The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) in the case of Shri Rajeshkumar Navnitlal Dani v. ITO vide its order dated April 10, 2019, held that LTC can be claimed only towards proceeding on leave to any place in India.
The Assessee, an employee of Bank of Baroda, has availed Leave Travel Concession (LTC) covering journey to foreign destinations. The assessee has filed the present appeal by majorly claiming that the order passed by the Commissioner of Income Tax is bad in law and has sought quashing of the same.
The Assessing Officer (AO) ordered that claiming LTC for foreign destinations was inconsistent with the provisions of Section 10(5) of the Income Tax Act, 1961. The amount of LTC has been wrongly claimed as exempt and disallowance shall be made for the claim of LTC. The intent of the exemption of encouraging tourism in India was discussed by the AO while dismissing the appeal.
With respect to another claim where the assessee contended that as per the scheme of travel journey, a complimentary journey was awarded to visit a place outside India started from Mumbai and come back to Mumbai. However, since no amount was charged as it was complimentary in nature, the same would not form a part of LTC, the Tribunal said.
The Tribunal constituting of Hon’ble members Shri Rajpal Yadav and Shri Amarjit Singh held that “the said sub-section provides that where an individual had received travel concession or assistance from his employer for proceeding on leave to any place in India, both for himself and his family, then such concession received by the employee is not taxable in the hands of the employee. Similar exemption is allowed to an employee proceeding to any place in India after the retirement of service or after the termination of his service. The provisions of the Act are in relation to the travel concession/assistance given for proceeding on leave to any place in India and the said concession is thus exempt only where the employee has utilized the travel concession for travel within India.”
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