The Income Tax Appellate Tribunal (ITAT), Bangalore has deleted the penalty against State Bank of India (SBI) on not deducting tax at source from the payment towards Leave Travel Concession consisting of foreign travel.
The Assessee is a banking institution and the survey under section 130A of the Act was conducted on 26/12/2013, to verify compliance of TDS. During the course of the survey, Ld.AO noticed that the assessee paid reimbursement of leave travel concession to its employees, even in cases where the foreign destination was included in the itinerary of such employees.
The Ld.AO also noted that such reimbursements were made without deducting TDS, and the amount paid on foreign travel was treated as exempt under section 10(5) of the Act. As employees were allowed exemption under section 10(5) read with the rule for travel outside India assessee was treated as an assessee in default, for not making TDS from such payments, made for foreign travel.
An order under section 201(1) was passed raising demand of Rs.6,62,454/-. Addition made by Ld.AO under section 201(1) of the Act was confirmed by this Tribunal, consequent to which, the penalty under section 271C was passed by Ld.AO.Aggrieved by penalty levied, assessee preferred appeal before the Ld.CIT (A).
The CIT(A) upheld the penalty, by holding that there was no reasonable cause for applicability of provisions of section 273B, and not deducting tax at source from the payment towards LTC consisting of foreign travel. Aggrieved by order of Ld.CIT(A), the assessee is in appeal before us now.
The order was pronounced by judicial Member, Beena Pillai, and Accountant Member, B.R Baskaran on an appeal filed by State Bank of India.
Relying on the case state Bank of India Vs. ACIT (2019) and an identical case Syndicate Bank vs ACIT the Tribunal came into conclusion that the ITAT Jaipur Bench in the 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 a penalty for such failure u/s 271C of the Act, the ITAT Jaipur deleted penalty imposed u/s,271C of the Act.
While allowing the appeal tribunal said that “we are of the considered view that there was a reasonable cause in terms of section 2738 of the Act for not deducting tax by the assessee Bank. As a result, the penalty’s levied under section 271C is hereby directed to be deleted”.To Read the full text of the Order CLICK HERE