Fringe Benefit Tax cannot apply without an employer-employee relationship where payments are ordinary business expenses.

Fringe Benefit Tax under Chapter XII-H applies only where an employer incurs expenditure and confers a personal benefit on an employee; absent an employer-employee relationship, the statutory basis for FBT fails. On the facts stated, the assessee had no employees and its consultants were not employees, so the expenditure remained a business expense and FBT could not be invoked. The same view had been taken in the assessee's favour in an earlier year, and that approach was followed for the year in question.

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Issues: Whether Fringe Benefit Tax could be invoked where the assessee had no employees and there was no employer-employee relationship with consultants.

Analysis: Fringe Benefit Tax under Chapter XII-H applies only where expenditure is incurred by an employer and a benefit of a personal nature is passed on to an employee. Where the expenditure is a legitimate business expense and the basic employer-employee relationship is absent, the statutory basis for invoking FBT does not exist. The identical issue had already been decided in the assessee's favour in an earlier year, and the same view was followed for the year in question.

Conclusion: The invocation of Fringe Benefit Tax was not justified and the issue was decided in favour of the assessee.

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