TMI Blog2012 (8) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... under Group Accident Policy assessee contending non levy on ground of it being expenditure on employees welfare arising out of statutory obligation or to mitigate occupational hazards - Held that:- CIT(A) rightly observed that impugned expenditure is not on account of a statutory obligation and, therefore, the same does not fall within the exceptions provided in the Explanation to section 115WB(2)(E) Levy confirmed. FBT on the reimbursement of medical expenses to the extent of Rs 15,000/-. Held that:- Medical reimbursement is taxable as perquisite in the hands of individual employees and merely because grant of such exemptions, same cannot be said to be a fringe benefit for the purposes of Chapter XII-H. Levy deleted. FBT on part of the expenses under the head depreciation and expenses on Aircraft and Club expenses, disallowed in the assessment finalized u/s 143(3) for personal in nature Held that:- We remand the matter back to the file of the Assessing Officer who shall rework the liability of FBT on such dis-allowable expenses in accordance with the clarification issued by the CBDT in its Circular No. 8 of 2005 Decided partly in favor of assessee - ITA No. 1262/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions. Chapter XIIH of the Act creating additional tax liability on the prescribed assessees in the 3 form of FBT was inserted by the Finance Act, 2005 with effect from 1.4.2006. Section 115WA of the Act prescribes that in addition to the income-tax chargeable under the Act, there shall be charged for every assessment year commencing on or after 1.4.2006, a FBT at a specified rate on the value of the fringe benefits provided or deemed to have been provided by an employer to his employees during the relevant previous year. Section 115WB of the Act elucidates the fringe benefits which are liable for charge of FBT as prescribed in section 115WA of the Act. Sub-section (1) of section 115WB prescribes that For the purposes of this Chapter, fringe benefits means any consideration for employment provided by way of------ . The presence of the expression any consideration for employment is significant in section 115WB(1), inasmuch as the benefits by way of clauses (a) to (d) listed therein are directed towards the employees or their families including former employees. Sub-section (2) of section 115WB, which is the focus of controversy before us reads as under: (2) The fringe ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fringe benefits contained therein is For the purposes of this Chapter----- and, therefore, it implies that the overriding condition of the incurrence of expenditure in consideration for employment is even relevant for the purposes of assessing or ascertaining fringe benefits, which are deemed to have been provided by the employer to its employees in terms of sub-section (2) of section 115WB of the Act also. Therefore, even in the circumstances provided in sub-section (2) of section 115WB of the Act fringe benefits can be deemed to have been provided by the employer to his employees, only in cases where the prescribed 5 expenditure is incurred in consideration for employment. Therefore, on this aspect, we find ample force in the plea set-up by the assessee and accordingly, the assessee is liable to succeed. 9. So, however, the Revenue has contended that the CBDT has clarified by way of Circular No. 8 of 2005 that the deeming provision contained in subsection (2) of section 115WB cannot be restricted to expenses which are incurred on employees alone and, in this context the answer to Question No. 14 of the Circular has been referred to. On the strength of the circular o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, hold that the expenses prescribed therein are liable to be considered as fringe benefits only to the extent the same are incurred in consideration for employment. To the same effect is also the view of our co-ordinate Bench in the case of DCIT v. Kotak Mahindra Old Mutual Life Insurance Ltd. 134 ITD 388 (Mum). 11. In view of the aforesaid discussion, we therefore set aside the order of the Commissioner of Income-tax (Appeals) on this aspect and direct the Assessing Officer to rework the FBT liability on the lines of our above discussion. Thus, on this aspect, the assessee succeeds. 12. By way of Ground Nos. (2) and 2.1, the assessee has challenged the levy of FBT on travelling expenses at 20% as against 5% claimed by the assessee. This aspect of the controversy has not been pressed and is accordingly dismissed. 7 13. In Ground No. (3), the assessee has challenged the action of the lower authorities in levying FBT on the entire amount of sales promotion expenses of Rs 1,25,537/- without appreciating that out of the said sum, a sum of Rs 58,712/- was not incurred on the employees and hence, according to the assessee, the latter amount was not exigible to levy of FBT. This as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t medical reimbursement is taxable as perquisite in the hands of individual employees and merely because grant of such exemptions, same cannot be said to be a fringe benefit for the purposes of Chapter XII-H of the Act. Thus, on this Ground, the assessee succeeds. 16. The last Ground is with regard to charging of FBT on part of the expenses under the head depreciation and expenses on Aircraft and Club expenses which, as per the assessee had been disallowed in the assessment finalized under section 143(3) of the Act for personal in nature. According to the assessee, such disallowed expenses are not liable for FBT and such position has been clarified by the CBDT in Circular No 8 of 2005 by way of answer to Question No. 35. On this aspect, we find that the Commissioner of Income-tax (Appeals) has directed the Assessing Officer to consider the claim accordingly after the matter relating to the disallowance of expenditure has attained finality. The learned Counsel for the assessee submitted, at the time of hearing, that the partial disallowance of such expenses has been upheld by 9 the Tribunal vide its order dated 10.8.201 for the impugned assessment year and such order has become fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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