×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
All the above four appeals are filed by different assesses against the order of Ld. CIT(A), Vadodara-4 on identical issues and similar facts, therefore, for the sake of convenience all these three grounds of appeals are adjudicated together by this common order. Since the identical issues are involved on similar facts in all these appeal, therefore, for adjudicating these appeals we take ITA No. 2290/Ahd/2017 in the case of Shri Rajeshkumar Navnitlal Dani as a lead case and our finding of this case to be applied to the remaining three cases.
The assessee has filed the following grounds of appeal:-
“1. The order passed by the Learned CIT (A) - 4 Vadodara, is bad in law, contrary to legal pronouncements and same be quashed. The disallowances/additions are unwarranted and same be deleted now.
2. Your appellant submits that the provisions of section 147 r.w.s. 148 are not applicable in the case of your appellant since the reasons recorded for re-opening the assessment are not valid as per law. It be held so now and order passed by AO be quashed.
3. The Learned CIT (A) - 4 Vadodara, has erred in upholding the disallowance of Rs 4,06,452/- made by the AO on account of Leave Travel Concession claimed by the Assessee by virtue of section 10(5) of the Act. The Learned CIT(A) - 4 has erred in not appreciating the facts that the Assessee has claimed LTC u/s 10(5) to the extent of travel within India(Andaman & Nicobar). It may be appreciated that Andaman and Nicobar is part of India and hence the tour taken by the Appellant be considered as Travel within India. It is therefore submitted that the Hon CIT(A)-4, Vadodara has wrongly confirmed the disallowance made by AO. The Claim being rightly made, the AO be directed to allow the same.
4. The Ld. CIT(A)-4 Vadodara, has erred in confirming the charging of interest under section 234A/B/C/D. It be held so now and same be deleted ”
2. The brief fact of the case is that assessee was an employee of Bank of Baroda (Senior Branch Manager) and derived income from salaries. As per the information available with the AO for the Financial Year 2010-11 the assessee has availed LTC which has also covered journey to foreign destinations. The reimbursement of such claim of LTC was not offered for tax by the assessee, therefore, the case of the assessee was reopened after recording reasons thereof and proceedings were initiated under the provision of Sec. 147 of the Act by issuing of notice u/s. 148 of the act on 23.09.2014. The assessee has submitted that he has not claimed any amount towards his foreign travel and his foreign travel does not form part of LTC claim.
The AO has not accepted the explanation of the assessee and he was of the view that travelling to foreign destination while availing LTC was not consistent with the provisions of Sec. 10(5) of the Act. Therefore a show cause notice was issued by the AO which is reproduced as under:-
"In this connection, I would like to mention the provisions of section 10(5) of the Act which reads as under:
[ in the case of an individual the value of any travel concession or assistance received by or due to him,-
(a) From his employer for himself and his family, in connection with his proceeding on leave to any place in India;
(b)From his employer or former employer for himself and his family in connection with his proceeding to any place in India after retirement from service or after the termination of his service.
Subject to the conditions as may be prescribed under Rule 2B of the Income-tax Rules having regard to the travel concession or assistance granted to the employees.
Provided that the amount exempt under this clause shall in no case exceed the amount of expense actually incurred for the purpose of such travel. Explanation:- For the purposes of this clause, " family", in relation to an individual, means-
(i) The spouse and the children of the individual; and
(ii) The parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;]
4. In your case, it is seen that your journey also included travelling at foreign destinations which is not in consistent with the provisions of sec. 10(5) of the Income-tax Act, 1961.The plain reading of sec. 10(5) of the Act and Rule 2B of the Income-tax Rules in no way provided that the assessee is at liberty to claim exemption out of his ticket package spent on his overseas travel and part of the journey being undertaken within India. As such an amount of L.T.C./L.F.C./L.T.A. has been wrongly claimed as an exempt. You are, therefore, requested to show cause as to why the said amount of Rs 4,06,452/- claimed by you as an exempt should not be disallowed and added to your total income for that assessment year?”
3. The assessee has explained that his claim of LTC of Rs. 4,06,452/- was exempted u/s. 10(5) of the Act since he has not claimed any amount toward his journey to foreign destination . He has further explained that as per provisions of sec. 10(5) of the Act r w.r 2B of the Rules no disallowance shall be made for his claim of LTC. The AO has not accepted the claim of the assessee. He has referred sec. 10(5) of the I.T. Act and Rule 2B of the I.T. Rule and stated that the claim of exemption is available for performing of LTC to any place in India and not for travelling to foreign destinations. Consequently the AO has disallowed the claim of LTC amounting to Rs. 4,06,452/- as exempt u/s. 10(5) of the Act and added to the total income of the assessee.
4. Aggrieved assessee has filed appeal before the Ld. CIT(A) the Ld. CIT(A) has dismissed the appeal of the assessee. The relevant part of the decision of the CIT(A) is reproduced as under:-