ITAT Quashes Rs 5.44 Lakh TDS Demand on SBI Over Leave Fare Concession Payments for Foreign Travel

The ITAT Ahmedabad, in a recent significant ruling, has allowed the two appeals of SBI for AYs 2016-17 and 2017-18, holding that the TDS demand of Rs 5.44 lakh on Leave Fare Concession payments for foreign travel was unsustainable. Following its earlier precedent. The tribunal quashed the demand and ruled in favour of the assessee.

The State Bank of India (SBI) has filed two appeals before the Income Tax Appellate Tribunal (ITAT) Ahmedabad, challenging the two different orders of the Commissioner of Income Tax (Appeals), dated February 11, and 05, 2026, pertaining to the Assessment Years 2016-17 and 2017-18 respectively.

In the present case, the income tax authorities had raised an aggregate demand amounting to approximately Rs 5.44 lakh via an order and a notice, both dated the same, i.e., March 31, 2023. According to the department, the said demand was imposed on the bank on the ground of “alleged short deduction/non-deduction of tax at source in respect of the “Leave Fare Concession” paid to certain employees who had undertaken travel to foreign destinations, including journeys involving a foreign leg, during the Financial Year 2015-16.”

Being aggrieved with the order, the bank filed an appeal before the Commissioner of Income-tax (Appeals) [CIT(A)]; however, the same was dismissed through an order dated February 11, 2026, passed under section 250 of the Income-tax Act, 1961.

Thereafter, the assessee approached the ITAT Ahmedabad. The tribunal, when analysing the case, noted that issues similar to the present case had already been decided earlier in State Bank of India, Bhavnagar Vs. ITO for A.Y. 2016-17 in ITA Nos. 453 & 454/Ahd/2026, dated March 26, 2026.

Because the situation has not changed since a previous court ruling and no new legal arguments have been presented to us, we are ruling in favour of the taxpayer and cancelling the tax penalty or addition. The tribunal held that, “In the absence of any change in factual matrix and legal proposition brought to our notice, the appeal of the assessee is hereby allowed.”

The second appeal (ITA No. 1583/Ahd/2026 for AY 2017-18) was also dismissed, as the issue raised in the same was identical to the other one. Accordingly, the assessee’s appeals have been allowed.