Income Tax Act, 1961: ss. 10(5), 192(1), 201 – Deduction of tax at source from salary of employee – Consequences of failure to deduct or pay – Employees of assessee bank availed Leave Travel Concession (LTC) taking a circuitous route, they travelled not just within india but their journey involved a foreign leg also, and was also not the shortest route – Assessee bank while releasing payments to its employees as LTC, did not deduct the tax at source of its employees – Tribunal as also the High Court held the assessee bank in default for not deducting TDS of its employees – On appeal, held: Employees travelled to foreign and got full reimbursement u/s 10 – LTC is for travel within India – Moment employees undertake travel with a foreign leg, it is not a travel within India, thus, not covered under the provisions of s. 10(5) – A foreign travel also frustrates the basic purpose of LTC, which is to familiarise a civil servant or a Government employee to gain some perspective of Indian culture and it was for this reason that reimbursement of LTC was exempted – There was no intention of legislature to allow the employees to travel abroad in the garb of LTC available by virtue of s. 10(5) – Furthermore, the assessee-employer cannot claim ignorance about the travel plans of its employees as during settlement of LTC Bills the complete facts are available before the assessee about the details of their employees’ travels – It cannot be a case of bonafide mistake – Thus, the order passed by the High Court does not call for interference – Income Tax Rules – r. 2B.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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