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2014 (7) TMI 587 - ITAT PUNELiability to pay FBT u/s 115WB(1) - market support expenditure – Internal transport expenses - Expenses incurred for benefit of employee or not – Held that:- The provisions of fringe benefit are in respect of payment with regard to the expenditure which has incurred for the benefit of its employees - The expenditure incurred should be in consideration of the employment - The main thrust of FBT tax was to tax those benefits which are enjoyed by the employees and could not be attributable in the case of a single employee - the payment has been made to the customers as per agreement - There is nothing on record to suggest that market support expenditure has been incurred for the benefit of employees of the assessee in any manner – it has been paid to the customers on account of reimbursement of advertisement and sales promotions expenses as per agreement - it is not justified to attract the provisions of FBT in respect of payments - This is not applicable to the payment to third party which does not result in any benefit to employees of the assessee, so the same should not be chargeable to fringe benefits tax u/s.115WB. Relying upon T & T Motors Ltd. Vs. Asst. CIT [2012 (1) TMI 96 - DELHI HIGH COURT] - the legislation has excluded from FBT, the expenditure in the form of payments to third parties and fringe benefit tax is to be levied only in the case of expenditure incurred collectively on employees - the payment has been made to the customers of the assessee as per agreement who do not fall in the definition of employees - the provisions of fringe benefit are not applicable to them - So, the employer or employee relationship is must to levy fringe benefit tax - FBT is not levied in respect of gift items given to the travel agent, customer where there is no employer or employee relationship or assessee and recipient - the employer employee relationship for FBT provisions would be applicable only in respect of those expenses which contain an element of personal benefit to employees and not in respect of expenses incurred on non-employees - the expenses incurred by assessee on market support reimbursed to its customers, it is not attracts the provisions of section 115WB. Internal transport expenses – Held that:- The assessee has incurred internal transport expenses - The internal transport expenses are on account of shuttle service hired by the assessee for movement of the staff from the office to factory and back - CIT(A) has held that such expenditure is liable to FBT - CBDT vide its circular No.8 of 2005 had clarified that the expenditure on providing free or subsidized transport to the employees for journey of the employees from the residence to office is not liable to FBT, even that event, even the expenditure on travel of the employees from one official place to another official place should not be liable to FBT - this expenses has no personal benefit to the employees and it has incurred during course of assessee’s business - the lower authorities were not justified to hold that the expenditure on internal transport expenses was deemed fringe benefit u/s.115WB(2)(F) of the Act – Decided in favour of Assessee.
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