AI Drafter 
TaxTMI 
TaxTMI 
2012 (10) TMI 1058
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....amount of Fringe Benefits declared by the appellant in his return of FBT. 2. Learned CIT(A) erred in not appreciating that Fringe Benefit Tax is not liable to be paid by the appellant in respect of the following items of Expenditure as they have been either incurred only with relation to non-employees and/or though incurred through employees, but being purely for the business purposes of the assessee and thus not resulting in any benefit to the employees Particulars Amount of Expenditure FBT % Amount a. Entertainment 1,17,883/- 20 23,577/- b. Provision of Hospitality 1,12,580/- 20 22,516/- c. Sales Promotion 35,06,332.98 20 7,01,267/- Travelling & Conveyance Auditors Travelling ....
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....f section 115WB(2) of the Act, which is wrong. The plea of the assessee is that deeming provision of sub-section (2) of section 115WB would operate only if the expenditure specified therein is incurred inconsideration for employment or in other words, it is incurred in connection with the employees of the assessee, and not otherwise. 5. On the other hand, the contention of the Revenue and, which is supported by the impugned order of the Commissioner of Income-tax (Appeals), is that section 115WB(2) lays down 16 items of expenditure which are deemed fringe benefits and that if any of such expenses is incurred by an assessee, the same is liable to FBT and the provision does not contain any qualification to the effect that such expenditure ....
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....tivity is carried on with the object of deriving income, profits or gains) incurred any expense on, or made any payment for, the following purposes, namely:- (A)...................(Q)" 7. Sub-section (2) of section 115WB of the Act elucidates the fringe benefits which shall be deemed to have been provided by the employer to his employees. It is provided that if an employer in the course of his business or profession incurs any expenditure for the purposes set out therein, it shall be deemed that 'fringe benefit' has been provided by the employer to the employees. The moot point before us is whether the mere incurrence of the expenditure listed in Clauses (A) to (Q) of section 115WB(2) of the Act is enough to trigger the deeming ....
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....' contained therein is "For the purposes of this Chapter-----" and, therefore, it implies that the overriding condition of the incurrence of expenditure in consideration for employment is even relevant for the purposes of assessing or ascertaining fringe benefits, which are deemed to have been provided by the employer to its employees in terms of subsection (2) of section 115WB of the Act also. Therefore, even in the circumstances provided in sub-section (2) of section 115WB of the Act 'fringe benefits' can be deemed to have been provided by the employer to his employees, only in cases where the prescribed expenditure is incurred in consideration for employment. So, however, the Revenue has contended that the CBDT has clarified by way of Ci....
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....ere sought to be taxed in the hands of the concerned employer. Though the speech of the Hon'ble Finance Minister may not be a decisive test, so however, it is indeed a relevant and contemporaneous exposition of the legislative intent and can be relied upon, as propounded by the Hon'ble Supreme Court in the case of K P Varghese v. ITO 131 ITR 597 (SC). Considered in that light too, we find that the interpretation sought to be made out by the Revenue with regard to the meaning of the expression 'fringe benefits' for the purposes of section 115WB(2) of the Act is quite misplaced. Considering the aforesaid, we therefore do not subscribe to the interpretation sought to be placed by the Revenue on section 115WB(2) of the Act and instead, hold tha....