Non-Deduction of TDS u/s 192 on Reimbursement of LTC/LFC and HTC: ITAT holds SBI in default u/s 201(1)(1A) of Income Tax Act [Read Order]

In recent ruling the Delhi bench of the Income Tax Appellate Tribunal ( ITAT) observed that the State Bank of India is in default meaning under Section 201 (1) (1A) of Income Tax Act, 1961 for non-deduction of Tax Deducted at Source ( TDS ) under Section 192 of reimbursement of LTC ( Leave Travel Concession ) /LFC ( Leave Fare Concession ) and  HTC ( Home Travel Concession ).

Mr. Vivek Gupta, representing the assessee submitted that the only issue in the appeal of the Revenue is whether TDS is liable to be deducted on the LTC paid to employees. He further submitted that the issue was squarely covered in favour of the assessee in the assessee’s own case which is reported as SBI vs. DCIT, TDS, and Kanpur

Furthermore submitted that Madras High Court has granted interim stay to All India |State Bank Officers Federation held that any amount paid to petitioners (State Bank Officers) towards LTC or reimbursement of LTC would not amount to income so as to enable the bank to deduct tax at source.  Therefore, submitted that in view of the interim stay order of the Madras High Court, the bank was not liable for TDS.

The bench observed that a writ petition was filed challenging the circular issued by the SBI to the effect that officers/employees would not be entitled to visit Overseas Countries/Centers as part of LTC /HTC

Further observed that the Madras High Court in its interim order held that if the writ petition was dismissed, the employees are liable to pay tax on the amount paid by the bank. However, Delhi High Court in holding that the assessee is liable to deduct tax at source on the payments made to its employees towards LTC bills.

The two member bench of the tribunal comprising G.S.Pannu (Vice president) and Challa Nagendra Prasad (Judicial member) held that the assessee is in default within the meaning of Section 201(1)(1A) of the Act for non-deduction of tax under Section 192 of the Income Tax Act on the reimbursement of LTC ( Leave Travel Concession ) /LFC ( Leave Fare Concession ) and HTC ( Home Travel Concession ). Accordingly, the appeals of the assessee are dismissed.

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