TaxTMI 
TaxTMI 
2011 (8) TMI 751
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....rtain additions and determined the total taxable Fringe Benefits at Rs. 11,18,25,549. The Assessing Officer made the following additions to the fringe benefits computation which is being contested by the assessee bank:- Sl. No. Particulars Amount (In rupees) 1. Addition of Medical Aid 45,00,000 2. Addition of Entertainment Expenses inside the office Premises 49,04,111 3. Conference fees 3,14,438 2.1 Being aggrieved by the order of Assessing Officer passed under section 115WE(3), the assessee preferred an appeal to CIT (A) LTU, Bangalore. 2.2 The CIT(A), LTU, Bangalore upheld the order of the Assessing Officer and dismissed the appeal of the assessee bank. 2.3 Being aggrieved by the order of the CIT(A), LTU, the assessee is in appeal before us. 2.4 Let us examine each of the additions to the fringe benefits computation, which are contested in this appeal. (i) Addition of Medical Aid - Rs. 45,00,000 3. In the course of assessment proceedings, the assessee bank was asked to show cause as to why the expenses of Rs. 45,00,000 in respect of medical aid should not be treated as fringe benefit and brought to tax. In reply, it was submitted that the expenditure represented....
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....t the relevant time, section 17(2) proviso (v) reads as follows:- "(v) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family (other than the treatment referred to in clauses (i) and (ii); so, however, that such does not exceed fifteen thousand rupees in the previous year;" This sub-clause treats the expenditure actually incurred by the employee on medical treatment for himself or his family, and which is paid by the employee, in excess of Rs. 15,000 would be a perquisite which would be taxable as salary. It is clear that reimbursement of medical expenditure as in the case referred to above, is not chargeable to tax as a perquisite if the amount does not exceed Rs. 15,000. 3.5 Section 115WB(3) reads as follows:- "For the purposes of sub-section (1), the privilege, service, facility or amenity does not include perquisites in respect of which tax is paid or payable by the employee (or any benefit or amenity in the nature of free or subsidized transport or any such allowance provided by the employer to his employees for journeys by the employees from their residence to the place....
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....the employees. In the instant case, the medical reimbursement is taxable but for the exemption provided in the proviso (v) to section 17(2) up to an amount of Rs. 15,000. Merely by grant of exemption, it cannot be said that the tax is not payable. Therefore, a specific item of perquisite, which is normally taxable in the hands of individual employee, cannot be subjected to FBT, only for the reason that the same is exempt in the hands of the employees. If the above proposition is not accepted, it leads to an anomalous situation. For example, when the medical expenditure is above Rs. 15,000 and the overall income of the individual employee is less than the minimum amount not chargeable to tax; whether the medical expenses in excess of Rs. 15,000 could be subjected to FBT, only on account of the fact that no Income-tax was paid by the employee. The answer to the above query, in our view, would be in the negative. Likewise, when an item which is to be treated as a perquisite is exempt in the hands of the individual employee, the same, according to us, could not be subjected to FBT. In taking the above view, we are also fortified by the order of the Mumbai Tribunal in the case of Godrej....
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....s issue therefore fail". 4.2 The learned counsel for the assessee reiterated the submissions made before the authorities below whereas the learned DR supported the orders of the Income-tax authorities. 4.3 We have heard the rival submissions and perused the material on record section 115WB(2)(B) states that the fringe benefits shall be deemed to have been provided by the employer to his employees, if the employer has incurred any expense on, or made any payment for the purposes enumerated in clauses (A) to (Q). It is evident from the provisions of sub-section 2 of section 115WB that the meaning of the term "fringe benefits" is extended to certain specific types of expenses which, perhaps, may not otherwise have been considered to fall within the purview of fringe benefits as laid down in sub-section (1) of section 115WB of the Act. 4.4 As per section 115WB(2)(B)(i), the expenditure incurred for providing snacks and refreshments have to be excluded from the fringe benefits. In other words, the Act excludes certain species of expenditure from the purview of fringe benefits. The reason stated by the authorities for denying the claim of the assessee is that this expenditure are incu....