AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 517
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....ve, the submissions made by the appellant. 3. On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-1, erred in not giving sufficient opportunity to the assessee company to be heard. 4. The appellant craves leaved to add, amend alter or otherwise raise any other ground of appeal. 2, Facts giving rise to the present appeal are that the assessee company is engaged in the distribution of power in the state of Madhya Pradesh. The A.O. issued a notice u/s 115WH of the Income Tax Act, 1961 (hereinafter called as 'the Act'). In response thereto, the assessee filed written submissions. The A.O. after considering the submissions made addition of Rs. 7,36,09,000/- as Fringe Benefit Tax (in short 'FBT'). Further, on account of mistake of the assessee in respect of valuation of the fringe benefit, the assessment order u/s 115WG r.w.s. 115WE of the Act was passed on 29.12.2016 by making the aforementioned additions. 3. Aggrieved against this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions dismissed the appeal. Thereby, the additions made by the A.O. were confirmed. Ld. Counsel for the as....
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.... of electricity at concessional rates would partake the character of the perquisite and would be taxable at the hands of the employees. Ld. CIT(A) rejected this claim on the basis that the assessee could not support its contention by furnishing material evidences proving that perquisite has already been taxed in the hands of the employees. Moreover, auditor of the assessee company opined that the amount which required to be taxed as FBT. Ld. Counsel submitted that opinion of the auditor would not replace or supersede the law. He took us through the relevant provisions of the Act. For the sake of clarity, section 115WB of the Act is reproduced as under: "Section 115WB of Income Tax Act "Fringe benefits" Section 115WB. (1) For the purposes of this Chapter, "fringe benefits" means 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 his employees (including former employee or employees); (b) any free or concessional ticket provided by the employer for private journeys of his employees or their family members....
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....rding and lodging in connection with any conference shall be deemed to be expenditure incurred for the purposes of conference; (D) sales promotion including publicity: Provided that any expenditure on advertisement,- (i) being the expenditure (including rental) on advertisement of any form in any print (including journals, catalogues or price lists) or electronic media or transport system; (ii) being the expenditure on the holding of, or the participation in, any press conference or business convention, fair or exhibition; (iii) being the expenditure on sponsorship of any sports event or any other event organised by any Government agency or trade association or body; (iv) being the expenditure on the publication in any print or electronic media of any notice required to be published by or under any law or by an order of a court or tribunal; (v) being the expenditure on advertisement by way of signs, art work, painting, banners, awnings, direct mail, electric spectaculars, kiosks, hoardings, bill boards, display of products or by way of such other medium of advertisement; (vi) being the expenditure by way of pay....
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....Act defines perquisite as under: "17(2) of the Income Tax Act: "perquisite" includes- (i) the value of rent-free accommodation provided to the assessee by his employer; (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer; [Explanation 1.-For the purposes of this sub-clause, concession in the matter of rent shall be deemed to have been provided if,- [(a) in a case where an unfurnished accommodation is provided by any employer other than the Central Government or any State Government and- (i) the accommodation is owned by the employer, the value of the accommodation determined at the specified rate in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee; (ii) the accommodation is taken on lease or rent by the employer, the value of the accommodation being the actual amount of lease rental paid or payable by the employer or fifteen per cent of salary, whichever is lower, in respect of the period during which the said acco....
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....rigerators, other household appliances, airconditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the assessee during the previous year. Explanation 3.-For the purposes of this sub-clause, "salary" includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called, from one or more employers, as the case may be, but does not include the following, namely:- (a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned; www.taxmann.com h (b) employer's contribution to the provident fund account of the employee; (c) allowances which are exempted from the payment of tax; (d) value of the perquisites specified in this clause; (e) any payment or expenditure specifically excluded under the proviso to this clause.] [Explanation 4.-For the purposes of this sub-clause, "specified rate" shall be- (i) fifteen pe....
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....his sub-clause,- (a) "specified security" means the securities as defined in clause (h) of www.taxmann.com section 225 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme; (b) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of 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 spe....
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....tually incurred by the employee on his medical treatment or treatment of any member of his family [other than the treatment referred to in clauses (i) and (ii)]; so, however, that such sum does not exceed 37[fifteen] thousand rupees in the previous year; (vi) any expenditure incurred by the employer on- (1) medical treatment of the employee, or any member of the family of such employee, outside India; (2) travel 38[and] stay abroad of the employee or any member of the family of such employee for medical treatment; (3) travel and stay abroad of one attendant who accompanies the patient in connection with such treatment, 39[subject to the condition that- (A) the expenditure on medical treatment and stay abroad shall be excluded from perquisite only to the extent permitted by the Reserve Bank of India; and (B) the expenditure on travel shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees;] (vii) any sum paid by the employer in respect of any expenditure actually incurred by the employee for any ....
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....of the authorities below and restore the issue to the file of the A.O. for verifying whether the employees offered such benefit in their returns, if any. The assessee would cooperate by furnishing the requisite information to the A.O. If the assessee fails to prove that these benefits were treated as perquisite in the accounts of the assessee and the due tax has been deducted thereon, the A.O. would be at liberty to make the addition as per law. The grounds raised in this appeal are allowed for statistical purposes. 9. In the result, the appeal filed by the assessee in ITA No.181/Ind/2018 for the A.Y. 2009-10 is allowed for statistical purposes. Order was pronounced in the open court on 11.10.2019. ============= Document 1 5. I have carefully considered the facts of the case, assessment order, the submissions filed and arguments made by the appellant. The only issue that is to be decided here is whether the concessional electricity provided to its employees is chargeable as Fringe Benefit liable to Fringe Benefit Tax. The issue is decided in the succeeding paragraphs. 6. The Finance Act, 2005 introduced a new levy namely Fringe Benefit Tax (FBT) on t....