State Bank of India, Lake Town Branch vs. Income Tax Officer, TDS Circle 3(1), Kolkata

Parties Involved

Facts Summary

The case pertains to the Assessment Year 2016-17. The State Bank of India, Lake Town Branch, was issued a show cause notice under Section 201(1)/201(1A) of the Income Tax Act, 1961 for failure to deduct tax at source (TDS) on Leave Fare Concession (LFC) payments made to its employees during the financial year 2015-16. The bank argued that the LFC payments were exempt under Section 10(5) of the Act. However, the Assessing Officer (AO) concluded that certain LFC payments were not eligible for exemption and treated the bank as being in default under Section 201(1) of the Act, resulting in a tax liability of Rs. 87,212/- and interest of Rs. 81,107/- totaling Rs. 1,68,320/-. The bank appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), which was dismissed, leading to the present appeal before the Tribunal.…

Legal Issues

• 1. Whether the order of the CIT(A) is bad in law, contrary to the provisions of law and facts of the case and without appreciation of the facts and circumstances of the case in their right perspective.
• 2. Whether the CIT(A) and TDS officer erred in holding the Appellant as an assessee in default under section 201(1) on the basis that tax was not deducted at source on payment of LFC and raising a demand of and interest.
• 3. Whether the CIT(A) and TDS officer erred in not appreciating that the Appellant did not deduct tax at source on the reimbursement of LFC amounts to its employees under the specific directions of the Hon'ble High Court of Madras in its Interim Order dated 16 February 2015 in W.P. No. 11991 of 2014.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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