TaxTMI 
TaxTMI 
2018 (11) TMI 259
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...., 18.08.2010 & 25.03.2011 passed by Ld. CIT (Appeals)-XII, New Delhi qua the assessment years 2006-07, 2007-08 & 2008-09 respectively on the grounds inter alia that:- "ITA NO.3793/DEL/2010 (AY 2006-07) 1. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of Rs. 1068.75 lakh made by the AO to the value of Fringe Benefits on account of medical reimbursement expense. 2. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of Rs. 797.13 lakh made by the AO to the value of Fringe Benefits on account of maintenance expenses of Township of the assessee. 3. Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in directing the AO to allow 50% of Rs. 2077.14 lakh which was included by the AO in the value of Fringe Benefits on account of Medical expenses for treatment in Hospitals." "ITA NO.4851/DEL/2010 (AY 2007-08) 1. On the facts and circumstances of the case, the Ld. CIT (A) erred in law as well as on merits in deleting the addition of ....
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....The authorities below have erred in mixing up the provisions regarding tax exemption limit of Rs. 15,000 for domiciliary treatment with hospitalization charges covered by Section 17[2] read with Rule 3A and arriving at erroneous conclusions / decisions. 3. That the CIT [A] has erred in confirming the action of the AO treating the Maintenance of Townships [8 Nos.] expenses of Rs. 863.43 lakhs as Employee Welfare Expenses for the purposes of Fringe Benefit Tax ignoring the fact that the factories of the company are huge and that they are deemed as townships for which the company is responsible." "ITA NO.2699/DEL/2011 (AY 2008-09) 1.1 The CIT [A] should have deleted the whole of the addition of Rs. 4828.40 [770.48 + 4057.92] lacs on account reimbursement of medical bills and payment to referral hospitals on reference by Hospitals run by the company instead of deleting only 50% despite it being excluded by Section 115WB[E] read with Section 17[2]. [Para 4.3-page 4 of order] 1.2 The authorities below should have accepted the illustrative evidences submitted on test check basis in view of voluminous nature of evidences. 2 The authorities below....
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....against 100% disallowance made by the AO and has deleted the entire addition on account of medical reimbursement on account of AY 2006-07 and deleted 50% of the addition made by the AO in AYs 2007-08 & 2008-09.. Feeling aggrieved, both the Revenue as well as the assessee have come up before the Tribunal by way of filing the present appeals. 7. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 IN REVENUE'S APPEAL ITA NO. 3793/Del./2010 (AY : 2006-07) ITA No.4851/Del./2010 (AY : 2007-08) ITA No.3261/Del./2011 (AY : 2008-09) GROUND NO.3 IN REVENUE'S APPEAL ITA NO. 3793/Del./2010 (AY : 2006-07) GROUND NO.2 IN REVENUE'S APPEAL ITA No.4851/Del./2010 (AY : 2007-08) ITA No.3261/Del./2011 (AY : 2008-09) GROUNDS NO.1 & 2 IN ASSESSEE'S APPEAL ITA NO.3285/DEL/2010 (AY 2006-07 ITA No.4689/Del./2010 (AY : 2007-08) GROUNDs NO.1.1, 1.2 & 2 IN ASSESSEE'S APPEAL ITA No.2699/Del./2011 (AY : 2008-09) 8. AO has disallowed reimbursement of medical expenses by invoking ....
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.... intellectual property rights or value additions, by whatever name called; (c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from, the assessee in respect of such security or shares; (d) "fair market value" means the value determined in accordance with the method as may be prescribed; (e) "option" means a right but not an obligation granted to an employee to apply for the specified security or sweat equity shares at a predetermined price;" 10. In AY 2006-07, ld. CIT (A) has deleted the entire addition made by AO to the value of FBT on account of medical reimbursement expenses of 100% in AY 2006-07 and 50% in AYs 2007-08 & 2008-09 on the ground that since the reimbursement of medical expenses is taxable in the hands of the employees, the same cannot be includible for FBT. Likewise, ld. CIT (A) deleted 50% of the addition made by the AO in the value of FBT on account of medical expenses for treatment in hospital in all three as....
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....o above, is not chargeable to tax as a perquisite if the amount does not exceed Rs. 15,000/-. 3.5 Section 115WB(3) reads as follows:- "For the purposes of sub-section (1), the privilege, service, facility or amenity does not include perquisites in respect of which tax is paid or payable by the employee (or any benefit or amenity in the nature of free or subsidized transport or any such allowance provided by the employer to his employees for journeys by the employees from their residence to the place of work or such place of work to the place of residence)" (Emphasis ours). 3.6 In the budget speech at para 160 reported in 273 ITR (St.) 25, at page 56, it is observed as follows:- "I have looked into the present system of taxing perquisites and I have found that many perquisites are disguised as fringe benefits, and escape tax. Neither the employer nor the employee pays any tax on these benefits 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....
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....000/- and the overall income of the individual employee is less than the minimum amount not chargeable to tax; whether the medical expenses in excess of Rs. 15,000/- could be subjected to FBT, only on account of the fact that no income tax was paid by the employee. The answer to the above query, in our view, would be in the negative. Likewise, when an item which is to be treated as a perquisite is exempt in the hands of the individual employee, the same, according to us, could not be subjected to FBT. In taking the above view, we are also fortified by the order of the Mumbai Tribunal in the case of Godrej Properties Ltd., which has decided an identical issue. 3.10. In the result, ground nos. 2 to 4 are allowed." 13. So, following the decision rendered by the coordinate Bench of the Tribunal in Vijaya Bank (supra) which is squarely applicable to the facts and circumstances of the case, we are of the considered view that medical reimbursement expenses is prerequisites in the hands of employees and is taxable as such, even if medical expenses are in excess of Rs. 15,000/- and as such cannot be subjected to FBT because once the item as prerequisites is exempted in the hands....
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....ew the aforesaid facts, we allow 85% of the amount incurred by the assessee on account of medical expenses for treatment in the approved hospitals for the reason that possibility of 15% of such cases being overlooked cannot be ruled out for AYs 2007-08 & 2008-09. Even otherwise, the ld. Representative for the assessee has shown his inability to produce old record for verifications. So, ground no.3 in ITA No. 3793/Del./2010 (AY : 2006-07) and ground no.2 in ITA No.4851/Del./2010 (AY : 2007-08) & ITA No.3261/Del./2011 (AY : 2008-09) in Revenue's appeal are determined against the Revenue. Grounds No.1 & 2 in ITA NO.3285/Del/2010 (AY 2006-07) and ITA No.4689/Del./2010 (AY : 2007-08) and Grounds No.1.1, 1.2 & 2 being ITA No.2699/Del./2011 (AY : 2008-09) in assessee's appeal are partly determined in favour of the assessee. GROUND NO.2 IN REVENUE'S APPEAL ITA NO. 3793/Del./2010 (AY : 2006-07) GROUND NO.3 IN ASSESSEE'S APPEAL ITA No.4689/Del./2010 (AY : 2007-08) ITA No.2699/Del./2011 (AY : 2008-09) 18. Undisputedly, assessee has been maintaining townships situated in the vicinity of its plants all over the country. It is also not in dispute that in the township constructed and ....
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....L ITA No.4928/Del./2012 (AY: 2006-07) ITA No.4929/Del./2012 (AY: 2007-08) 23. Briefly stated the facts necessary for adjudication of the controversy at hand are : on the basis of completed assessment u/s 115WE (3) at Rs. 5975.11 lacs & Rs. 6090.28 lacs after making addition/disallowances to the returned income (FBT) at Rs. 1038.57 lacs & Rs. 934.81 lacs for AYs 2006-07 & 2007-08 respectively, penalty proceedings were initiated u/s 271(1)(d) of the Act that the assessee has failed to bring on record the details for payment of medical reimbursement expenses of Rs. 1038.75 lacs & Rs. 934.81 lacs for AYs 2006-07 & 2007-08 respectively on account of medical expenses for treatment in approved hospitals to the tune of Rs. 2077.14 lacs & Rs. 3368.35 lacs for AYs 2006-07 & 2007-08 respectively; and to the tune of Rs. 797.13 lacs & Rs. 863.43 lacs for AYs 2006-07 & 2007-08 respectively on account of township expenses; and consequently 20% of 1038.75 lacs i.e. Rs. 207.71 and Rs. 934.81 lacs i.e. Rs. 196.96 lacs for AYs 2006-07 & 2007-08 respectively on account of medical reimbursement expenses; 20% on account of Rs. 2077.14 lacs i.e. Rs. 415.43 lacs & Rs. 3368.35 i.e. Rs. 673.67 lacs for A....
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....atives of the parties, the sole question arises for determination in this case is :- "as to whether the assessee has concealed the particulars of fringe benefit or furnished inaccurate particulars of such fringe benefits during the assessment proceedings? 29. Undisputedly, prerequisites drawn by an employee is part of the salaried income. When undisputedly the ld. CIT (A) has deleted the addition on account of medical reimbursement and payment of approved hospital expenses u/s 115WE(2)(a) that too on the ground that no detail or evidence has been brought on record by the assessee to prove that in each case, reimbursement was above Rs. 15,000/- to its employees and similarly in case of payment to the approved hospitals, no details have been supplied that the payment was below Rs. 15,000/- nor detail of hospital has been brought on record, the assessee was having reasons to claim the deductions. Moreover, in Vijaya Bank (supra) case, identical issue has been decided in favour of the assessee by deleting the addition made by the AO and confirmed by the CIT (A) to the value of FBT on account of medical reimbursement expenses and on account of medical expenses sought treatme....