State Bank of India, New Delhi V. ACIT Circle-77(1), New Delhi

ITA 4851/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1117 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-09-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Retrospective amendment; Time period of passing order; TDS; Set aside
• Section: 201; 192; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘B’: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.4851/DEL/2019 [Assessment Year: 2011-12] M/s State Bank of India, Office Administration Department, Local Head Office, 11, Sansad Marg, New Delhi-110001 Vs Asst. Commissioner of Income Tax, Circle-77(1), Laxmi Nagar, Delhi-110092 PAN-AAACS8577K Assessee Revenue Assessee by Sh. Vivek Gupta, CA Revenue by Sh. Sumit Kumar Verma, Sr.DR Date of Hearing 20.09.2022 Date of Pronouncement 12.10.2022 ORDER PER SHAMIM YAHYA, AM, This appeal by the assessee is directed against the order of the Ld. CIT(A)-31, New Delhi, dated 19.03.2019 pertaining to Assessment Year 2011-12. 2. Grounds of appeal reads as under:- “1. That on the facts and circumstances of the case and provisions of the law, the order dated 05/03/2018 passed by the Ld AO u/s 201(1 )/201 (1 A) and confirmed by the Ld CIT(A), being beyond jurisdiction on account of expiry of limitation, is bad in law and needs to be quashed. 2. That without prejudice to ground no. 1 above and on the facts and circumstances of the case and provisions of the law, the Ld AO as well as Ld CIT(A) erred in 2 ITA No.4851/DEL/2019 M/s State Bank of India raising/confirming the demand of Rs. 23,16,799/-(including interest of Rs. 10,91,835/-) by denying the exemption u/s 10(5) in respect of reimbursement of Leave Travel concession involving foreign leg through circuitous route as long as the employees designated place is in India for his leave travel concession and he actually visits the place as designated. 3. That consequential to our Ground No.1,& 2 above, the learned AO and Ld CIT(A) has erred in charging/confirming interest u/s 201(1 A) of Rs. 10,91,835/-.” 3. Brief facts of the case are that the Assessing Officer for Assessment Year 2011-12 vide order dated 05.03.2018 passed an order u/s 201(1)/201(1A) of the Act. In the said order, a demand was raised of Rs.23,16,799/- including interest of Rs.10,91,835/-. In the order passed u/s 201(1)/201(1A) denying the exemption u/s 10(5) was denied in respect of reimbursement of Leave Travel Concession involving the foreign leg and/or treating the bank as an assessee in default on account of alleged non deduction of TDS on such reimbursement towards Leave Travel Concession. 4. Before the Ld. CIT(A), the assessee challenged the assessment order both on the validity of jurisdiction and merits of the case. The Ld. CIT(A) held that jurisdiction was valid and he held that amendment in provision of section 201(3) w.e.f 01.10.2014 is also applicable to the present assessee’s case. On merits also, he upheld the action of the Assessing Officer. We may gainfully refer the order of the Ld. CIT(A) is as under:- “4.1. All the grounds of appeal raised are pertaining to a demand of short deduction alongwith interest amounting to 3 ITA No.4851/DEL/2019 M/s State Bank of India Rs. 23,16,799/- raised u/s 201(1)/201(1A). At the outset, the Ld. AR has argued that as per provisions of section 201(3), the order should have been passed within the period of two year from the end of relevant financial year in which TDS statement was filed i.e. 2011-12 and hence the order passed by the A.O. is barred by limitation of time. On perusal of the provisions of section 201(3), I find that the section has been amended w.e.f 01.10.2014 and from this date, order u/s 201 can be passed at any time before the expiry of seven years also from the end of financial year in which payment is made or credit is given. Since the payment for reimbursement of expenditure liable for TDS was made in F.Y. 2010-11, the seven years period expire on 31.03.2018. Thus, the order passed by the AO dated 05.03.2018 is within prescribed time limit. On the basis of decisions of Hon'ble Supreme Court in the case of TATA Teleservices Vs Union of India (2016) 66 taxmann.com 157 (Guj), DCIT Vs Oracle India Pvt Ltd (2016) 72 taxmann.com 138 (SC) and Vodafone Cellular Limited Vs DCIT (2018) 91 taxmann.com 466 (Pune - Trife), the Ld. AR also argued that for the year under consideration the earlier provision will be applicable. However on going through these decisions, it is noticed that in the case of Oracle India Pvt Ltd (Supra), order u/s 201(1)/201(1A) for A.Y. 2008-09 was passed prior to amendment u/s 201(3) and similarly order in the case of Vodafone Cellular Ltd (Supra) was also passed prior to 01.10.2014. The Ld. AR has not brought on record any decision favourable to appellant on this issue which is of Hon'ble jurisdictional ITAT/High Court. Since the provisions in section 201(3) are procedural in nature, the order passed by the AO after this date even for financial year 2010- 11 has to be treated within the time prescribed. Hence I hold that the decisions relied upon by the Ld. AR are not applicable and grounds of appeal raised on this account are dismissed. 4.2. On merits, the grounds of appeal raised are pertaining to a demand of short deduction alongwith interest amounting to Rs. 23,16,799/- raised u/s 201(1)/201(1A). In his written submissions, the Ld. AR after referring to the provisions of section 10(5) and Rule 2B, has vehemently submitted that the employees of the bank have 4 ITA No.4851/DEL/2019 M/s State Bank of India actually travelled to the designated place in India such as Delhi-Madurai-Chennai-Europe-Delhi where designated place was Madurai. Further the fare has been paid equivalent to economy class of national carrier and accordingly the reimbursement of LFC was exempt u/s 10(5) of the Act. The arguments of the Ld. AR on this account are not acceptable because LFC for foreign component of travelling is not exempt u/s 10(5) and hence the tax was required to be deducted u/s 192 on the perquisite value of such LFC. Accordingly the action of AO on this account is confirmed raising a demand of Rs. 23,16,799/- u/s 201 (l)/201 (1A). However, in other two appeals of the appellant pertaining to A.Y. 2016-17 and 2018-19, the Ld. AR vehemently argued that the Hon'ble Madras High Court in the case of All India State Bank Officers Federation, Chennai and New Delhi (Petitioners) Vs SBI through its Chairman (Respondent), vide interim order dated 16.02.2015 contained in MP No. 2 of 2014 in WP No. 11991 of 2014 has held that the bank would not be liable to deduct tax at source on LTC/LFC, but if writ petition is dismissed, the employees are liable to pay tax on the amount paid by the bank. In view of the decision of Hon'ble High Court, therefore, the AO is directed to take necessary action for recovery of demand on the basis of final outcome in the above mentioned writ petition only. Thus, the grounds raised are partly allowed.” 5. Against the above order, the assessee is in appeal before us. 6. At the outset, the ld. counsel for the assessee stated that this issue is squarely covered in favour of the assessee by the order of the Tribunal in assessee’s own case vide order dated 03.08.2022 passed in ITA No.2615 & 2616/Del/2019 for Assessment Year 2011-12. In the said order, the ITAT had held that in similar circumstances in the similar period, the assessment order passed was held to be invalid as it was 5 ITA No.4851/DEL/2019 M/s State Bank of India passed beyond the limitation period for two years. . The ITAT has concluded as under:- “8. Appreciating the mater on record it can be observed that there is no dispute to the fact that for assessment year 2010- 11 in ITA No. 2616/Del/2019 summons was issued on 20.01.2018 and notice u/s 201(1)/ 201(1A) of the Act were issued on 29.01.2018 while in case of ITA No. 2615/Del/2019 also the summons were issued on 20.01.2018 and notice was issued on 29.01.2018. The assessment orders u/s 201(1)/ 201(1A) of the Act have been passed on 05.03.2018. There is no doubt that Section 201(3) of the Act provides that the assessment orders under sub section 1 of Section 201 against assessee in default for failure to deduct the whole or any part of the tax from a person resident in India can be passed before expiry of two years from the end of financial year in which the payment is made. Judgment of Hon’ble Gujarat High Court in Tata Teleservices vs. Union of India (supra) relied by Ld. Counsel for appellant has held that Section 201(3) as amended by Finance Act (no. 2) of 2014 shall not be applicable retrospectively and for convenience relevant para 15 is reproduced as below:- 15. Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, to the facts of the case on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201 (3)(i) of the Act had already expired on 31/3/2011 and 31/3/2012. respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and therefore, as such a right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so specifically provided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(i) of the Act can be passed for which limitation had already expired prior to amended section 201(3) as amended by Finance Act 6 ITA No.4851/DEL/2019 M/s State Bank of India No.2 of 2014. Under the circumstances, the impugned notices / summonses cannot be sustained and the same deserve to be quashed and set aside and writ of prohibition, as prayed for, deserves to be granted.” 9. Co-ordinate Bench at Delhi in the case of HCL Technologies Ltd. (supra) has also relied the Hon’ble Gujarat High Court judgment. The distinction attempted to be brought by Ld. Sr. DR by submitting that under the un-amended sub section 3 of Section 201 there were two clauses and first clause provided two years limitation was in case where statement of TDS were filed and there was limitation of six years where no such statement is filed and has no foundation because in the present case admittedly the statement was filed by the assessee and the question was only with regard to the issue if TDS was required to be deducted in cases involving payment of LTC reimbursements to employees who had taken circuitous routes involving travel abroad to one or more domestic destinations. Thus, there is no doubt in the mind of Bench that the impugned order of assessment passed was without jurisdiction as the same was passed beyond the limitation period of two years and accordingly the ground no. 1 as raised stands allowed in favour of the assessee declaring assessment order to be void ab initio requiring no further determination of issues raised in remaining ground no. 2 to 5. 7. Ld. DR did not dispute that the issue is covered as submitted above. 8. We have carefully considered the submission and perused the record. We find that the issue herein is whether the limitation period would be two years or six years as per amendment and whether amendment applies retrospectively. We find that identical circumstances in assessee’s own case in ITA No.2615 & 2616/Del/2019, the ITAT held that assessment order passed was beyond limitation period of two years and hence void ab initio. Following the precedent in assessee’s own case as above, we hold the assessment order passed in the present case on 7 ITA No.4851/DEL/2019 M/s State Bank of India 05.03.2018 relating to the Assessment Year 2011-12, on the same reasoning is beyond limitation period and void ab intio. Following the decision of the Co-ordinate Bench, the appeal of the assessee stands allowed. 9. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 12 th October, 2022. Sd/- Sd/- [YOGESH KUMAR US] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi; Dated: 12.10.2022. f{x~{tÜ f{x~{tÜf{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi