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  • Page 1 of 1 Proof of Travel Not Required For Claiming LTA: SC

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    The Supreme Court ruled that employers are not obligated under law to collect documentary proof when employees claim travel and transportation allowances. The court said employees themselves are the beneficiaries of these exemptions under tax law, not employers. There is no requirement for employers to examine evidence supporting employees' claims in order to assess tax withholdings from salaries. This overturns the revenue department's argument that employers must gather tickets, receipts and other documents showing allowances were used for approved travel expenses.

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    The Supreme Court ruled that employers are not obligated under law to collect documentary proof when employees claim travel and transportation allowances. The court said employees themselves are the beneficiaries of these exemptions under tax law, not employers. There is no requirement for employers to examine evidence supporting employees' claims in order to assess tax withholdings from salaries. This overturns the revenue department's argument that employers must gather tickets, receipts and other documents showing allowances were used for approved travel expenses.

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    Page 1 of 1 Proof of Travel Not Required For Claiming LTA: SC

    Uploaded by

    rajendrap
    The Supreme Court ruled that employers are not obligated under law to collect documentary proof when employees claim travel and transportation allowances. The court said employees themselves are the beneficiaries of these exemptions under tax law, not employers. There is no requirement for employers to examine evidence supporting employees' claims in order to assess tax withholdings from salaries. This overturns the revenue department's argument that employers must gather tickets, receipts and other documents showing allowances were used for approved travel expenses.

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    Proof of travel not required for claiming LTA: SC

    ">

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    Publication: Economic Times Mumbai; Date:2009 Jan 29; Section:Front Page; Page Number 1

    Proof of travel not required for claiming LTA: SC


    Employers Under No Obligation To Collect Documentary Evidence
    Sanjay K Singh NEW DELHI

    EMPLOYERS, while assessing the conveyance and leave & travel allowance (LTA) 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 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 revenue department 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.

    No CBDT circular requires employer to examine evidence


    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).

    sanjay . singh 6 @ timesgroup . com

    http://epaper.timesofindia.com/APD26302/PrintArt.asp?SkinFolder=ET&banner=<a...

    29/01/2009

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