New Delhi: The Supreme Court has issued notice to the British Airways on a petition filed by the income tax department alleging that the airline has failed to deduct TDS on various allowances paid to its employees.
A bench headed by Justice SH Kapadia sought reply from the airline on the department’s petition challenging the Delhi high court judgement which dismissed the I-T Department’s pleas on the ground that the proceedings were initiated against the assessee (British Airways) beyond a reasonable time period of four years.
The department said that the assessee was paying meal, daily and conveyance allowances to its employees on tour without deducting TDS (tax deduction at source) on these components of salaries.
The company’s exemption claim was rejected by the assessing officer for lack of evidence on whether the employees actually spent the amount they received as a part of salary under these heads.
While the assessing officer had finalised a short reduction of around Rs2.8 million for a period between 1989-92 and had held British Airways as ‘assessee in default,’ the Commissioner of Income Tax (Appeals) had partly allowed British Airways’ plea.
The CIT decided in airline’s favour in respect of meal allowance but held against it on conveyance allowance. The sectoral tribunal and the Delhi high court had dismissed the department’s appeals.