claims of their staff, are under no statutory obligation to collect
supporting evidence and furnish them to tax authorities, the Supreme Court
said on Wednesday. A bench comprising Justice SH Kapadia and Justice Aftab
Alam said that assessee employers are under no statutory obligation to
collect bills and details to prove that the employees had utilised the
amounts obtained against these claims on travel and related expenses.
According to prevailing rules, if claims on LTA and conveyance are not
supported by journey bills, they would be taxed. For instance, on an LTA
allowance of Rs 1 lakh, if documentary proof such as air tickets, taxi
vouchers and other public transport bills are submitted only for Rs 50,000,
then tax is applicable on the rest of the amount. Regardless of the amount
an executive is entitled to as LTA, tax laws allow air tickets only in the
domestic sector for the claim. The apex court order came in a plea by
companies including Larsen &Toubro and ITI. In its defence, the
revenuedepartment had argued that assessee companies were under
statutory
obligation under Income Tax Act, 1961, and relevant rules, to collect
documentary proof to show that their employee(s) had actually utilised the
amount paid towards the leave travel concession and conveyance allowance.
Rejecting the plea, the court in its order said: "The beneficiary of
exemption under Section 10(5) (of the Income Tax Act) is an individual
employee. There is no circular of Central Board of Direct Taxes (CBDT)
requiring the employer under Section 192 to collect and examine the
supporting evidence to the declaration to be submitted by an employee(s)."
– www.economictimes.indiatimes.com