Proof of travel not required for claiming LTA: SC

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 993 OF 2005 With Civil Appeal No. 992 OF 2005

COMMISSIONER OF INCOME TAX Vs M/s LARSEN & TOUBRO LTD

A short question which arises for determination in these Civil Appeal(s) is - whether the assessee(s) was under statutory obligation under Income Tax Act, 1961, and/or the Rules to collect evidence to show that its employee(s) had actually utilized the amount(s) paid towards Leave Travel Concession(s)/Conveyance Allowance?

It may be noted that the beneficiary of exemption under Section 10(5) 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). For the above reasons there is no merit in the Civil Appeals and the same are dismissed with no order as to costs.

Here goes my opinion on this...

Though Sec-192 doesn't cast any "OBLIGATION" on the employer, but as a DDO (Disbursement Officer), he has the authority to collect en examine the supporting evidence.

The same rule applies for HRA, Medical Reimbursement & 80C investments as well...If you refer to the Circular on "TDS on Salaries" no where it is mentioned about collecting proofs. But as a DO, it is the employer's responsibility to ensure that the deductions he is giving to employees from his income are based on genuine proofs and not mere declarations from employees.

Though the final obligation lies on the employees, employer need to ensure that he has proper basis for the providing exemptions/deductions under various sections viz., Sec-10, 80C etc.

Just a snippet, why complicate our salary structure, can't we have everything as LTC and just a mere declaration that I have incurred my entire salary on LTC !!! What say??