TaxTMI 
TaxTMI 
2014 (4) TMI 1203
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the levy of fringe benefit tax. 3. During the course of the Fringe Benefit Tax assessment proceedings, the Assessing Officer noticed that the assessee has not offered medical reimbursement/allowance to the extent of Rs. 15,000/- per employee exempt in the hands of the employees from taxation. When questioned regarding the same, the assessee submitted as under: "We have not considered 20% of exempt medical allowance amounting to Rs. 50,52,962/- for the payment of fringe benefit tax (FBT). FBT has been introduced in order to tax perquisites, which escaped taxation earlier, and not to tax specific allowances and perquisites, which were specifically exempt from taxation in the hands of the employees. In other words, FBT has not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Sec. 17(2) of the Act. Therefore, specific item of perquisite which is normally taxable in the hands of the individual employee cannot subject to FBT only for the reason that the same is exempt in the hands of the employee. To substantiate, the Ld. Counsel relied upon the decision of the Tribunal, Mumbai Bench in the case of Godrej Properties Ltd Vs ACIT 135 TTJ 426, Bangalore Bench , in the case of Vijaya Bank in ITA No. 1066/Bang/2010. The Ld. Counsel also relied upon the speech of the Finance Minister made while presenting the Finance Bill 2005. 7. Per contra, the Ld. Departmental Representative strongly supported the findings of the lower authorities. It is the say of the Ld. DR that since there are varied decisions of the Tribunal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ursements or other miscellaneous expenses so as to enable the employees to escape/reduce their tax liability; and (c) of the difficulty in the valuation of the benefits. 2.2 In India, prior to assessment year 1998-99, some perquisites/fringe benefits were included in salary in terms of section 17 and accordingly taxed under section 15 of the Incometax Act in the hands of the employee and a large number of fringe benefits were taxed by the employer-based disallowance method where the quantum of the disallowance was estimated on a presumptive basis. In practice, taxation of fringe benefits by the employer-based disallowance method resulted in large-scale litigation on account of ambiguity in defining the tax base. Therefore, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he employees. The medical reimbursement is definitely a perquisite as per Sec. 17(2) of the Act , though a threshold limit of exemption is provided under clause (v) at Rs. 15,000/-, nevertheless medical reimbursement expenditures are taxable as perquisites. The Circular No. 8 issued by CBDT appears to be in contradiction to the legislative intent on this specific issue. The Coordinate Bench of the Tribunal, Bangalore in ITA No. 1407/Bang/2008 in the case of Bosch Ltd., has considering a similar issue, has held that such payments do not attract Fringe benefit tax in the light of the budget speech of the Hon'ble Finance Minister on the floor of Parliament. A similar view was taken by the Co ordinate Bench, Mumbai in the case of Godrej Propert....