCIT / DATE OF HEARING : 02.12.2019 /DATE OF PRONOUNCEMENT : 04.12.2019 O R D E R PER D.S. SUNDER SINGH, A.M : THIS APPEAL FILED BY THE ASSESSEE-BANK NAMELY STATE BANK OF INDIA (HEREAFTER REFERRED AS SBI) IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, BENGALURU ( HEREAFTER REFERRED AS CIT(A)) IN ITA NO.CIT(A), BENGALURU-6/10264/2018- 19 DATED 11.02.2019 FOR THE ASSESSMENT YEAR (AY) 2012-13. DELAY : 2. THERE WAS A DELAY BY 53 DAYS IN FILING THE APPEA L. THE ASSESSEE FILED AFFIDAVIT REQUESTING FOR CONDONING THE DELAY AND EX PLAINING THE REASONS FOR ITA NO.1640/BANG/2019 :- 2 -: THE DELAY. WE HAVE GONE THROUGH THE AFFIDAVIT AND AFTER HAVING HEARD BOTH PARTIES THE DELAY IS CONDONED. 3. ALL THE GROUNDS OF APPEAL ARE RELATED TO CONFIRM ING THE ORDER OF THE INCOME TAX OFFICER (TDS), WARD-3(2), BANGALORE (AO IN SHORT) BY THE LD. CIT(A) IN RESPECT OF THE DEMAND RAISED U/S. 201(1) & 201(1A) OF THE INCOME TAX ACT, 1961 ('THE ACT') RELATING TO THE PA YMENT MADE BY THE DEDUCTOR(ASSESSEE) ON ACCOUNT OF REIMBURSEMENT OF L EAVE TRAVEL CONCESSION (LTC) TO FOREIGN COUNTRIES. IN THIS CAS E, THE DEDUCTOR HAS MADE THE PAYMENT OF RS. 3,61,650/- TO SHRI RAVI KULKARNI AN EMPLOYEE OF THE ASSESSEE-BANK TO A DESTINATION IN INDIA VIA BANGKOK , KUALA LUMPUR AND COLOBMO RELATING TO THE FOREIGN LEGS OF TRAVEL. TH E SAID AMOUNT WAS REIMBURSED BY THE ASSESSEE FOR LTC/LFC. THE ASSESS EE TREATED THE ENTIRE AMOUNT AS EXEMPT U/S. 10(5) OF THE ACT AND DID NOT DEDUCT TDS THEREON. THE AO VIEWED THAT THE ASSESSEE IS OBLIGED TO DEDUC T THE TDS ON FOREIGN LEGS OF TRAVEL AND THE EXPENDITURE RELATABLE TO THE FOREIGN LEGS OF TRAVEL IS NOT EXEMPT U/S. 10(5) OF THE ACT AS CLAIMED BY THE ASSESSEE IN THEIR TDS RETURN. THEREFORE, THE AO RAISED THE DEMAND OF RS. 1,82,271/- FOR ASSESSEES FAILURE TO DEDUCT TAX AT SOURCE ON LTC/L FC PAID TO THE EMPLOYEES OF THE ASSESSEE BANK. THE DEMAND OF RS. 1,82,271/- CONSISTS OF THE REMAND U/S. 201(1) OF THE ACT OF RS. 1,08,49 5/- AND THE INTEREST U/S. 201(1A) OF THE ACT RS. 73,776/- AGGREGATING TO RS. 1,82,271/-. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE IN HIS DETAILED ITA NO.1640/BANG/2019 :- 3 -: ORDER FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE CASE OF SYNDICATE BANK VS. ASST. CIT (TDS) [2017] 80 TAXMANN.COM 179 AND CONFIRMED THE DEMAND RAISED BY THE AO. AGAINST WHICH THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE ASSESSEE REIMBURSE D THE EXPENSES RELATING TO FOREIGN TRAVEL AND CLAIMED THE DEDUCTION U/S. 10 (5) OF THE ACT AS LTC/LFC. AS PER THE PROVISIONS OF S. 10(5) OF THE ACT, THE PAYMENT MADE TO THE EMPLOYEE FOR FOREIGN VISIT IS NOT EXEMPTED AND THE SAID AMOUNT IS TAXABLE IN THE HANDS OF THE EMPLOYEE, THUS THE ASSE SSEE IS OBLIGED TO DEDUCT TAX AT SOURCE U/S. 192 OF THE ACT. THIS IS SUE WAS DISCUSSED IN DETAIL BY THE LD. CIT(A) IN HIS ORDER DATED 11.02.2019. F OR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT THE RELEVANT PART OF THE OR DER OF THE LD. CIT(A), WHICH READS AS UNDER: 4.2.3 I HAVE CONSIDERED THE POINTS RAISED IN THE WRITTEN SUBMISSIONS AND DO NOT FIND ANY MERIT THEREIN. AS RIGHTLY POINTED OUT BY THE AO, THE PROVISIONS OF THE ACT OVERRULE ANY INTERNAL GUIDELI NE OF AN EMPLOYER/DEDUCTOR/ANY ASSOCIATION. FURTHER, APPLYI NG THE PRINCIPLE OF CONSISTENCY DOES NOT MEAN THAT THE APPELLANT CAN CO NTINUE TO VIOLATE THE LETTER AND SPIRIT OF THE ACT AND RULES MERELY BECAU SE THE DEPARTMENT HAD NOT OBJECTED O THE SAME EARLIER. THE MATERIAL FACT S RELATING TO THE WRONG CLAIMS MADE BY THE APPELLANTS EMPLOYEE AND THE APP ELLAN5TS COLLUSION IN FACILITATING THE VIOLATION OF THE LAW CAME TO THE A OS NOTICE WHEN HE MADE ENQUIRIES U/S. 133(6) OF THE ACT WITH THE APPELLANT . THUS THERE WAS ADEQUATE REASON FOR THE AO TO TAKE A DIFFERENT VIEW FROM THAT OF THE DEPARTMENT IN THE EARLIER YEARS. IT IS SETTLED LAW THAT THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDING S AS EACH ASSESSMENT YEAR IS A SEPARATE PROCEEDINGS. THE APPELLANTS CL AIM FOR APPLYING THE PRINCIPLE OF CONSISTENCY IS ALSO NOT SUSTAINABLE IN LIGHT OF THE FOLLOWING JUDICIAL DECISIONS: I) IN CIT VS. SESHASAYEE INDUSTRIES LTD. (MAD) 242 ITR 691, THE MADRAS HIGH COURT HELD THAT THE FACT ITS CLAIM WAS NOT QUESTIONED IN EARLIER YEARS DOES NOT ENTITLE THE ASSESSEE TO C ONTEND THAT THE LAW SHOULD NOT BE APPLIED DURING THE CURRENT A.Y. II) IN INDIAN VACCINES CORPORATION LTD. VS. ITO 201 0-TIOL-587 ITAT DEL AND IN JAT EDUCATION SOCIETY VS. DCIT (ITAT, DE L) 10 ITA NO.1640/BANG/2019 :- 4 -: TAXMANN.COM 127, IT WAS HELD THAT A PATENTLY WRONG VIEW CANNOT BE ALLOWED TO PERPETUATE ON THE BASIS OF THE PRINCIPLE OF CONSISTENCY. 4.2.4 IN THE WRITTEN SUBMISSION THE AR HAS ALSO REL IED ON VARIOUS JUDICIAL PRECEDENTS TO ASSERT ITS BONA FIDES IN REIMBURSING ITS EMPLOYEES LTC/LFC CLAIMS. HOWEVER, SEVERAL OF THE CASE LAWS RELIED U PON BY THE APPELLANT HAVE BEEN CONSIDERED BY THE HONBLE ITAT C BENCH, BENGALURU IN THE APPELLANTS OWN CASES IN ITA NOS.1395 TO 1412, 1426 TO 1426 & 1456 TO 1458 WHICH HAVE BEEN DECIDED BY THE ITAT AGAINST TH E APPELLANT BY RELYING ON ITS DECISION IN THE CASE OF SYNDICATE BA NK VS. ASST. CIT (TDS) [2017] 80 TAXMANN.COM 179, WHEREIN THE FACTS OF THE CASE WERE IDENTICAL WITH THOSE OF THE APPELLANT. THE RE LEVANT PORTION OF THE ITAT ORDER IS REPRODUCED BELOW: 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT MATERIALS ON RECORD AND ALSO THE CASE LAWS RELIED ON BY EITHER PARTY. 7.1 THE SOLITARY ISSUE FOR CONSIDERATION NOW IS: WHETH ER THE A.O. WAS JUSTIFIED IN TREATING THE ASSESSEE-BANK AS AN 'ASSE SSEE IN DEFAULT' U/S. 201(1) OF THE ACT FOR MAKING SHORT DEDUCTION U/S. 1 92 OF THE ACT IN ALLOWING EXEMPTION U/S. 10(5) OF THE ACT TOWARDS TH E REIMBURSEMENT OF LTC/LFC CLAIMS OF ITS EMPLOYEES? 7.2 BRIEFLY STATED, A SURVEY U/S. 133A OF THE ACT HAD TAKEN PLACE IN THE BUSINESS PREMISES OF THE ASSESSEE-BANK ON 18.3.2014 BY THE ACIT, TDS CIRCLE 18(2), BENGALURU THE A.O. AND IT WAS NOTICED DURING THE COURSE OF SURVEY THAT THE ASSESSEE-BANK (THE DEDUCT OR) HAD ALLOWED EXEMPTION U/S. 10(5) OF THE ACT TO ITS EMPLOYEES FO R TRAVEL OUTSIDE INDIA AND ALSO TRAVELLED BY A CIRCUITOUS ROUTE WHICH WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF S.10(5) OF THE ACT R.W. RULE 2B. ACCORDINGLY, THE A.O. TREATED THE ASSESSEE-BANK AS AN 'ASSESSEE IN DEFAUL T' U/S. 201(1) OF THE ACT FOR THE ELABORATE REASONS SET OUT IN IMPUGNED A SSESSMENT ORDERS FOR THE ASSESSMENT YEARS UNDER DISPUTE. THE A.O.'S STAN D WAS DULY CONFIRMED BY THE CIT(A) FOR THE REASONS RECORDED IN THE IMPUGNED ORDERS UNDER DISPUTE. DURING THE COURSE OF HEARING BEFORE US, THE LEARNED COUNSEL HAD MADE CERTAIN ARGUMENTS WHICH ARE DEALT WITH AS UNDER: :(I) THAT THERE WAS NO REQUIREMENT UNDER THE LAW OR THE RULES THAT THE JOURNEY SHOULD BE PERFORMED THROUGH SHORTEST ROUTE: RULE 2B OF INCOME-TAX RULES, 1962 SAYS CONDITIONS FOR THE PURPOSE OF SECTION 10(5) 2B. ** ** ** (I) WHERE THE JOURNEY IS PERFORMED ON OR AFTER THE 1ST DAY OF OCTOBER, 1997, BY AIR, AN AMOUNT NOT EXCEEDING THE AIR ECONO MY FARE OF THE NATIONAL CARRIER BY THE SHORTEST ROUTE TO THE PLACE OF DESTINATION; ** ** ** AS PER THE PROVISIONS OF SECTION 10(5) OF THE INCOM E-TAX ACT & RULE 2B OF INCOME-TAX RULES, THE REIMBURSEMENT OF LTC IS EXEMP T U/S. 10(5) OF INCOME-TAX ACT ONLY WHEN ALL THE CONDITIONS ARE FOL LOWED. ITA NO.1640/BANG/2019 :- 5 -: THE CONDITIONS ARE AS FOLLOWS: - THERE MUST BE A REIMBURSEMENT OF - ACTUAL EXPENDITURE INCURRED ON - TRAVELLED WITHIN INDIA BY TAKING A - SHORTEST ROUTE [REFER: PAGES 4 & 5 OF A.O.'S ORDER] THE ABOVE EXPLANATION DISPELS THE ASSESSEE'S ARGUME NT. (II) THE CIT(A) ERRED IN HOLDING THAT THE TRAVEL SH OULD BE WITHIN INDIA: THE ASSESSEE BANK ITSELF VIDE ITS LETTER DT: 26/3/2 014 HAD STATED AS UNDER: (I) ** ** ** (II) IN OUR CASE, WE HAVE REIMBURSED THE LFC ONLY I N RESPECT OF JOURNEY THE DESTINATION OF WHICH IS IN INDIA. FURTHER, THE QUANTUM WAS RESTRICTED TO THE AIR FARE BY ECONOMY CLASS THROUGH THE SHORTE ST ROUTE..' [COURTESY: P 6 OF A.O.'S ORDER] 7.3 THE ABOVE NARRATIONS ARE HIGHLIGHTING THE CONTRADI CTIONS OF THE ASSESSEE'S DEFENSE. THE ASSESSEE-BANK HAD IN ITS GR OUNDS OF APPEAL CONTENDED THAT '4.5..THAT THE APPELLANT BANK WAS UNDER THE BONA FIDE BELIEF THAT THE AMOUNT WAS EXEMPT U/S. 10(5) A ND AS SUCH, THE APPELLANT BANK CANNOT BE TREATED AS 'AN ASSESSEE IN DEFAULT' U/S. 201 OF THE INCOME-TAX ACT, 1961'. ON THE CONTRARY, ON EXAM INATION OF THE CASE ON HAND, IT IS EXPLICIT THAT THE ASSESSEE BANK HAD NOT APPLIED ITS MIND WHILE APPLYING THE PROVISIONS OF S.10(5) OF THE ACT WITH LETTER AND SPIRIT AND ALLOWED EXEMPTION IN A MECHANICAL WAY. AS RIGHT LY HIGHLIGHTED BY THE LEARNED DR IN HIS SUBMISSIONS, THE PROVISIONS OF S. 10(5) OF THE ACT ARE CLEAR AND ONLY THE REIMBURSEMENT OF EXPENSES WHICH WERE INCURRED ON TRAVEL OF EMPLOYEES AND HIS FAMILY TO ANY PLACE IN INDIA SUBJECT TO CERTAIN CONDITIONS ARE EXEMPT. SINCE THE EMPLOYEES OF THE A SSESSEE-BANK HAD TRAVELLED TO FOREIGN COUNTRIES, THE BENEFIT OF EXEM PTION AVAILABLE U/S. 10(5) OF THE ACT SHOULD NOT HAVE BEEN GRANTED. WE A GREE THAT THE ASSESSEE-BANK MAY NOT HAVE BEEN AWARE OF THE DETAIL S OF THE EMPLOYEES' PLACES OR DESTINATION OF VISITS AT THE T IME OF ADVANCEMENT OF LTC/LFC AMOUNTS. HOWEVER, AT THE FINAL SETTLEMENT O F THE CLAIMS OF THE EMPLOYEES UNDER LTC/LFC, THE ASSESSEE-BANK SHOULD H AVE OBTAINED ALL THE RELEVANT DETAILS SUCH AS THE PLACES OF VISITS ( DESTINATIONS) ETC. WHEN THE ASSESSEE-BANK WAS AWARE OF THE FACT THAT ITS EM PLOYEES HAD VISITED FOREIGN COUNTRIES BY AVAILING LTC/LFC CONCESSION AN D SO HE WAS NOT ENTITLED FOR EXEMPTION OF REIMBURSEMENT OF LTC U/S. 10(5) OF THE ACT, THE ASSESSEE-BANK WAS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE TREATING SUCH AN AMOUNT AS NOT EXEMPT. SINCE THE ASSESSEE-BA NK HAD FAILED TO ENFORCE ITS DUTY TO DEDUCT TAX AT SOURCE AS ENVISAG ED IN SECTION 192 OF THE ACT, IT IS TANTAMOUNT THAT THE ASSESSEE-BANK WA S AN 'ASSESSEE IN DEFAULT' U/S. 201(1) OF THE ACT AND THE A.O.(TDS) W AS WITHIN HER DOMAIN TO HOLD SO. MOREOVER, THE ASSESSEE-BANK DOES NOT HA VE A CASE THAT ITS EMPLOYEES HAVE INCLUDED THE LTC/LFC IN THEIR TAXABL E SALARY AND PAID TAX ON THE SAME. MOREOVER, THE NATIONAL CARRIER, I. E., AIR INDIA/INDIAN ITA NO.1640/BANG/2019 :- 6 -: AIRLINES HAD ALSO BEEN OFFERING LTC PACKAGE TO VARI OUS DESTINATIONS IN INDIA AND ALLOWING PASSENGERS TO VISIT THE FOREIGN COUNTRIES AT THE FULL FARE CHARGEABLE TO THE FINAL DESTINATION IN INDIA AND IT WAS CLEARLY MENTIONED IN AIR INDIA WEBSITE THAT THE VALUE OF LTC WAS CHAR GEABLE TO INCOME TAX. 7.4 THE HON'BLE ITAT, LUCKNOW BENCH 'A' IN THE CASE OF SBI CASE (SUPRA) ON IDENTICAL FACTS HAD DECIDED THE ISSUE IN FAVOUR OF REVENUE. FOR APPRECIATION OF FACTS, THE RELEVANT PORTION OF THE FINDINGS OF THE HON'BLE BENCH IS AS FOLLOWS: '9. ON PERUSAL OF THIS SECTION, WE ARE OF THE VIEW THAT THIS PROVISION WAS INTRODUCED IN ORDER TO MOTIVATE THE EMPLOYEES AND A LSO TO ENCOURAGE TOURISM IN INDIA AND, THEREFORE, THE REIMBURSEMENT OF LTC/LFC WAS EXEMPTED, BUT, THERE WAS NO INTENTION OF THE LEGISL ATURE TO ALLOW THE EMPLOYEES TO TRAVEL ABROAD UNDER THE GARB OF BENEFI T OF LTC AVAILABLE BY VIRTUE OF SECTION 10(5) OF THE ACT. UNDISPUTEDLY, I N THE INSTANT CASE, THE EMPLOYEES OF THE ASSESSEE HAVE TRAVELLED OUTSIDE IN DIA IN DIFFERENT FOREIGN COUNTRIES AND RAISED CLAIM OF THEIR EXPENDI TURE INCURRED THEREIN. NO DOUBT, THE ASSESSEE MAY NOT BE AWARE WITH THE UL TIMATE PLAN OF TRAVEL OF ITS EMPLOYEES, BUT AT THE TIME OF SETTLEMENT OF THE LTC/LFC BILLS, COMPLETE FACTS ARE AVAILABLE BEFORE THE ASSESSEE AS TO WHERE THE EMPLOYEES HAVE TRAVELLED, FOR WHICH, HE HAS RAISED THE CLAIM; MEANING THEREBY THE ASSESSEE WAS AWARE OF THE FACT THAT ITS EMPLOYEES HAVE TRAVELLED IN FOREIGN COUNTRIES, FOR WHICH, HE IS NO T ENTITLED FOR EXEMPTION U/S. 10(5) OF THE ACT. THUS, THE PAYMENT MADE TO IT S EMPLOYEES IS CHARGEABLE TO TAX AND IN THAT SITUATION, THE ASSESS EE IS UNDER OBLIGATION TO DEDUCT TDS ON SUCH PAYMENT, BUT THE ASSESSEE DID NOT DO SO FOR THE REASONS BEST KNOWN TO IT.' 7.5 ON IDENTICAL FACTS, THE HON'BLE ITAT, CHANDIGARH ' A' BENCH IN THE CASE OF OM PARKASH GUPTA (SUPRA), HAD RECORDED ITS FINDINGS AS UNDER: '12. THE SAID SUB-SECTION PROVIDES THAT WHERE AN IN DIVIDUAL HAD RECEIVED TRAVEL CONCESSION OR ASSISTANCE FROM HIS EMPLOYER F OR PROCEEDING ON LEAVE TO ANY PLACE IN INDIA, BOTH FOR HIMSELF AND H IS FAMILY, THEN SUCH CONCESSION RECEIVED BY THE EMPLOYEE IS NOT TAXABLE IN THE HANDS OF THE EMPLOYEE. SIMILAR EXEMPTION IS ALLOWED TO AN EMPLOY EE PROCEEDING TO ANY PLACE IN INDIA AFTER RETIREMENT OF SERVICE OR A FTER THE TERMINATION OF HIS SERVICE. THE PROVISIONS OF THE ACT ARE IN RELAT ION TO THE TRAVEL CONCESSION/ASSISTANCE GIVEN FOR PROCEEDING ON LEAVE TO ANY PLACE IN INDIA AND THE SAID CONCESSION IS THUS EXEMPT ONLY W HERE THE EMPLOYEE HAS UTILIZED THE TRAVEL CONCESSION FOR TRAVEL WITHI N INDIA. FURTHER, UNDER RULE 2B OF THE INCOME-TAX RULES THE CONDITIONS FOR ALLOWING EXEMPTION U/S. 10(5) OF THE ACT ARE LAID DOWN. THE CONDITIONS ARE IN RESPECT OF VARIOUS MODES OF TRANSPORT. HOWEVER, THE BASIC COND ITION IS THAT THE EMPLOYEE IS TO UTILIZE THE TRAVEL CONCESSION IN CON NECTION WITH HIS PROCEEDING TO LEAVE TO ANY PLACE WITHIN INDIA, EITH ER DURING THE COURSE OF EMPLOYMENT OR EVEN AFTER RETIREMENT OF SERVICE OR A FTER TERMINATION OF SERVICE. READING OF SECTION 10(5) OF THE ACT AND RU LE 2B OF THE RULES IN CONJUNCTION LAYS DOWN THE GUIDELINES FOR CLAIMING E XEMPTION IN RELATION TO THE TRAVEL CONCESSION RECEIVED BY AN EMPLOYEE FROM HIS EMPLOYER OR FORMER EMPLOYER, FOR PROCEEDING ON LEAVE TO ANY PLA CE IN INDIA AND THEREAFTER RETURN TO THE PLACE OF EMPLOYER AND IS E NTITLED TO REIMBURSEMENT OF EXPENDITURE ON SUCH TRAVEL BETWEEN THE PLACE OF EMPLOYMENT AND DESTINATION IN INDIA. RULE 2B OF THE RULES FURTHER LAYS DOWN THE CONDITIONS THAT THE AMOUNT TO BE ALLOWED A S CONCESSION IS NOT ITA NO.1640/BANG/2019 :- 7 -: TO EXCEED THE AIR ECONOMY FARE OF THE NATIONAL CARR IER BY THE SHORTEST ROUTE TO THE DESTINATION IN INDIA. THE SAID CONDITI ON IN NO WAY PROVIDES THAT THE ASSESSEE IS AT LIBERTY TO CLAIM EXEMPTION OUT OF HIS 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 OBSERVATION OF THE CIT(APPEALS) IN THIS REGARD IN VIEW THEREOF, WE REJECT THE C LAIM OF THE ASSESSEE OF EXEMPTION U/S. 10(5) OF THE ACT' 7.6 IN THE CASE OF HCL INFO SYSTEMS LTD. (SUPRA) REL IED ON BY THE ASSESSEE-BANK - THE ISSUE WAS THAT THE A.O. HAD REJ ECTED THE CLAIM OF THE ASSESSEE (HCL) OF TREATING LTC ALLOWANCE AS EXE MPT U/S. 10(5) FOR THE REASON OF NOT VERIFYING THE EVIDENCE WITH REGAR D TO INCURRING OF ACTUAL EXPENDITURE. HOWEVER, THE TRIBUNAL HAD ACCEPTED THE ARGUMENT OF THE ASSESSEE THAT THE CBDT CIRCULARS DID NOT SPECIFICAL LY REQUIRE VERIFICATION OF THE EVIDENCE AND, THUS, HELD THAT THERE WAS SUFF ICIENT MATERIAL ON RECORD BY WAY OF DECLARATIONS FURNISHED BY THE EM PLOYEES CONCERNED FOR THE ASSESSEE TO FORM A BONA-FIDE BELIEF THAT LT A GRANTED TO ITS EMPLOYEES WAS EXEMPT U/S. 10(5) OF THE ACT. ON AN A PPEAL, THE HON'BLE DELHI HIGH COURT CONCURRED THE FINDINGS OF THE TRIB UNAL BY HOLDING THAT 'THE BONA FIDES OF THE ASSESSEE WAS ACCEPTED B Y THE FIRST APPELLATE AUTHORITY AND WERE DULY CONFIRMED BY THE APPELLATE TRIBUNAL.' 7.7 ON A CAREFUL PERUSAL OF THE RULING OF THE HON'BLE COURT (SUPRA), WE ARE OF THE VIEW THAT THE SAID RULING OF THE HON'BLE COURT IS DISTINGUISHABLE SO FAR AS THE ISSUE UNDER DISPUTE IS CONCERNED. THE PRESENT ASSESSEE- BANK HAD NOT BROUGHT ANY CREDIBLE MATERIAL ON RECOR D TO REMOTELY SUGGEST THAT THAT THE BASIS [BY WAY OF DECLARATIONS FURNISHED BY THE EMPLOYEES CONCERNED] FOR FORMATION OF SUCH A BONA F IDE BELIEF AND HONEST OPINION ON EXEMPTION U/S. 10(5) OF THE ACT O F SUCH AN ALLOWANCE ON A CIRCUITOUS ROUTE WHEN IT WAS EVIDENT THAT THE EMPLOYEES HAD UNDERTAKEN FOREIGN TRAVEL. 7.8 IN THE CASE OF NESTLE INDIA LTD. (SUPRA) RELIED ON BY THE ASSESSEE- BANK THE ISSUE, IN BRIEF, WAS THAT ON A PERUSAL O F THE ANNUAL RETURN OF THE ASSESSEE, THE ACIT(TDS) NOTICED THAT THE ASSESS EE HAD MADE SHORT DEDUCTION OF TDS WHILE COMPUTING THE INCOME OF ITS EMPLOYEES CHARGEABLE UNDER THE HEAD 'SALARIES', THE CONVEYANC E ALLOWANCE (CA)/REIMBURSEMENT GRANTED TO THEM HAD NOT BEEN INC LUDED IN THEIR TAXABLE SALARIES. IN COMPLIANCE TO THE A.O.'S QUERY , THE ASSESSEE, INTER ALIA, EXPLAINED THAT THE CA WAS BEING PAID AS REIMB URSEMENT TO THOSE EMPLOYEES WHO HAD NOT BEEN PROVIDED WITH VEHICLES A GAINST DECLARATION THAT THEY HAD ACTUALLY INCURRED THE SAID AMOUNT FOR THE PURPOSE OF CONVEYANCE ETC., AND, THEREFORE, SUCH EXPENSE WAS E XEMPT U/S. 10(14) OF THE ACT. THE A.O.(TDS) TOOK A DIVERGENT VIEW THA T THE ASSESSEE WAS PAYING SALARIES TO ITS EMPLOYEES UNDER THE GARB OF CA IN ORDER TO AVOID TAXATION AND, ACCORDINGLY, HELD THE ASSESSEE AS AN 'ASSESSEE IN DEFAULT'. WHEN THE ISSUE WENT IN APPEAL BEFORE THE TRIBUNAL W HICH HELD THAT THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT CA WAS N OT TAXABLE AND, HENCE, NEITHER ORDER U/S. 201 NOR INTEREST U/S. 201 (1A) WAS LEVIABLE. THE STAND OF THE TRIBUNAL WAS CONCURRED BY THE HON'BLE HIGH COURT. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE-BANK HAD FAILED TO CITE THE PRONOUNCEMENT OF ANY ORDER OF THE JUDICIARY TO DEMO NSTRATE WHY AND HOW IT FORMED THE BELIEF THAT SUCH CONCESSION ON A CIRCUITOUS ROUTE WAS EXEMPT U/S. 10(5) OF THE ACT. THUS, WE ARE OF THE V IEW THAT THIS CASE LAW RELIED ON BY THE ASSESSEE-BANK CANNOT BE OF ANY HEL P TO IT. ITA NO.1640/BANG/2019 :- 8 -: 7.9 IN THE CASE OF ITC LTD. (SUPRA) RELIED ON BY THE ASSESSEE-BANK THE ISSUE INVOLVED WAS NON-DEDUCTION OF TAX AT SOUR CE FROM THE CONVEYANCE ALLOWANCE (CA) PAID TO ITS EMPLOYEES. TH E HON'BLE TRIBUNAL ALLOWED THE ASSESSEE'S CASE AFTER ACCEPTING THE EXP LANATION OF THE ASSESSEE TO BE BONA FIDE, I.E., THE ASSESSEE HAD AM PLY DEMONSTRATED THAT BELIEF WAS BASED ON A MEETING WITH THE REPRESE NTATIVES OF THE ASSESSEE-COMPANY, DECLARATIONS OBTAINED FROM THE EM PLOYEES ETC. IT WAS ONLY ON THE STRENGTH OF SUCH DEMONSTRATION THAT THE EXPLANATION BEING HONEST, FAIR AND HAVING A BONA FIDE BELIEF, T HE TRIBUNAL ACCEPTED THE ASSESSEE'S CONTENTION WHICH HAS BEEN SUSTAINED BY THE HON'BLE HIGH COURT. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE-B ANK HAD NOT MADE ANY HONEST EFFORT TO JUSTIFY HOW ITS BONA FIDE BELI EF WAS FORMED TO EXCLUDE SUCH ALLOWANCE FROM SALARY OF THE EMPLOYEE WAS EXEM PT U/S. 10(5) OF THE ACT. THIS CASE LAW RELIED BY THE ASSESSEE-BANK IS DISTINGUISHABLE. 7.10 WE HAVE WITH DUE RESPECTS PERUSED THE RULING OF THE HON'BLE SUPREME COURT IN THE CASE OF LARSEN AND TOUBRO LTD. (SUPRA) RELIED ON BY THE ASSESSEE-BANK WHEREIN THE ISSUE BEFORE THE HON'BLE COURT WAS THAT 'THE EMPLOYER IS NOT UNDER ANY STATUTORY OBLIG ATION UNDER THE INCOME-TAX ACT, 1961 OR THE RULES TO COLLECT EVIDEN CE TO SHOW THAT THE EMPLOYEE HAD ACTUALLY UTILIZED THE AMOUNT PAID TOWA RDS LTC OR CONVEYANCE ALLOWANCE U/S. 10(5).' HOWEVER, THE PRES ENT ISSUE IS: WHETHER THE DEDUCTOR (ASSESSEE-BANK) WAS RIGHT IN A LLOWING EXEMPTION U/S. 10(5) TO ITS EMPLOYEES FOR TRAVEL OUTSIDE INDI A AND TRAVEL BY A LONG CIRCUITOUS ROUTE WHICH WAS, ACCORDING TO THE A.O., NOT IN ACCORDANCE WITH THE PROVISIONS OF S.10(5) READ WITH RULE 2B? THUS, THE ISSUE BEFORE THE HON'BLE COURT (SUPRA) WAS ON A DIFFERENT FOOTING AN D HAS NO RELEVANCE WHATSOEVER TO THE MATTER UNDER CONSIDERATION. THE R ULING OF THE HON'BLE SUPREME COURT RELIED ON BY THE ASSESSEE-BANK, IN OU R CONSIDERED VIEW, CANNOT COME TO ITS RESCUE. 8. AS RIGHTLY HIGHLIGHTED BY THE HON'BLE TRIBUNAL, LUC KNOW BENCH (SUPRA) AND CAREFUL PERUSAL OF THE PROVISIONS OF S.10(5) OF THE ACT, WE ARE OF THE VIEW THAT THE SAID PROVISION WAS INTRODUCED IN ORDE R TO MOTIVATE THE EMPLOYEES AND ALSO TO ENCOURAGE TOURISM IN INDIA AND, THEREFORE, THE REIMBURSEMENT OF LTC/LFC WAS EXEMPTED, BUT, THERE W AS NO INTENTION OF THE LEGISLATURE TO ALLOW THE EMPLOYEES TO TRAVEL ABROAD UNDER THE GARB OF BENEFIT OF LTC AVAILABLE BY VIRTUE OF S.10( 5) OF THE ACT . HOWEVER, IN THE PRESENT CASE THE EMPLOYEES OF THE A SSESSEE-BANK HAVE TRAVELLED OUTSIDE INDIA AND RAISED CLAIMS OF THEIR EXPENDITURE INCURRED THEREIN. THERE IS NO DISPUTE THAT THE ASSESSEE-BANK MAY NOT BE AWARE WITH THE PLAN OF TRAVEL OF ITS EMPLOYEES INITIALLY, HOWEVER, AT THE TIME OF SETTLEMENT OF LTC/LFC BILLS, THE EMPLOYEES SHOULD H AVE PLACED COMPREHENSIVE DETAILS BEFORE THE ASSESSEE-BANK AS T O WHERE THEY HAVE TRAVELLED/VISITED AND RAISED THE CLAIMS, THAT MEANS TO SAY, THE ASSESSEE- BANK WAS WELL AWARE OF THE FACT THAT ITS EMPLOYEES HAVE TRAVELLED IN FOREIGN COUNTRIES TOO BY AVAILING LTC/LFC FOR WHICH THEY WERE NOT ENTITLED FOR EXEMPTION U/S. 10(5) OF THE ACT. SUCH BEING THE SCENARIO, THE ASSESSEE-BANK CANNOT NOW PLEAD THAT IT WAS UNDER TH E BONA FIDE BELIEF THAT THE AMOUNTS CLAIMED WERE EXEMPT U/S. 10(5) OF THE ACT. THUS, THE ASSESSING OFFICER(TDS) WAS WITHIN HER DOMAIN TO TER M/CHARGE THAT THE ASSESSEE-BANK WAS UNDER OBLIGATION TO DEDUCT TDS ON SUCH PAYMENTS. SINCE THE ASSESSEE-BANK HAD FAILED TO DO SO, THE A. O.(TDS) HAD RIGHTLY TREATED THE ASSESSEE AN 'ASSESSEE IN DEFAULT' U/S. 201(1) OF THE ACT. ITA NO.1640/BANG/2019 :- 9 -: 9. THE ASSESSEE HAD RELIED ON VARIOUS CASE LAWS FOR TH E PROPOSITION THAT ITS ESTIMATE IS BONA FIDE AND IT CANNOT BE HELD TO BE A N 'ASSESSEE IN DEFAULT' U/S. 201(1) OF THE ACT. THIS CONTENTION OF THE ASSE SSEE IS WITHOUT LEGAL BASIS, SINCE THE ASSESSEE HAD MADE NO EFFORT TO PRO VE HOW ITS BELIEF WAS FORMED THAT SUCH FOREIGN TRAVEL EXPENSES WOULD COME WITHIN THE AMBIT OF SEC. 10(5) OF THE I.T. ACT. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS DELIBERATED UPON IN T HE FORE-GOING PARAGRAPHS AND ALSO IN CONFORMITY WITH THE JUDICIAL VIEWS (SUPRA), WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN THEIR STAND WHICH REQUIRES NO INTERFERENCE OF THIS BENCH. IT IS ORDER ED ACCORDINGLY. 5. THE IDENTICAL ISSUE HAS COME BEFORE THE ITAT, BA NGALORE BENCH IN ASSESSEES OWN CASE IN ITA NO.1578 TO 1581/BANG/201 7 DATED 29.11.2019 AND THE COORDINATE BENCH FOLLOWING ITS OWN ORDER I N THE CASE OF SYNDICAE BANK DISMISSED THE APPEAL OF THE ASSESSEE. DURING T HE APPEAL HEARING, THE LD. AR FAIRLY CONCEDED THAT THE FACTS ARE IDENTICA L. SINCE, THE FACTS ARE IDENTICAL AND THE LD. CIT(A) FOLLOWED THE ORDER OF THIS TRIBUNAL, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH IN THE CASE OF SYNDICATE BANK (SUPRA)WE DECLINE TO INTERFERE WITH THE ORDER OF TH E LD. CIT(A) AND THE SAME IS UPHELD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH DECEMBER, 2019. SD/- SD/- (N.V. VASUDEVAN) (D.S. SUNDER SINGH) VICE PRESIDENT ACCOUNTANT MEMBER BENGALURU, DATED: 04-12-2019 EDN ITA NO.1640/BANG/2019 :- 10 -: COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. 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