STATE BANK OF INDIA LAKE TOWN BRANCH,KOLKATA V. INCOME TAX OFFICER TDS CIRCLE 3(1), KOLKATA

ITA 1146/KOL/2024

AI Insights

The case involves the State Bank of India, Lake Town Branch, appealing against the order of the Commissioner of Income Tax (Appeals) which upheld the AO's decision treating the bank as an assessee in default for not deducting tax at source on LFC payments to employees. The bank argued that it acted under the belief that TDS was not applicable, based on a Madras High Court judgment. However, the Supreme Court later stayed this judgment and ruled in favor of the Revenue. The Tribunal found that the bank was not given adequate opportunity to present its case and thus restored the matter to the AO for re-examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470971 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 17-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; TDS
• Section: 250; 201(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Shri Manish Borad, Accountant Member Shri Sonjoy Sarma, Accountant Member I.T.A. No. 1146/Kol/2024 Assessment Year: 2016-17 State Bank of India, Lake Town Branch, P-871, Block-A, Lake Town, Kolkata - 700089 [PAN: CALS02119F] .......................…...……………....Appellant vs. Income Tax Officer, TDS Circle 3(1), Kolkata, 10B, Middleton Road, Kolkata - 700071 ...…..........................…..…..... Respondent Appearances by: Assessee represented by :Vikash Saraogi, AR Department represented by :P.P. Barman, Addl. CIT, Sr. DR Date of concluding the hearing :October 03, 2024 Date of pronouncing the order :October 09, 2024 ORDER Per Sonjoy Sarma, Judicial Member: This appeal filed by the assessee pertaining to the Assessment Year (in short „AY‟) 2016-17is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the „Act‟) by the Learned Commissioner of Income Tax (Appeals), Addl/JCIT(A)-1, Coimbatore (in short „the Ld. CIT(A)‟], dated 21.03.2024 arising out of Order dated 31.03.2023, passed under Section 201(1)/201(1A) of the Act. I.T.A. No.1146/Kol/2024 State Bank of India,Lake Town Branch 2 2. The Assessee has raised the following grounds of appeal: “1. The order of the learned CIT(A), on aspects agitated in this appeal, is bad in law, contrary to the provisions of law and facts of the case and without appreciation of the facts and circumstances of the case in their right perspective. 2. The learned CIT(A) & TDS officer both erred in holding the Appellant as an assessee in default under section 201(1) on the basis that tax was not deducted at source on payment of Leave Fare Concession [LFC] and raising a demand of and interest. 3. The learned CIT(A) & TDS officer both erred in not appreciating that the Appellant did not deduct tax at source on the reimbursement of LFC amounts to its employees under the specific directions of the Hon'ble High Court of Madras in its Interim Order dated 16 February 2015 in W.P. No. 11991 of 2014.” 3. Brief facts of the case are that the information was received from TDS Circle 2(2), Mumbai, regarding LFC payment made by the assessee to its employees during financial year 2015-16 (relevant to the AY 2016-17) without deducting tax at source as required u/s 192(1) of the Act. A show cause notice u/s 201(1)(1A) of the Act was issued to the assessee on 23.03.2023 asking the assessee to explain why it should not be treated as the assessee in default for failure to TDS on the Leave Fair Concession (LFC). In response the assessee provided a list of such employees who availed to LFC benefit but argued that the LFC payment did not attract TDS liability u/s 192(1) of the Act, as these payments were exempt u/s 10(5) of the Act after verifying the details provided by the assessee, the AO concluded that no TDS was deducted on LFC payments involving certain travel routs, which were not eligible for exemption u/s 10(5) of the Act. As a result, the AO treated the assessee as being in default u/s 201(1) and calculated the tax liability to be Rs. 87,212/- along with interest u/s 201(1A) amounting to Rs. 81,107/- thereby raising the total demand of Rs. 1,68,320/- the assessee‟s appeal to CIT(A) was dismissed leading to the present appeal before this Tribunal. I.T.A. No.1146/Kol/2024 State Bank of India,Lake Town Branch 3 4. At the time of hearing, the Ld. Counsel for the assessee submitted that the assessee was not given adequate time to comply with the AO notice dated 28.03.2023 and the order was passed hastily on 31.03.2023 without giving assessee an opportunity to furnish necessary details. The assessee further argued that at the time making the LFC payments it relied on the judgment of the Hon‟ble Madras High Court dated 16.02.2015 which held that the TDS was not applicable on LFC payments was acted in good faith assuming that TDS was not applicable on LFC payments. The assessee acted in good faith assuming that no TDS was required. The Counsel also referred to the Hon‟ble Supreme Court interim order dated 28.03.2023 in which the Hon‟ble Court stay the operation of previous judgment dated 08.06.2023, which was in favour of the revenue and directed that no recovery should be made from the employees until final decision was reached. Therefore, the assessee requested that issue is restored to the file of AO for reconsideration. 5. On the other hand, the Ld. DR argued that the assessee was provided sufficient opportunity to comply with the TDS but failed to deduct tax at source on the LFC payments. The AO therefore, correctly raised the demand u/s 201(1) and 201(1A) of the Act. The ld. DR also contended that the Hon‟ble Supreme Court had already decided the appeal in favour of the Revenue in its order dated 08.06.2023 and the assessee failure to deduct TDS was a clearly violation of the provision of the Act. 6. We after hearing the rival submissions of the parties and perusing the material available on record, we find that the assessee was held to be in default for non deduction of tax on LFC payments. The Hon‟ble Madras High Court in judgment dated 16.12.2015 followed that the TDS was not required on LFC payment which made have created confusion for the I.T.A. No.1146/Kol/2024 State Bank of India,Lake Town Branch 4 assessee regarding its TDS obligation. Subsequently, the Hon‟ble Supreme Court vide its order dated 08.06.2023 ruled in favour of the Revenue, but later stayed the operation of this judgment on 28.08.2023. 7. Given the stay order by the Hon‟ble Supreme Court considering the facts that the assessee did not have adequate opportunity to presentits case before the AO. We deem it appropriate to restore the matter to the file of the AO for necessary approval. The AO is directed to examine whether the employees who received LFC payment offered the amounts for their taxation in their individual return, if it is found that employees have already paid tax on this account no further liability for TDS should arose on the assessee. In the interest of justice and fair play, we set aside the order of Ld. CIT(A) and restore the matter to the file of AO for fresh examination. The AO is directed to verify the details and provide a reasonable opportunity of being heard to the assessee before deciding the issue in accordance with law. 8. In terms of the above, appeal of the assessee is allowed for statistical purposes. 9. In the result, appeal of the assessee isallowed for statistical purposes. Kolkata, the 9th October, 2024. Sd/- Sd/- [Manish Borad] [Sonjoy Sarma] Accountant Member Judicial Member Dated:09.10.2024. AK, PS I.T.A. No.1146/Kol/2024 State Bank of India,Lake Town Branch 5 Copy of the order forwarded to: 1State Bank of India, Lake Town Branch 2.Income Tax Officer, TDS Circle 3(1), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches "