Fringe benefit tax liability is independent of income-tax on total income, and remains payable despite no taxable income.

An employer's liability to fringe benefit tax under section 115WA of the Income-tax Act is independent of any liability to income-tax on total income. Section 115WA(1) creates a separate charge on fringe benefits provided or deemed provided by an employer, and section 115WA(2), through its non obstante clause, confirms that the tax remains payable even where no income-tax is otherwise payable on the employer's total income. Reading the provision with the scheme of sections 4, 5(2), 28 and 29, the absence of assessable taxable income does not extinguish the fringe benefit tax charge. The applicant was therefore held liable to pay fringe benefit tax.

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Issues: Whether an employer that is not otherwise liable to income-tax on its total income in India is nevertheless liable to pay fringe benefit tax under section 115WA of the Income-tax Act, 1961.

Analysis: Section 115WA(1) creates a separate charge of fringe benefit tax in addition to income-tax on fringe benefits provided or deemed to have been provided by an employer to employees. Section 115WA(2), introduced with a non obstante clause, makes it clear that the tax on fringe benefits remains payable even where no income-tax is payable by the employer on its total income computed under the Act. The words relating to computation of total income were read as clarifying and amplifying the charge, not as restricting it to cases where total income is actually assessable. Applying the ordinary meaning of the provision, and reading it with the scheme of sections 4, 5(2), 28 and 29, the absence of taxable total income does not extinguish the liability to fringe benefit tax.

Conclusion: The applicant is liable to pay fringe benefit tax under section 115WA of the Income-tax Act, 1961.

Ratio Decidendi: Liability to fringe benefit tax under section 115WA is independent of the employer's liability to income-tax on total income, and the non obstante clause in sub-section (2) ensures that the charge applies even where no income-tax is otherwise payable.

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