TaxTMI 
TaxTMI 
TaxTMI 
2010 (5) TMI 840
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....lief without considering para-82 of the Circular 8/2005 issued by the CBDT dated 29.8.2005 which stipulates that the rent paid or payable on lease of motor car is expenditure for the purposes of conveyance, tour and travel and shall be treated as expenditure within the section 115WB(2)(F). 4) The learned CIT(A) has erred in allowing relief to the assessee to the extent of Rs. 68,90,438/- for FBT purpose when the assessee has not proved that these expenses are incurred on divisions or agencies of the assessee. 3. Brief facts of the case are that the assessee, an Electricity Supply Company, filed the return of income on 27.11.2006 declaring NIL income and book profit of Rs. 27,86,58,020/- u/s 115JB of the I T Act. The A.O. assessed the inco....
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....ssessee company. 4. Aggrieved by the order of the AO relating to the fringe benefits, the assessee filed an appeal before the CIT(A). 5. The CIT(A), on verifying the company's books of accounts and from the details therein, he observed that the expenditure incurred on hiring of vehicles consisted of amounts paid for vehicles engaged by different divisions and agencies of the company and the purposes for which vehicles were hired were as follows:- i) 24-hour consumer complaint and service stations Rs.31,79,094/- ii) Theft detection vigilance squads Rs.10,29,869/- iii) Consumer meter testing division Rs.26,81,475/- iv) Meetings, inspections and other official functions Rs.33,15,367 Total Rs.1,02,05,805/- After co....
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....revenue is in appeal before us. 7. The learned DR submitted that the facility of conveyance given to the employees is covered by clause (F) of sub-section 2 of section 115WB of the I T Act and there is no discretion left to the AO in making any exception to the rule. It is submitted that the CIT(A) has no jurisdiction to bifurcate the amounts into different categories and grant relief. The learned DR further submitted that these fringe benefits were earlier being taxed as perquisites in the hands of the employees and it is only to take care of excessive benefits given to the employees in the garb of business expenditure that the fringe benefit tax has been introduced in the Act and it is only 25% of the benefits which are being taxed to ta....
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....provides that in addition to the income tax charged under this Act, there shall be charged for every asst. year commencing on or after the 1st day of April, 2006, additional income tax (In this Act, referred to as 'fringe benefit tax') in respect of the fringe benefits provided or deemed to have been provided by an employer to his employees (Emphasis provided by us) during the previous year. Section 115WB defines the fringe benefits as to mean, any consideration for employment provided by way of - (a) any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to this employees (including former employee or employees); (b)----- (c) ----- 9.1 115WB(2)....
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....s "conveyance, tour and travel (including foreign travel)", while the words "tour and travel (including foreign travel)" were omitted by Finance Act of 2006 w.e.f. 1/4/2007 and has been inserted into clause (Q) w.e.f. 1/4/2007; therefore, in the relevant asst. year, the words "conveyance, tour and travel (including foreign travel)" have to be read together. To understand the meaning of these words and whether they included any type of expenditure by the employer on conveyance, tour and travels etc. under the provision of fringe benefits, it is necessary to go through the Explanatory Memorandum of the Finance Bill of 2005, which has been reproduced in 273 ITR (St.) 196 and 197, wherein it is explained as under:- "That the taxation of perqui....
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....enefits which are certainly of considerable material value. At present, where the benefits are fully attributable to the employee, they are taxed in the hands of the employee; that position will continue. In addition, I now propose that where the benefits are usually enjoyed collectively by the employees and cannot be attributed to individual employees, they shall be taxed in the hands of the employer. However, transport services for workers and staff and canteen services in an office or factory will be outside the tax net. The tax is not a new tax, although I am obliged to call it by a new name, namely, fringe benefit tax. The rate will be 30 per cent on an approximately defined base (2005) 273 ITR (St.) 56)". 9.5 Thus, it can be seen tha....