TMI Blog2013 (6) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... er to keep in force an insurance on health of employees are all perquisites liable to be taxed in the hands of the employees individually thus deserves to be kept outside the purview of FBT. In favour of assessee. FBT on administration expenses incurred on driver/pilot - Held that:- Expenses on repair, running and maintenance of motor car/aircraft do not include remuneration paid to drivers/pilot as supported by the decision of CIT Vs Sholinger Textiles Ltd. [1998 (4) TMI 83 - MADRAS High Court] - exclusion of value of such fringe benefit from the taxable value of fringe benefit. In favour of assessee. FBT on Insurance premium for motor car and aircraft - Held that:- As decided in CIT Vs Tungabhadra Industries Ltd [1991 (11) TMI 6 - CALCUTTA High Court] expenditure incurred on repairs and insurance of car cannot be considered for disallowance u/s. 37(3A) - exclusion of value of such fringe benefit from the taxable value of fringe benefit. In favour of assessee. FBT on pre-operative expenses - Held that:- CBDT in its explanatory note on the provisions relating to FBT answered that expenditure on any capital asset in respect of which depreciation is allowable u/s. 32 does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Hon'ble Supreme Court in the case of ITO Vs Murlidhar Bhagwan Das 52 ITR 335. It is the say of the Ld. DR that jurisdiction of the Tribunal in the hierarchy created by the Act is not higher than that of the ITO. The Tribunal cannot do what the ITO cannot. 3. Per contra, the ld. Senior Counsel relied upon the decision of CIT Vs Pruthvi Brokers and Shareholders Pvt. Ltd., 349 ITR 336 and contended that the assessee can take a plea not taken before the assessing authorities. 4. We have considered the rival submissions and carefully perused the decisions relied upon by the rival parties. In our considerate view, the decision relied upon by the Ld. DR relates to the power of the appellate authorities wherein it has been held that no power is conferred to make an order or issue directions in respect of an assessment year which is not the subject matter of appeal which means that the jurisdiction of the appellate authorities in the hierarchy created by the Act is confined to the year of assessment. 5. The Hon'ble Jurisdictional High Court in the case of Pruthvi Brokers Shareholders (supra) has held that appellate authorities have power to consider claim not make in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Circular issued by CBDT being Circular No. 8/2005 dt. 29.8.2005 wherein this Bench has held that employer/employee relationship is a pre-requisite for the levy of FBT. Rationale for introduction of FBT is that it is difficult to isolate the "personal element" if the benefits are collectively enjoyed by the people which means that the provisions of FBT will be applicable only in respect of those expenses which contain or atleast are likely to contain an element of personal benefit to employees. We do not find any such thing present on the facts of the present case." 11. Facts of the present case are identical, therefore, respectfully following the decision of the Tribunal, we direct the AO to exclude from the taxable value of FBT amount of Rs. 3,91,08,627/-. Ground No. 1 is accordingly allowed. 12. Ground No. 2 relates to charging of FBT on fringe benefit which are taxable in the hands of employees. 13. This head comprises of 5 expenses: a) Medical reimbursement - Rs. 1,34,20,291/- b) Medical facilities - Rs. 44,35,084/- For these two items, it is the claim of the assessee that these are taxable in the hands of the employees as perquisites. Therefore, the same should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel that the insurance premium is not the expense on repair, running and maintenance of motor car/aircraft and therefore not liable for fringe benefit. 20. We find that the Hon'ble Calcutta High Court in the case of CIT Vs Tungabhadra Industries Ltd. 207 ITR 553 has held that the expenditure incurred on repairs and insurance of car cannot be considered for disallowance u/s. 37(3A) of the Act. Taking a leaf out of the aforementioned decision, we direct the AO to exclude value of such fringe benefit of Rs. 4,70,334/- from the taxable value of fringe benefit. Ground No. 4 is accordingly allowed. 21. Ground No. 5 relates to pre-operative expenses. We find that the pre-operative expenses have been incurred on units not yet set up and the expenses have been claimed as capital expenditure. The CBDT in its explanatory note on the provisions relating to FBT " Whether capital expenditure falling within the category specified in Sec. 115WB(2) would be covered in the scope of Fringe benefit. The CBDT answered "expenditure on any capital asset in respect of which depreciation is allowable u/s. 32 of the Act does not fall within the scope of sub-sec. (2) of Sec. 115WB of the Act. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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