State Bank of India, Regional Business Office-II, Surat V. The Income Tax Officer (TDS-2), Surat

ITA 887/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2103 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Keywords: Additional evidence; TDS
• Section: 201(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NOS.886, 887 & 888/AHD/2016/SRT / ASSESSMENT YEARS: 2013-14 & 2014-15 STATE BANK OF INDIA, REGIONAL BUSINESS OFFICE-II, GHOD DOD ROAD, NR. BSNL OFFICE, SURAT 395 001. [PAN: AAACS 8577K] VS. INCOME TAX OFFICER, TDS-2, SURAT. ( / APPELLANT) ( !' /RESPONDENT) / ASSESSEE BY : SHRI PANKAJ GUPTA, C.A /REVENUE BY : SHRI R.P. RASTOGI, SR. D.R /DATE OF HEARING : 18-04-2018 /DATE OF PRONOUNCEMENT : 20-04-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS IS A SET OF THREE APPEALS FILED BY THE ASSESSE E AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS )-3, SURAT (CIT(A) FOR SHORT) DATED 29.01.2016 FOR THE ASSESSMENT YEAR S (A.YS) 2013-14 & 2014-15 PASSED UNDER SECTION 201(1) AND 201(1A) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. THE ASSESSEE HAS RAISED IDENTICAL AND SIMILAR GR OUNDS IN ALL THESE THREE APPEALS AND BOTH THE PARTIES AGREED THAT FACT S AND CIRCUMSTANCES OF 2 ITA NOS.886, 887 & 889/AHD/2016/SRT (A.YS: 2012-13 & 2014-15) STATE BANK OF INDIA THESE APPEALS ARE ALSO QUITE IDENTICAL AND SIMILAR. FOR THE SAKE OF CONVENIENCE OF ADJUDICATION, WE ARE TAKING ITA NO.8 86/AHD/2016/SRT AS LEAD CASE WHERE THE GROUNDS OF ASSESSEE READ AS FOL LOWS: 1. THE ORDER OF THE LEARNED ITO TDS - 2 AND THE ORD ER OF CIT (A)-3 ON ASPECTS AGITATED IN THIS APPEAL, IS BAD IN LAW, CON TRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE AND WITHOUT APPRECIATI ON OF THE FACTS AND CIRCUMSTANCES OF THE CASE IN THEIR RIGHT PERSPECTIV E. 2. THE LEARNED ITO TDS - 2 ERRED IN PASSING AN ORDE R UNDER SECTION 201(1) / 201(1A) AND IN RAISING DEMAND OF RS. 17,94,201/- (I.E. TAX OF RS. 13,88,315/- AND INTEREST OF RS.4,05,886/-) ON THE B ASIS THAT TAX WAS NOT DEDUCTED AT SOURCE ON PAYMENT OF LEAVE TRAVEL CONCE SSION. THE ID. CIT (A)-3, SURAT ALSO ERRED IN PASSING THE ORDER WI THOUT ADJUDICATING ALL OF THE GROUNDS OF THE APPEAL MADE BEFORE HIM AND DI SMISSING THE ADJUDICATED GROUND NO. 2 OF APPEAL AND CONFIRMING T HE ACTION OF ITO (TDS-2). 3. THE LEARNED ITO TDS - 2 ERRED IN NOT GRANTING SU FFICIENT OPPORTUNITY OF HEARING TO THE BANK PRIOR TO PASSING THE ORDER UNDE R SECTION 201(1) /201(1A). 4. THE LEARNED ITO TDS - 2 ERRED IN NOT APPRECIATIN G THAT THE BENEFIT OF LEAVE TRAVEL CONCESSION IS AVAILABLE TO THE BANK'S EMPLOYEE EVEN IN CASES WHERE THE JOURNEY UNDERTAKEN BY AN EMPLOYEE I NVOLVES A FOREIGN LEG BUT THE EMPLOYEE'S DESIGNATED PLACE IS IN INDIA AND HE ACTUALLY VISITS THE PLACE AS DESIGNATED. 5. THE LEARNED ITO TDS - 2 ERRED IN MAKING THE FOLL OWING OBSERVATION, HOLDING AS UNDER: '2. DURING THE COURSE OF VERIFICATION, IT WAS FOUND THAT SOME OF THE EMPLOYEES OF BANK HAVE CLAIMED L.F.C. (LEAVE FARE C ONCESSION) FOR TRAVELLING TO FOREIGN COUNTRIES. AS PER THE PROVISI ON OF SECTION 10(5) OF THE I.T. ACT, THE EXEMPTION OF L.F.C. IS ALLOWED ONLY I F THE EMPLOYEE TRAVELS TO ANY PLACE IN INDIA.' '3. IF THE EMPLOYEE TRAVELS OUT OF INDIA, THE L.F.C . AMOUNT CANNOT BE CLAIMED AS EXEMPTED U/S 10(5) OF THE I.T. ACT AND I T HAS TO BE TAXED AS PART OF SALARY OF THE CONCERNED EMPLOYEE. ACCORDING LY THE EMPLOYER IS REQUIRED TO DEDUCT TDS ON THIS AMOUNT U/S 192 AFTER TREATING IT AS PART OF SALARY. THE BANK WAS REQUESTED TO PROVIDE THE DETAI LS OF LFC CLAIMS IN WHICH THERE WAS FOREIGN TRAVEL. THE ABOVE OBSERVAT IONS ARE WITHOUT ANY BASIS AND ARE CONTRARY TO THE FACTS OF THE CASE. TH E APPELLANT OBJECTS TO THESE OBSERVATIONS / CONCLUSIONS. 6. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ITO TDS - 2 ERRED IN NOT APPRECIATING THE BONA FIDE BELIEF OF THE BANK IN GRANTING BENEFIT OF LEAVE TRAVEL CONCESSION PAID TO THE BANK'S EMPLOYEES WHO TRAVELLED OUT OF INDIA AND HELD THE BANK TO BE AN ASSESSEE IN DEFAUL T. 3 ITA NOS.886, 887 & 889/AHD/2016/SRT (A.YS: 2012-13 & 2014-15) STATE BANK OF INDIA 7. WITHOUT PREJUDICE TO THE ABOVE, WHILE COMPUTING THE TDS LIABILITY THE LEARNED ITO TDS - 2 ERRED IN CONSIDERING CASES WHER E LEAVE TRAVEL CONCESSION HAS BEEN PAID FOR JOURNEYS WHICH DID NOT INVOLVE ANY FOREIGN TRAVEL BEING UNDERTAKEN BY THE EMPLOYEE. 8. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ITO TDS - 2 ERRED IN NOT APPRECIATING THAT THE EMPLOYEE IS ENTITLED TO EXEMP TION UNDER SECTION 10(5) TO THE EXTENT OF EXPENSES INCURRED FOR TRAVEL IN INDIA WHERE THE EMPLOYEE'S DESIGNATED PLACE IS IN INDIA AND HE ACTU ALLY VISITS THE PLACE AS DESIGNATED EVEN IN CASES WHERE THE JOURNEY UNDER TAKEN BY AN EMPLOYEE INVOLVES A FOREIGN LEG. 9. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ITO TDS - 2 ERRED IN APPLYING A FLAT RATE OF 30% FOR COMPUTATION OF TDS INSTEAD OF APPLYING THE ACTUAL INCOME-TAX RATE APPLICABLE IN CASE OF EA CH EMPLOYEE. BUT AGAINST THE ORDER OF ITO TDS-2,THE LD. CIT (A)-3, S URAT APPRECIATED THIS PLEA OF THE BANK IN FAVOR AND PRONOUNCED THAT 'THE ACTUAL INCOME TAX RATE APPLICABLE TO THE INDIV IDUAL EMPLOYEE SHOULD BE ADOPTED FOR THE TDS'. 10. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED ITO TDS - 2 ERRED IN COMPUTING INTEREST FROM THE DATE OF SANCTION OF LTC INSTEAD OF CONSIDERING THE ACTUAL DATE OF PAYMENT OF THE LTC I N CASE OF EACH EMPLOYEE. BUT AGAINST THE ORDER OF ITO TDS-2,THE LD . CIT (A)-3, SURAT APPRECIATED THIS PLEA OF THE BANK IN FAVOR AND PRON OUNCED THAT 'TDS CAN BE MADE ONLY WHEN ACTUAL DISBURSEMENT OR P AYMENT IS MADE TO EMPLOYEE/S AND NOT WHEN THE SANCTION IS GIVEN TO THE ASSESSEE. AS A COROLLARY THE DEFAULT ALSO ARISES WHEN PAYMENT IS M ADE WITHOUT DEDUCTING TAX AND HENCE, THE INTEREST IS ALSO CHARG EABLE FROM THE DATE OF ACTUAL PAYMENT'. 11. THE LEARNED ITO TDS - 2 ERRED IN NOT APPRECIATI NG THE SUBMISSIONS MADE BY THE BANK IN THE CORRECT PERSPECTIVE. 12. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITH OUT PREJUDICE TO THE OTHER. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE ITO, TDS HAS NOT GRANTED SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE PRIOR TO PAS SING THE IMPUGNED ORDER. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS RECEIVED THE SET OF 4 ITA NOS.886, 887 & 889/AHD/2016/SRT (A.YS: 2012-13 & 2014-15) STATE BANK OF INDIA SANCTIONED DOCUMENTS OF TWO EMPLOYEES SHRI HAREESH JAIN AND SHRI MANOJ PAWAR AND FROM THE DETAILS OF THEIR TRAVEL SHOW THA T THE TRAVEL WAS WITHIN INDIA AND THESE EMPLOYEES HAVE NOT TRAVELLED TO ANY PLACE SITUATED OUTSIDE INDIA. THE LD. AR SUBMITTED THAT THIS VITAL EVIDEN CE COULD NOT BE SUBMITTED BEFORE THE AO, TDS, THEREFORE, THE SAME IS BEING SU BMITTED AS ADDITIONAL EVIDENCE, WHICH MAY KINDLY BE ADMITTED FOR CONSIDER ATION AND ADJUDICATION OF THE APPEAL. 4. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BE LOW. HOWEVER, IN ALL FAIRNESS THE LD. DR SUBMITTED THAT THE DEPARTMENT H AS NO SERIOUS OBJECTION IF THE ADDITIONAL EVIDENCE IS ADMITTED AND THE CASE IS RESTORED TO THE FILE OF AO FOR LIMITED PURPOSE FOR RE-ADJUDICATION OF THE ISSU E ONLY. 5. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE ARE OF THE CONSIDERED VIEW THAT THE ITO, TDS HAS MADE ADDITION S BASED ON CERTAIN ALLEGATIONS AND THE ASSESSEE WAS NOT ALLOWED SUFFIC IENT OPPORTUNITY OF HEARING TO EXPLAIN THE CASE AND ISSUE AND TO SUBMIT RELEVANT EVIDENCE EXPLAINING THE STAND OF THE ASSESSEE. IN THIS SITU ATION, ENDS OF JUSTICE WOULD BE IF ADDITIONAL EVIDENCE IS ADMITTED FOR CONSIDERA TION, AND SINCE, THE AO HAD NO OPPORTUNITY TO EXAMINE AND VERIFY THE ADDITIONAL EVIDENCE DURING ORIGINAL ASSESSMENT PROCEEDINGS, THEREFORE, HE SHOULD BE ALL OWED TO EXAMINE AND VERIFY THE SAME AFTER ALLOWING DUE OPPORTUNITY OF H EARING TO THE ASSESSEE. WE ORDERED ACCORDINGLY THE ADDITIONAL EVIDENCE FILE D BY THE ASSESSEE IS ADMITTED, AND AO IS DIRECTED TO EXAMINE AND VERIFY THE SAME AFTER ALLOWING 5 ITA NOS.886, 887 & 889/AHD/2016/SRT (A.YS: 2012-13 & 2014-15) STATE BANK OF INDIA DUE OPPORTUNITY OF HEARING TO THE ASSESSEE, AND WIT HOUT BEING PREJUDICE FROM THE EARLIER ASSESSMENT AND FIRST APPELLATE ORDER. ACCORDINGLY, APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.887 & 888/AHD/2016/SRT : 6. SINCE, THE FACTS AND CIRCUMSTANCES OF ALL THREE APPEALS ARE QUITE SIMILAR AND IDENTICAL AND ASSESSEE HAS ALSO SUBMITT ED ADDITIONAL EVIDENCE IN OTHER TWO APPEALS THEREFORE, OUR CONCLUSION DRAWN I N ITA NO.886/AHD/2016/SRT WOULD APPLY MUTATIS MUTANDIS TO THE OTHER TWO APPEALS ALSO. ACCORDINGLY, OTHER TWO APPEALS ARE A LSO ALLOWED FOR STATISTICAL PURPOSES WITH THE DIRECTIONS TO THE AO AS MENTIONED HEREIN ABOVE. 7. IN THE RESULT, THREE APPEALS ARE ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 0 TH APRIL, 2018. / SURAT ; DATED : 20 TH APRIL, 2018 EDN ! $ / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. # ( ) / THE CIT(A)- 3, SURAT; 4. PRL. CIT, SURAT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE. // TRUE COPY // SD/ - SD/ - ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER