Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2022 (1) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 539 - KARNATAKA HIGH COURTTDS u/s 192 - Exemption u/s 10(5) read with Rule 2B of the Income Tax Rules, 1962 - liability under Sections 201[1] and 201[1A] - appellant - Bank provides benefit of leave travel concession (‘LTC’ for short) to its employees and while deducting TDS from the salary of the employees - reimbursement of leave travel expenses as claimed by the employee of the Appellant - Whether the Tribunal was justified in holding that in the light of the provisions of Section 10(5) of the IT Act, 1961 read with Rule 2B of the IT Rules, 1962 when the employee has undertaken circuitous route which included foreign leg, the exemption is totally denied without considering the expenditure involved by the shortest route from the place of departure to the place of destination when both the places are within India? - HELD THAT:- The liability under Sections 201[1] and 201[1A] would arise only when the assessee has been declared as an assessee-in-default, the object of which is to recover the tax. Tax compliance has to be made strictly in terms of the Act, not on the advise/Circulars of the Association. Tax being compulsorily payable, in default interest is liable to be paid under Section 201[1A] which is compensatory in nature but that is not so in the case of penalty. The Hon'ble Apex Court in Eli Lilly & Co. [2009 (3) TMI 33 - SUPREME COURT], has set aside the penalty order made under Sections 271C read with 273B of the Act directing the Assessing Authority to examine each case to ascertain whether the employee-assessee [recipient] has paid the tax due on, in case tax due on stands paid off, then the Assessing Officer shall not proceed under Section 201[1]. In cases where the tax has not been paid, the Assessing Officer has been directed to proceed under Section 201[1] of the Act. Similarly with respect to Section 201[1A] of the Act, relief has been granted only with respect to penalty proceedings. In the light of this judgment, the shelter taken by the assessee under the bonafide reason cannot be countenanced. We have also perused the e-Circular referred to, by the learned counsel for the assessee dated 03.03.2015, where the interim order of the Hon’ble Madras High Court dated 16.02.2015 has been referred to. But in the present cases, journey was undertaken prior to 16.02.2015. As in the case of Commissioner of Income-tax and Another V/s. Larsen and Toubro Ltd.[2009 (1) TMI 11 - SC ORDER] beneficiary of exemption under Section 10[5] is an individual employee. There is no Circular of the Central Board of Direct Taxes [CBDT] requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee[s]. With great respect, we are of the considered view that this judgment would not come to the aid of the appellant to substantiate the arguments advanced in the present case. Having regard to Section 10[5] and Rule 2B, it is clear that leave travel concession is available for an employee to proceed on leave to any place in India [destination] and thereafter return to the place of origin in the shortest route but not with a foreign leg. Such an amount to be allowed as concession cannot exceed the air economy fair of the National carrier by the shortest route to the destination in India. We are of the considered view that no claim of exemption could be made, out of the total ticket package spent on overseas travel with part of the journey being within India by the employee. The bonafide belief pleaded by the appellant assessee is without any legal basis. Considering these aspects, the authorities have rightly held that the assessee as an ‘assessee in default’ under Section 201[1] of the Act - we answer the substantial questions of law against the assessee.
|