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TMI Blog2022 (1) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 the Income Tax Rules, 1962 ('Rules' for short). 5. A survey under Section 133A of the Act was conducted in the business premises of the appellant's Head Office on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arted 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 these aspects in a right perspective. 8. Learned counsel for the revenue justifying the impugned orders submitted that the provisions of Section 10(5) of the Act read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 amount eligible for exemption shall be :- (A) where a recognised public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant 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 Taxi Fates [Rs. 575+Rs. 600] 24700 10700 35400 x 2 x 3=212400 1175 Total-213575/- 221675/- 213575/- 2. 09/02/2013 [2012-2013] RameshK Upadhye Katra Bangalore-Colombo-Hong Kong-Macau-Bangkok- Pattaya-Delhi-Jammu-Katra etc., Bangalore to Delhi Delhi to Jammu For 3 Members To and For Jammu to Katra -by Helicoptor 29000 19000 48000 x 2 x 3=288000/- 2097/- Total-290097/- 271179/- 271179/- 3. 20/08/2013 [2013-2014] T R Ugalwat Gulmarg Bangalore-Colombo, Kaula Lumpur-Put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangkok - Colombo by flight [27-04-2011] Colombo - Delhi by flight [28-04-2011] Delhi - Amritsar [28-04-2011 to 01-05-2011] Delhi - Amritsar By A/C Chair Car Train Amritsar - Wagha border - Amritsar by Cab [29-04- 2011 to 01-05-2011] Amritsar - Delhi By A/C Chair Car Train Delhi - Bangalore by Air [01-05-2011] 16. The receipt of the said travel agency indicates that the amount of Rs. 2,20,500/- only was received towards journey charges/vehicle hired from 17.04.2011 to 01.05.2011 for Singapore-Malaysia- Thailand-Delhi-Amritsar-Wagha Border, for three seats. Thus, the package includes international travel as well in a single itinerary. It is evident that in the case of Indian Institute of Science V/s. The Dy. Commissioner of Income Tax [TDS] [ITA No.1589/Bang/2014], the Income Tax Appellate Tribunal, "A" Bench, Bangalore, considering the plea of the assessee inasmuch as the bonafide estimate of employees' salary by valuing the perquisites in the form of residential accommodation provided to the employees by valuing the same as if employees were employees of Central Government, accepted the same. The assessees' obligation under Section 192 was held to be properly disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veling abroad in the guise of LTC/LFC could not entitle for the exemption under Section 10[5] of the Act. The service conditions/circular issued by the Indian Banks' Association is not a statutory Circular and would not govern the department. It would have been different altogether if the employee has traveled to any place in India and then abroad, for example, from Bengaluru to Delhi, thereafter from Delhi to New York. In the instant cases, it is not so. The employees have directly traveled abroad and in the return journey, had visited the places in India. The itinerary confirms the same. 19. The charges towards the said tour received by the tour operator demonstrate that it is the consolidated charges for the entire journey. In such circumstances, in our considered view, the same cannot be split up to avail the benefit of LTC/LFC by the employees. The plea of bonafide belief put up by the assessee placing reliance on the Circular issued by the Indian Banks' Association is untenable since no clarification from the department was sought by the assessee on this aspect. 20. Section 192 of the Act reads thus: "Salary. 192. (1) Any person responsible for paying any income chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e object underlying Section 201(1) is to recover the tax. In the case of short deduction, the object is to recover the shortfall. As far as the period of default is concerned, the period starts from the date of deductibility till the date of actual payment of tax. Therefore, the levy of interest has to be restricted for the above stated period only. It may be clarified that the date of payment by the concerned employee can be treated as the date of actual payment." 22. 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., supra, 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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