Fringe Benefits Tax legal fiction limited to statutory purpose; section 115WB(2) was not required to be read down.

Chapter XII-H of the Income-tax Act, 1961 creates a Fringe Benefits Tax regime based on the employer-employee relationship in section 115WA, and section 115WB deems specified expenses to be fringe benefits through a legal fiction limited to its statutory purpose. The High Court held that such fiction cannot be extended beyond that purpose, but the validity and operation of section 115WB(2) must be examined in the context of a concrete factual application. Because no assessment finding had yet been made against the petitioners on any specific item, the question was not fit for abstract adjudication. Section 115WB(2) therefore did not require to be read down, and the answer was against the petitioners.

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Issues: Whether Section 115WB(2) of Chapter XII-H of the Income-tax Act, 1961 was required to be read down.

Analysis: Chapter XII-H created a regime of Fringe Benefits Tax premised on the employer-employee relationship contemplated by Section 115WA, and Section 115WB defined fringe benefits through a legal fiction deeming certain expenses to be fringe benefits. The legal fiction could not be extended beyond its statutory purpose, but the validity and operation of the provision had to be assessed in the context of a concrete factual application. As no assessment finding had yet been made against the petitioners on any particular item, the issue was not fit for abstract adjudication.

Conclusion: Section 115WB(2) did not require to be read down, and the answer was against the petitioners.

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