CIT Vs. AMERICAN EXPRESS BANK LTD

JUDGEMENT

(1.) THESE three appeals filed by the Revenue are taken up together as they involve common issues. ITA No.74/2003 and ITA No. 75/2003 are in respect of American Express Bank Limited, Travel Related Services, whereas ITA No. 653/2005 is in respect of American Express Bank Limited. All the three appeals pertain to the financial year 1992-93. ITA No.74/2003 arises out of an order under Section 201 of the Income Tax Act, 1961 (hereinafter referred to as the said Act) whereby the respondent has been held to be an 'assessee in default' on account of short deduction and short payment of the taxes which ought to have been deducted at source in respect of reimbursements made to its employees on account of watchmen, gardeners, sweepers, etc., engaged by the employees of the assessee, out of their own funds. The said appeals also pertain to the reimbursement of travel expenses of the employees of the assessee company on account of their travel to and fro their residences and office. It also pertains to the reimbursement of expenses incurred by the employees for journals, newspapers and periodicals. ITA No.75/2003 arises out of an order under Section 201(1A) imposing a liability on the assessee to pay interest on the amount of short deduction/short payment of the taxes deducted/to be deducted at source. It also pertains to the same financial year i.e., 1992-93. ITA No.653/2005 relates to a different assessee i.e., American Express Bank Limited but is in respect of the issues which arise under Section 201 and 201 (1A) of the said Act and also pertains to the financial year 1992-93. In ITA No.653/2005, certain additional reimbursements have been made under heads such as lunch coupons, reimbursement of educational expenses etc.

(2.) THE Income Tax Appellate Tribunal in each of these cases has held in favour of the assessee by coming to the finding that the assessee had not deducted/paid tax at source on account of the aforesaid heads of reimbursement because it was under a bona fide belief that it was not required to deduct the said amounts. We need not go into the merits of whether the said amounts were, in fact, deductible or not, because it is an admitted position that the assessee ought to have been made the said deductions. However, in view of the fact that there was some controversy with regard to some of the deductions, the Tribunal has come to a conclusion that the assessee was under a bona fide belief that the amounts were not to be deducted and, therefore, it had good cause and sufficient reason not to deduct the said amounts.

(3.) WITH the consent of the parties, the appeals are taken up for hearing straightaway on the basis of the appeal papers.