TaxTMI 
TaxTMI 
2014 (5) TMI 933
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....ance of motor car being car fuel, oil and lubricants, rent and taxes, insurance on motor car, service charges, i.e., driver salary, given on hire as liable to fringe benefit tax under the provisions of the Income-tax Act, 1961." 3. Briefly stated the facts giving rise to this appeal are that the assessee company is a public limited company engaged in the business of providing complete travel related services to its clients. The assessee company filed its return of fringe benefit on 15.12.2006 for AY 2006-07 declaring total value of fringe benefit of Rs.91,42,036. The Assessing Officer, however, finalized the assessment and determined that u/s 115 WE(3) of the Income Tax Act, 1961 (for short the Act), the total fringe benefits were calculated at Rs.2,03,18,452/- after making various additions to the returned value of fringe benefits. The aggrieved assessee preferred an appeal before the Commissioner of Income Tax(A) which was partly allowed on the point of charged interest of Rs.2,74,050/- u/s 115WZ of the Act but major part of the appeal of the assessee was dismissed. Now, the empty handed assessee is again in the second appeal before this Tribunal with the grounds as mentioned ....
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....: 153 CTR 624 (Mum.) ACIT vs Tata Consultancy Services Ltd: 56 SOT 71 (Mum.) Intervalve India Limited vs Addl. CIT: 149 TTJ 365 (Pune) Toyota Kirloskar Motor (P.) Ltd. vs Addl. CIT: 54 SOT 70 (Bang.) GlaxoSmithKline Consumer Healthcare Limited vs Addl. CIT: 149 TTJ 248 Reebok India Ltd. vs ACIT (Delhi Bench of ITAT in ITA No.5905/Del/2010 & 2702-2703/Del/2011) 7. Replying to the above, ld. DR submitted that from the tax audit report, it was observed that the value of FBT had been worked out at Rs.2,03,18,452 as against returned value of fringe benefit which was taken by the assessee at Rs.91,42,036/-. The DR further pointed out that the Assessing Officer asked to reconcile the difference in the expenses debited to Profit & loss account and has adopted for the purpose of fringe benefit but the assessee failed to substantiate the returned value of fringe benefit, therefore, the Assessing Officer rightly adopted the value of fringe benefit as worked out by the tax auditor while submitting the return u/s 44AB of the Act. Supporting the impugned order, the DR contended that as per section 115WB of the Act for determination of value of fringe benefits in relating to mot....
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....nt." 10. During first appellate proceedings before the Commissioner of Income Tax(A), ld. counsel of the assessee placed following written submissions before the first appellate authority:- "expenditure on repair, running and maintenance of motor cars including depreciation thereon is liable to FBT in terms of clause (H) of subsection (2) of Section 115 WB of the Act. Further, in terms of clause (e) of subsection (2) of section 115WC of the Act, value of fringe benefit is deemed to be 5% for the employer engaged in the business or carriage of passenger or goods by motorcar instead of 20%. In the car renting business, the payments of rent for hiring of cars by the customers comprises of three elements viz. (i) payment towards wear and tear/use of the motor cars, i.e., towards depreciation (ii) payment towards maintenance of motor cars (iii) income for services provided by the renting company. The motor cars given on rent by ITR, a renting company, are its tools of trade and are to be exclusively used in that business. The motor cars that are maintained and used by the employees of ITH are separately identified and are distinct from those used in the business. Clause (F) ....
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....s of renting as aforesaid, in terms of clause (H) of said section 115WB of the Act is inequitable and is opposed to the intent of the legislature." 11. The Commissioner of Income Tax(A) decided the issue against the assessee by holding as under:- "6. I have considered the submissions of the learned counsel and the facts on record. It is seen that there is no dispute about the facts. The business of the appellant is that of providing travel related services including providing motor cars on hire. As per submission, 27 motor cars are used for administering the business i.e. for official and personal use of the employees. For the business activity of providing touring services, the appellant has 491 motor cars. These are stated to be used exclusively for renting/hiring. As per the Learned counsel's submission, in the case of the appellant the fringe benefit value should be determined only with reference to the 27 motor cars and not the 491 motor cars used for hiring. Various reasons including double taxation of FBT on the cars rented out and the high improbability of assumption of 5 % of 491 cars being withdrawn from business and put to use by the appellant's employees h....
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....e outset, we observe from the citations relied by the assessee that as per Circular No. 8/2005 dated 29.08.2005 issued by CBDT, employer and employee relationship is a prerequisite for the levy of FBT u/s 115 WB of the Act. As per the same Circular, we further observe that FBT is payable by a person if he satisfies the following conditions:- "1. FBI is payable by a person if he satisfies the following conditions:- (i) He is an employer; (ii) He has employees based in India; (iii) He is a company or a firm or an association of persons or a body of individuals or a local authority or an artificial juridical person; (iv) His income is not exempt under section 10(23C) of the Income-tax Act or he is not registered under section 12AA; (v) He has provided the following fringe benefits:- (a) contributes to an approved superannuation fund for employees; (b) provides free or concessional tickets for private journeys of employees or their family members; (vi) He has, during the course of his business or profession (including any activity whether or not* such activity. is carried on with the object of deriving income, profits or gains) incurred any expense on, or mad....
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....he statutory provisions relating to fringe benefit tax as mentioned hereinabove, we agree with this contention of the assessee that for determination of value of fringe benefit, the relation of employer and employee is a prerequisite condition and the assessee company itself had offered expenses in relation to 27 cars used by the employees and officers of the company for administering the business of the assessee i.e. for official and personal use. 16. The peculiar facts and circumstances of the present case are that the Assessing Officer has calculated total value of fringe benefits at Rs. 2,03,18,452 by following the tax audit report as against the returned value of fringe benefit which was taken by the assessee at Rs.91,42,036. From careful perusal of the record placed before us, specially both paper books of the assessee, we observe that neither the assessee nor the revenue has placed the copy of tax audit report on the basis of which the Assessing Officer calculated the higher value of fringe benefit as against the returned value by the assessee due to the reasons best known to them. In the absence of tax audit report, we are unable to draw any fact finding conclusion regar....