TaxTMI 
TaxTMI 
2011 (11) TMI 497
X X X X Extracts X X X X
X X X X Extracts X X X X
....assed by the Assessing Officer. 2. The assessee is a company and is in the business of life insurance. It filed its fringe benefit tax (for short "FBT"), return under section 115WC on 29th October 2006. The Assessing Officer passed an order under section 115WE(3), assessing the value at Rs. 2,88,66,266, as against value of Rs. 37,71,522, returned by the assessee. The Assessing Officer, during the scrutiny proceedings, found that the assessee in the tax audit report, contended that certain expenditure listed are admissible as deductible business expenses and since there is no privilege, services, benefit or immunity, directly or indirectly to its employees, there is no question of collective enjoyment of benefits by the employees and ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the course of his business or profession which have an element of benefit to the employees. He held that when there is no express or implied benefit to the employee, fringe benefit tax is not attracted. As far as the other additions are concerned, the Commissioner (Appeals) confirmed the same. In case of expenditure on conference and meeting, the first appellate authority agreed with the contention of the assessee that agents and brokers are outside the scope of definition of fringe benefit contained in section 115WB(1), as they are not employees, but as the assessee had failed to give a bifurcation of the expenditure, he upheld the order of the Assessing Officer. Aggrieved, both the assessee as well as the Revenue are in appeal before the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... submitted that payments were made to Life Insurance marketing and research association, i.e., LIMRA and Actuarial society of India, are not payments made for club membership and cannot be subject to FBT. 7. Learned Departmental Representative, Mr. P.K.B. Menon, on behalf of the Revenue, submitted that the additional evidence may be admitted as it goes to the root of the matter and the issue may be restored to the file of Assessing Officer for verification. 8. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record, we admit the additional evidence which are - (i) domestic travel policy for business tours, training and conference and (ii) policy on mobile ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 115WB, applies only when the expenditure is in the nature of considered for employment. Thus, while restoring the issue back to the file of Assessing Officer for adjudication afresh, we direct the Assessing Officer to apply the proposition of law as interpreted by us while determining the value of fringe benefit. On the issue of expenditure incurred on conference and meetings, the Assessing Officer shall consider bifurcation submitted to him with respect to the expenditure incurred on the agents and brokers and pass appropriate orders. "Fringe benefit" cannot arise when expenditure is incurred on persons who are not employees. On the issue of club membership fee, the payments made to LIMRA and Actuarial Society of India, are to be exc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed as fringe benefit. In the absence of any inherent benefit to employees, even under the deeming provisions, fringe benefit cannot be assumed. 3. Deeming provisions contained in Sub-section 2 of Section 115 WB cannot be invoked mechanically and, in respect of every item of expenditure, it is necessary first to associate the benefit to employees arising out of their employment before the expenditure can be categorized to be resulting into fringe benefit, the exception of Clause B of Sub-section 2 of Section 115 WB notwithstanding. One can not., by the nomenclature alone, classify an expenditure to result into fringe benefit." Consequently, we dismiss ground no.1, raised by the Revenue. 13. Ground no.2, reads as fo....