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TMI Blog2020 (2) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... em it convenient to pass a common order. 2. Leave Travel Allowance (LTA) is the most common element of compensation adopted by employers to remunerate employees due to the tax benefits attached to it. An LTA is the remuneration paid by an employer for Employee's travel in the country, when he is on leave with the family or alone. LTA amount is tax free. Section 10(5) of the Income-Tax Act, 1961, read with Rule 2B (Commonly known as LTA Rules), provides for the exemption and outlines the conditions subject to which LTA is exempt. As per LTA Rules, LTA exemption can be claimed where the employer provides LTA to employee for leave to any place in India taken by the employee and their family. Such exemption is limited to the extent of actual travel costs incurred by the employee. Travel within India only allowed- As per LTA Rules, travel has to be undertaken within India and overseas destinations are not covered for exemption. Sec.10(5) of the Act reads thus:- "Section: 10 ( 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed in a block of four calendar years commencing from the calendar year 1986 : [Provided that nothing contained in this sub-rule shall apply to the benefit already availed of by the assessee in respect of any number of journeys performed before the 1st day of April, 1989 except to the extent that the journey or journeys so performed shall be taken into account for computing the limit of two journeys specified in this sub-rule.] (3) Where such travel concession or assistance is not availed of by the individual during any such block of four calendar years, an amount in respect of the value of the travel concession or assistance, if any, first availed of by the individual during first calendar year of the immediately succeeding block of four calendar years shall be eligible for exemption. Explanation : The amount in respect of the value of the travel concession or assistance referred to in this sub-rule shall not be taken into account in deter-mining the eligibility of the amount in respect of the value of the travel con-cession or assistance in relation to the number of journeys under sub-rule (2).] [(4) The exemption referred to in sub-rule (1) shall not be available to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalty u/s.271-C of the Act for the failure to deduct Tax at source. The provisions of Sec.271-C reads thus: "Section: 271C. 1) If any person fails to- a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVIIB; Or b) pay the whole or any part of the tax as required by or under- i. sub-section (2) of section 115-O; or ii. the second proviso to section 194B, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. 2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." 6. However, Section 273B of the Act provides that in case the payer proves to the revenue department that there was some reasonable cause for the failure to deduct tax then the penalty under Section 271C is waived off. Sec.273-B reads thus:- "Section 273B - Penalty not to be imposed in certain cases, can be read as follows: 273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B , section 271BA, section 271BB, section 271C, section 271C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficient reason. In each of the 104 cases before us, we find that non-deduction of tax at source took place on account of controversial addition. The concept of aggregation or consolidation of the entire income chargeable under the head "Salaries" being exigible to deduction of tax at source under Section 192 was a nascent issue. It has not be considered by this Court before. Further, in most of these cases, the tax- deductor-assessee has not claimed deduction under Section 40(a)(iii) in computation of its business income. This is one more reason for not imposing penalty under Section 271C because by not claiming deduction under Section 40(a)(iii), in some cases, higher corporate tax has been paid to the extent of Rs. 906.52 lacs (see Civil Appeal No. 1778/06 entitled CIT v. The Bank of Tokyo-Mitsubishi Ltd.). In some of the cases, it is undisputed that each of the expatriate employees have paid directly the taxes due on the foreign salary by way of advance tax/self-assessment tax. The tax-deductor-assessee was under a genuine and bona fide belief that it was not under any obligation to deduct tax at source from the home salary paid by the foreign company/HO and, consequently, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vit filed by the Assistant Manager of the respective appellant branches stating that the delay occasioned due to getting administrative approval for filing appeals. The delay is nominal and there has been no want of diligence on the part of the appellant. The delay in filing appeals is therefore condoned. 11. As far as the merits of the case relating to imposition of penalty u/s.271C of the Act, the learned counsel for the Assessee submitted that the Hon'ble ITAT Jaipur Bench in the case of State Bank of India Vs. ACIT (2019) 101 taxmann.com 61 (Jaipur-Trib.) wherein on identical default of non-deduction of tax at source on perquisite not exempt u/s.10(5) of the Act and imposition of penalty for such failure u/s.271C of the Act, the ITAT Jaipur deleted penalty imposed u/s.271C of the Act, observing as follows:- "10. We also refer to Hon'ble Supreme Court decisions in case of CIT v. I.T.I. Ltd. [2009] 183 Taxman 219 (SC) and CIT v. Larsen & Toubro Ltd. [2009] 181 Taxman 71 (SC) wherein it was held that the beneficiary of exemption under section 10(5) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under section 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; claim broadly, as in other cases, in terms of actual travel being undertaken, the designated place being in India and the amount of claim not exceeding the economy fare of the national carrier by the shortest route to the place of destination. However, the Revenue's case is that what the assessee bank has failed to consider is that the travel plan includes the foreign leg of travel and corresponding travel expenses which is not eligible for exemption under section 10(5) of the Act. However, the assessee's bank explanation to this effect is that section 10(5) and Rule 2B doesn't place a bar on travel to a foreign destination during the course of travel to a place in India and there is nothing explicit provided therein to prohibit such travel in order to deny the exemption. Having considered the rival submissions and facts on record, we are of the opinion that the assessee bank has undertaken reasonable steps in terms of verifying the assessee's claim towards their LFC claims and is aware of employees travelling to foreign countries as part of their travel itinerary but at the same time, there is an error of judgment on part of the assessee bank in understanding and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of CIT(A) and further drew our attention to a decision of ITAT Bangalore Bench in the case of Syndicate Bank in ITA No.532 to 536/Bang/2019 order dated 12.7.2019, wherein this tribunal remanded the question of imposition of penalty to the CIT(A) for fresh consideration to see parity of facts between the case of the Assessee and the decision of ITAT Jaipur Bench in the case of State Bank of India (supra). 14. We have carefully considered the rival submissions. The facts of the case of the Assessee in these appeals is identical to the case decided by the Jaipur Bench of ITAT in the case of State Bank of India(supra) and therefore the ratio laid down therein will squarely apply to the facts of the Assessee's case and therefore following the ratio laid down therein, the penalty imposed is liable to be cancelled. The Hon'ble Karnataka High Court in the case of Ankita Electronics Pvt. Ltd. (supra) had an occasion to deal with issue whether penalty can be levied when quantum proceedings are pending in the Hon'ble High Court and substantial question of law is framed for consideration by the High court on the default which is the basis for initiating penalty proceedings. The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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