Tribunal rules on fringe benefit tax exemption for airline crew transport expenses

The Tribunal ruled in favor of the appellant, holding that the expenditure on free transport for airline crew, transport charges for visiting guests, and night dropping of employees did not attract fringe benefit tax. The Tribunal emphasized the absence of an employer-employee relationship in each scenario, as outlined in Circular No. 8 of 2005 by the Central Board of Direct Taxes. Consequently, the expenses were deemed not liable for fringe benefit tax under the relevant sections of the Act. The judgment was delivered on July 19, 2013.

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Issues:
1. Whether expenditure on free transport for airline crew attracts fringe benefit tax.
2. Whether transport charges for visiting guests attract fringe benefit tax.
3. Whether expenditure on night dropping of employees attracts fringe benefit tax.

Analysis:

Issue 1:
The appeal raised concerns regarding the appropriateness of holding the expenditure on free transport for airline crew as liable for fringe benefit tax. The authorized representative argued that since the airline crew were not employees of the assessee, the fringe benefit tax should not apply. Reference was made to Circular No. 8 of 2005 by the Central Board of Direct Taxes, emphasizing the necessity of an employer-employee relationship for fringe benefit tax liability. The Tribunal concurred, ruling that as there was no such relationship with the airline crew, the expenditure could not be considered as liable for fringe benefit tax under section 115WB(2)(D) of the Act.

Issue 2:
Regarding the transport charges for visiting guests, the question of whether they attract fringe benefit tax was raised. The representative contended that since the guests were not employees of the assessee, the fringe benefit tax should not be applicable. Citing the same Circular, it was argued that the absence of an employer-employee relationship exempted the expenditure from fringe benefit tax under section 115WB(2)(B) of the Act. The Tribunal agreed with this argument, stating that the visiting guests could not be considered as employees, thus excluding the charges from fringe benefit tax liability.

Issue 3:
The appeal also addressed the expenditure on night dropping of employees, questioning its liability for fringe benefit tax. It was argued that since the transportation was related to employees' shifts ending late at 1.30 am, it should not be considered as a fringe benefit. Referring to the Circular, it was asserted that such transportation, from residence to work and vice versa, did not fall under fringe benefits. The Tribunal concurred, stating that as per the Circular, such expenses were not liable for fringe benefit tax, leading to the deletion of the additions confirmed by the Commissioner of Income-tax (Appeals).

In conclusion, the Tribunal allowed the appeal, emphasizing that the expenses in question did not meet the criteria for fringe benefit tax liability as outlined in the Circular by the Central Board of Direct Taxes. The judgment was delivered on July 19, 2013.

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