TaxTMI 
TaxTMI 
2014 (7) TMI 804
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....(1)(c) of the I.T. Act, the above contribution made by the employer needs to brought to tax as eligible FBT value during the year. It was the contention of assessee that it falls under employee's welfare and also in the nature of statutory obligation. A.O. however, was of the view that pension fund contribution is class apart from employee welfare and squarely falls under the said provision. He also relied that the amendment made to section 115WB (1)(c) for A.Y. 2007-08 onwards that amount of contribution, which exceeds Rs. 1 lakh in respect of each employee clearly distinguishes the contribution to such funds and accordingly, he brought the amount to tax. 3. Before the Ld. CIT(A), assessee contended that contribution to pension fund which was made in lieu of P.F. is a statutory liability and since the contribution to P.F. is not considered for valuation of FBT, contribution to pension fund shall also does not attract FBT. Assessee alternatively relied on the decision of Coordinate Bench at Jaipur in the case of DCIT vs. State Bank of Bikaner and Jaipur in ITA.No.538/JP/2011 for A.Y. 2006-07 dated 21.10.2011 wherein it was considered that the amendment brought subsequently will ....
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.... by the Banks particularly, public sector banks namely 'defined contribution scheme' and 'defined benefit scheme'. It was submitted that in assessee's case a lump sum contribution is made into the scheme in respect of pension for all eligible employees. The lump sum contribution is calculated based on the Actuarial Valuation which is in turn, typically based on several underlying assumptions. Given the nature of 'defined benefit scheme' it is not possible to derive the contribution on per employee basis which may be used for Income Tax purposes. It was submitted that assessee is having more than 97 thousand employees and it is not possible to segregate the benefit available to each person. It was further submitted that all employees are not covered by the defined benefit scheme as some have opted for 'contributory pension fund'. He referred to the various salary certificates given to the Employees and as an example placed two such certificates wherein for the persons covered by the contributory scheme the individual credit to the account was stated, whereas, for the persons who are under the benefit scheme, no such contribution was shown. Ld. Counsel emphasized that the scheme to w....
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....ution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh rupees; and 9.2. Contribution as defined in Part-A of Fourth Schedule in Cluase-2 is as under : "2. In this Part, unless the context otherwise requires,- (i) "employer" means.........; (a) "employee" means.........; (b) "contribution" means any sum credited by or on behalf of any employee out of his salary, or by an employer out of his own moneys, to the individual account of an employee, but does not include any sum credited as interest; PART-B Definitions : 1. In this Part, unless the context otherwise requires, "employer", "employee", "contribution" and "salary" have, in relation to superannuation funds, the meanings assigned to those expressions in Rule 2 of Part A in relation to provident funds." 9.3. Accordingly, the 'contribution' as defined in the provision means any sum credited to the individual account. Rationalizing the provision of fringe benefit tax the memorandum explaining the Finance Bill 2006 has clarified as under : "It is proposed to amend the said clause (b) so as to provide that contribution by an employer to an appr....
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....contributed to individual account of an employee in excess of Rs. 1 lakh is excluded from the purview of FBT from A.Y. 2007-08. Further, in the impugned A.Y. the amendment is not applicable. However, the Coordinate Bench by order dated 27.11.2009 in the case of Rajasthan Rajya Vidyut Prasaran Nigam Ltd., has analysed this issue and held as under : "The above principle of interpretation laid down in various judgments of Hon'ble Supreme Court when read in context with the purchase and intention for which the amendment was made u/s 115WB(1)(c) leaves no scope of debate that the said amendment was to remedy the unintended consequences and therefore, it is required to be considered as retrospective in operation so that a reasonable interpretation can be given to the scheme of levy of fringe benefit tax on contribution to superannuation fund as a whole. We, therefore, hold that the contribution to superannuation fund in present case being less than Rs. 1.00 lac per employee, is not liable for fringe benefit tax. In the result, this ground of assessee is allowed." 9.6. Accordingly, the provisions are held to be applicable even for the impugned A.Y. on the basis of which Ld. CIT(A) g....
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....n and such contributions would not have attracted FBT. The contributions made by the bank to the Pension Fund is only to secure pension payments, which is a statutory obligation of the Banks as brought out above. Accordingly, assesse bank has established a superannuation scheme ('the Scheme') for the purpose of providing pension to its eligible employees. The aforesaid Scheme, which is a defined benefit plan has been approved by the Commissioner of Income-Tax under Rule 2(1) of the Part B of the Fourth Schedule of the Act Whether provisions of section 115WB(1)(c) are applicable to the assessee's case: 11.1. In the present case, assessee made a single contribution during the year to the superannuation fund for all its employees who were governed by this scheme taken together based on the actuarial valuation provided by the Actuarial Valuer. There is no dispute with reference to the fact that the amount of Rs. 75,25,49,000/- was provided as short fall to the fund from making pension payable to eligible employees and this amount was arrived at on the basis of valuation of Actuarial Valuer appointed by the Bank. In respect of such single contribution made under defined benef....
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....oshio Kubo vs. CIT (2013) 36 taxmann.com 1 (Del.) wherein it was held out that when an amount does not result in a direct present benefit to the employee who does not enjoy it but assures him a future benefit in the event of contingency, the payment made by the employer does not vest in the employee. In view of the above principles laid down by the Hon'ble Supreme Court as well as the advise given by Authority for Advanced Rulings which, in turn, followed the Hon'ble Supreme Court decision in the case of CIT vs. L.W. Russel (1964) 53 ITR 91 (SC), the amount paid during the year cannot be considered as a contribution to superannuation fund as contemplated under the provisions of section 115WB(1)(c). 12.1. In view of the above, since the amount is not paid to the benefit of any individual employee, the lump sum contribution made under the defined benefit scheme, in our opinion, does not attract provisions of 115WB(1)(c). As per the definition of 'contribution', no individual employee had any benefit earmarked the payment cannot be considered as covered by the provisions of 115WB(1)(c). 13. As briefly stated earlier, the Ld. CIT(A) followed the Coordinate Bench decision in givin....