TMI Blog2022 (1) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al for short). 3. The appeals were admitted by this Court to consider the following substantial questions of law:- 1. Whether the Tribunal was justified in upholding the levy of tax under Section 201(1) and interest under Section 201(1A) of the Act as determined by the TDS authority? 2. Whether denial of exemption under Section 10(5) of the IT Act, 1961 read with Rule 2B of the IT Rules, 1962 of reimbursement of leave travel expenses as claimed by the employee of the Appellant was justifiable? 3. 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? 4. The appellant - Bank provides benefit of leave travel concession ( LTC for short) to its employees and while deducting TDS from the salary of the employees, LTC was considered exempted under Section 10(5) of the Act read with Rule 2B of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of State Bank of India V/s. Deputy Commissioner of Income-tax [TDS], Kanpur [(2016) 158 ITD 194 (Luck Trib)], dismissed the appeals. The fact that the employees departed from a place in India and ended up his journey in a place in India should have been considered and atleast the cost for the shortage route incurred by the employee should have been considered for exemption under Section 10(5) of the Act and the appellant should have been directed to obtain the details to furnish to the Department to collect short levy, if any. The authorities and the Tribunal ought to have appreciated that invariably reimbursement should only be on the basis of the norms accepted by the banks i.e., the circular issued by the Bankers Association and the State Bank of India Officers Service Rules, 1992. Thus, it was submitted that there was no default on the part of the appellant to fix the liability under Section 201(1) of the Act and interest under Section 201(1A) of the Act. The appellant was under a bonafide belief that the procedure and norms adopted by the appellant - Bank supported by the instructions issued by the Bankers Association is justifiable. The Tribunal has failed to consider the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding,- (a) on leave to any place in India; (b) to any place in India after retirement from service or after the termination of his service, shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely :- (i) where the journey is performed on or after the 1st day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination; (ii) where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination; and (iii) where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed on or after the 1st day of October, 1997, between such places, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sement may be made not exceeding maximum fare applicable for direct route to the last point of journey destination connected by air from the originating place of journey. 4.3 Banks may frame appropriate guidelines under relevant provision of the Service Regulation. The Managing Committee at its meeting held on 2nd July 2012 approved the above recommendations of the IBA Standing Committee on HR. 13. Sample of Staff LFC bills paid, details placed on record by the assessee would disclose thus: Sl.No. Date Name Farthest Destination in India Places Visited Entitlement as per Notional Fare Eligible Amount-Rs. Amount claimed- Rs. Amount paid. 1. 17/05/2011 [2011-2012] Ajit S Khasnis Wagha Border Bangalore Colombo, Kaula Lumpur Putrajaya-Genting Highlands Singapore Bangkok Pattaya Delhi Amritsar-Wagha Border etc., Bangalore to Delhi Delhi to Amritsar For 3 Members To and For Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with thanks from, SRI.AJIT KHASNIS, Manager, State Bank of India, No.65,. Local Head Office, St. Marks Road, Bangalore-560001, a sum of ₹ 2,20,500/- [Rupees Two Lakh twenty thousand five hundred only] towards journey charges excluding boarding lodging for the package tour referred above. 15. Day-to-day itinerary of the said tour reads thus: Day to day itinerary of the Far East Package tour operated From 17-04-2011 to 01-05-2011 Bangalore Colombo Kuala Lumpur By Srilankan Airways Flight Kuala Lumpur to Singapore By Benz Coach Singapore Bangkok By Flight Bangkok to Pattaya by Benz Bus Bangkok Colombo Delhi By Air Delhi Amritsar Delhi By A/C Chair Car Train Delhi Bangalore by Air Bangalore Colombo [17-04-2011 to 18-04-2011] Colombo to Nigambo Colombo by Benz bus Colombo to Malaysia [18-04-2011 to 21-04-2011] Airport transfer, Kula Lumpur Tour, Genting Highland Theme Park, Kuala Lumpur, Putrajaya Tour. Singapore [21-04-2011 to 23-04-2011] Jurong Bird Park, Sentosa Island Tour, Bam boat Station, transfer to Singapore Airport. Singapore Bang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided to the employees as if they are the employees of the central Government, the same was accepted and the proceedings under Sections 201 and 201[1A] of the Act have been quashed. Learned counsel for the appellant has placed reliance on these judgments to contend that it was based on a bonafide reason and referring to the Indian Banks Circular, exemption was granted under Section 10[5] of the Act read with Rule 2B of the Rules, as such, appellant cannot be treated as a defaulter to pass an order under Section 201 and 201[1A] of the Act. This argument cannot be countenanced in the teeth of Section 10[5] of the Act which contemplates that the value of any travel concession or assistance received by, or due to him, from his employer for himself and his family in connection with this proceeding on leave to any place in India shall be exempt having regard to the travel concession and assistance granted to the employees. This provision cannot be interpreted to allow the employees of the Bank to claim LTC for travelling in a circuitous route visiting foreign countries. 18. The intention of the Legislature under Section 10[5] appears to be two fold. One is to provide some relaxatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Section 201(1) and Section 201(1A) shows that both these provisions are without prejudice to each other. It means that the provisions of both the sub-sections are to be considered independently without affecting the rights mentioned in either of the sub-sections. Further, interest under Section 201(1A) is compensatory measure for withholding the tax which ought to have gone to the exchequer. The levy of interest is mandatory and the absence of liability for tax will not dilute the default. The liability of deducting tax at source is in the nature of a vicarious liability, which pre-supposes existence of primary liability. The said liability is a vicarious liability and the principal liability is of the person who is taxable. A bare reading of Section 201(1) shows that interest under Section 201(1A) read with Section 201(1) can only be levied when a person is declared as an assessee-in-default. For computation of interest under Section 201(1A), there are three elements. One is the quantum on which interest has to be levied. Second is the rate at which interest has to be charged. Third is the period for which interest has to be charged. The rate of interest is provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., and Another [(2009) 313 ITR 1 (SC)], the question that fell for determination was, whether the assessee[s] was under statutory obligation under the Income Tax Act, 1961, and/or the Rules to collect evidence to show that its employee[s] had actually utilized the amount[s] paid towards leave travel concession[s]/conveyance allowance? In that context, it was held that 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. 25. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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