State Bank of India, New Delhi V. ACIT, New Delhi

MA 576/DEL/2018

AI Insights

The case involves the State Bank of India (SBI) appealing against the order of the Assessing Officer (AO) and the CIT(A) regarding the denial of exemption under section 10(5) read with Rule 2B of the Income Tax Act for reimbursement of Leave Travel Concession (LTC) that included a foreign leg. The Tribunal initially recorded that the assessee did not press ground no.2 during the hearing, which was contested by the assessee in the miscellaneous application. The Tribunal acknowledged the mistake and recalled the order to adjudicate ground no.2 but upheld the decision on the other grounds based on precedents and the materials on record.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129940 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 03-11-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 06-09-2018
• Other Referred Cases: SBI Vs. DCIT, Allahabad Bank, Aligarh Muslim University
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS

Judgement Text

MA.No.576/Del/2018 & ITA No.3751/Del/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER MA No. 576/Del/2018 (In I.T.A No.3751/Del/2016) /Assessment Year: 2012-13 State Bank of India Office Administration Department Local Head Office-11, Sansad Marg, New Delhi. ब म Vs. ACIT Erstwhile TDS Circle 51(1), (now Circle 77(1), Laxmi Nagar, Delhi.) PAN No.AAACS8577K Appellant /Respondent & I.T.A No.3751/Del/2016 /Assessment Year: 2012-13 State Bank of India Office Administration Department Local Head Office-11, Sansad Marg, New Delhi. ब म Vs. ACIT Erstwhile TDS Circle 51(1), (now Circle 77(1), Laxmi Nagar, Delhi.) PAN No. AAACS8577K Appellant /Respondent Assessee by Shri Vivek Gupta, CA Revenue by Shri Yogesh Nayyar, Sr. DR स ु नवाईक तारीख/ Date of hearing: 04.11.2022 उ ोषणाक तारीख/Pronouncement on 11.09.2023 MA.No.576/Del/2018 & ITA No.3751/Del/2016 2 आदेश /O R D E R PER C.N. PRASAD, J.M. Through this miscellaneous application the assessee requests for recall of the order of the Tribunal in ITA No.3751/Del/2016 dated 23.05.2018 for the AY 2012-13. 2. Firstly it is the contention of the assessee that the Tribunal has recorded in the order that assessee has opted not to press ground no.2 and accordingly this ground was dismissed as not pressed. The assessee contends that at the time of hearing the assessee has not made any argument on ground no.2 and in fact the ground was conceded as the Tribunal intended to follow the coordinate bench decision of Lucknow Bench in the case of SBI Vs. DCIT reported in (2016) 67 taxmann.com 81, wherein identical issue has been decided against the assessee. The Ld. Counsel submits that there is a mistake apparent on record in observing that assessee has not pressed ground no.2. Therefore, it is prayed that the appeal be recalled to adjudicate ground no.2. 3. Secondly, in respect of ground nos. 3 & 4 which are without prejudice grounds the assessee contends that the finding of the Tribunal is that the assessee has not furnished relevant information to prove that the employees who have claimed LTC are Income tax MA.No.576/Del/2018 & ITA No.3751/Del/2016 3 assessees and they have considered the amounts paid by the assessee in their returns and taxes have been duly paid. The assessee in the miscellaneous application contends that all the details of payees i.e. name, PAN Number, amount paid, date of payment, date of journey and destination have been provided to the Assessing Officer and, therefore, the Tribunal should have followed the decision of Delhi Bench in the case of Allahabad Bank and Agra Tribunal in the case of Aligarh Muslim University and granted relief to the assessee. 4. Ld. DR opposed for recalling the order. 5. On hearing both the parties and perusing the order of the Tribunal it is noticed that the Tribunal in para 2 observed that Ld. Counsel for the assessee opted not to press ground no.2. 6. The Ld. Counsel for the assessee contends that the ground no.2 of grounds of appeal may be decided and it was never the contention of the assessee not to press the ground, we observed that the Tribunal inadvertently mentioned that ground no.2 of grounds of appeal was not pressed and accordingly the same was dismissed which is a mistake apparent on record. Thus, we recall the order of the Tribunal in ITA No.3751/Del/2016 dated 23.05.2018 to dispose of ground no.2. MA.No.576/Del/2018 & ITA No.3751/Del/2016 4 7. In so far as the alternative grounds raised by the assessee, we observed that the Tribunal considering the facts on record, restored the matter back to the AO for making necessary verification with regard to payment of taxes by the recipients and, therefore, there is no mistake apparent on record in deciding the alternative grounds by the Tribunal which is based on materials available on record. 8. Therefore, the only ground to be adjudicated in the appeal of the assessee is ground no.2 which is as under: - “2. That on the facts and circumstances of the case & provisions of the law, the Ld.CIT(A) erred in confirming the denial of exemption u/s 10(5) read with Rule 2B in respect of reimbursement of Leave Travel Concession involving foreign leg through circuitous route as long as the employees designated placed is in India for his leave travel concession and he actually visits the place as designated and the bank has not paid any amount for foreign tour which has been undertaken by the employee from his own pocket.” 9. As observed by us in earlier paragraphs that the assessee has not made any submissions as the issue has been decided against the assessee by the Lucknow Bench of the Tribunal in the case of SBI Vs. DCIT reported in 67 taxmann.com 81 (supra). We observe that the Ld.CIT(A) in fact followed the order of the Tribunal and decided the issue against the assessee observing as under: - MA.No.576/Del/2018 & ITA No.3751/Del/2016 5 “4.10 The Lucknow Bench of JTAT has decided a similar appeal in the case of SBI Vs, DC 17 TDS , Kanpur (2016) 67 Taxman.com 81 (Lucknow-Trib.), it is relevant to quote the Hon’ble LFAT’s decision dated 4th March, 2016 in this case: As per provisions of section 10(5) of the Act, only that reimbursement of expenses, which were incurred on travel of employees and his family to any place in India subject to certain limits, are exempt. Since the employee of the assessee has travelled to foreign countries, the benefit of exemption available u/s 10(5) of the Act cannot be granted to the employees. No doubt, at the time of advancement of LTC amount, the employer may not be knowing, but at the lime of settlement of bills of LTC/LFC complete details must have been obtained by the employer and once it is noted that the employee has visited foreign counties and he is not entitled for exemption of reimbursement of LTC u/s 10(5) of the Act, the employer should have deducted TDS while finalizing LTC/LFC bill. Since the assessee has intentionally did not deduct TDS on a payment, to which the employees is not entitled for any exemption, the Assessing Officer has rightly held the assessee to be in default and raised the demand u/s 201(1 )and 201(1 A) of the Act". .......... Having carefully examined the order of the lower authorities in the light of the rival submissions and the documents placed on record, we find that as per provisions of section 10(5) of the Act, only that reimbursement of travel concession or assistance to an employee is exempted which was incurred for travel of the individual employee or his family members to any place in India. Nowhere in this clause it has been stated that even if the employee travels to foreign counties, exemption would be limited to the expenditure incurred to the last destination in India. For the sake of reference, we extract the provisions of section 10(5) of the Act as under: - MA.No.576/Del/2018 & ITA No.3751/Del/2016 6 “10. In computing the total income of a previous year of any person, any income falling within any of the following clauses 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,- (a) From his employer for himself and his family, in connection with his proceeding on leave to any place in India; (b) From his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service. Subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government. 9. On perusal of this section, we are of the view that this provision was introduced in order to motivate the employees and also to encourage tourism in India and, therefore, the reimbursement of LTC/LFC was exempted, but there was no intention of the legislature to allow the employees to travel abroad under the grab 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 countries and raised claim of their expenditure incurred therein. No doubt, the assessee may not be aware with the ultimate 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 MA.No.576/Del/2018 & ITA No.3751/Del/2016 7 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 not entitled for exemption u/s 10(5) of the Act. Thus, the payment made to its employees is chargeable to tax, and in that situation, the assessee is under obligation to deduct TDS on such payment, but the assessee did not do so far the reasons, best known to it.” The appellant’s case is squarely covered by this decision. Following this precedent, I hold that the appellant was liable to deduct tax on these payments.” 10. On careful reading of the observations of the Ld.CIT(Appeals), we see no infirmity in the order passed as the Ld.CIT(A) in following the decision of the Tribunal in assessee’s case and in deciding against the assessee. Thus, we sustain the order of the Ld.CIT(A) and reject ground no.2 of grounds of appeal of the assessee. 11. In the result, miscellaneous application filed by the assessee is partly allowed and the appeal of the assessee is partly allowed as indicated above. Order pronounced in the open court on 11/09/2023 Sd/- Sd/- (PRADIP KUMAR KEDIA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MA.No.576/Del/2018 & ITA No.3751/Del/2016 8 Dated: 11.09.2023 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi