TMI Blog2013 (1) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... ific and has attained finality in due course of time since the assessment year 1999-2000, keeping in mind that the members of the frequent flyer programme scheme are from the general public. Thus restore this issue back to the files of the Assessing Officer who directed to value the fringe benefit of free/concessional tickets as per the valuation of frequent flyer programme as provided by the assessee in its books of account at ₹ 446.06 as the same has also been accepted by the Department while making provisions for " frequent flyer programme" for earning JP mileage, and if there are costs for foreign travels the same should be eliminated from the same, thereafter, the Assessing Officer is also directed to reduce the cost recovered from the employees. Direct the Assessing Officer to verify from the special auditor' s report about the actual figure of the tickets issued. Needless to mention, the Assessing Officer must compute the value of fringe benefit by adopting the correct number of tickets issued to the cost computed in the case of frequent flyer programme. The assessee is directed to furnish the details of the amount recovered from the employees towards the cost/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Appeals)-9, Mumbai pertaining to the assessment years 2006-07 to 2008-09. In all these appeals, the assessee has taken common grounds except the quantum for levy of fringe benefits tax varies. Since all these appeals were heard together, they are disposed of by this common order for the sake of convenience and brevity. ITA No. 6955/Mum/2012-Assessment year 2006-07 2. The assessee has raised as many as 11 grounds of appeal. At the very outset, learned counsel for the assessee submitted that ground No. 1 is not pressed. Therefore, ground No. 1 of appeal is dismissed. 3. Ground Nos. 2 to 6 relates to levy of fringe benefit tax on free/concessional tickets issued to the employees for private journeys. 4. Facts giving rise to this grievance show that while scrutinising the return of fringe benefits tax under section 115WE(3), the Assessing Officer noticed that during the year under consideration, the assessee has given the free/concessional tickets to its employees for their private journeys. The Assessing Officer further observed that during the course of the assessment proceedings for the year under consideration under section 143(3) of the Act, a special aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out by the special auditors and computed the value of taxable fringe benefit at ₹ 1,36,83,20,340. 6. Aggrieved, the assessee agitated this matter before the learned Commissioner of Income-tax (Appeals) but without any success. The learned Commissioner of Income-tax (Appeals) was convinced that the provisions of section 115WC(1)(a) read with Central Board of Direct Taxes Circular No. 8 dated August 29, 2005 ([2005] 277 ITR (St.) 20 ) applied on the facts of the case and held that the Assessing Officer has correctly computed the value of fringe benefit at ₹ 1,36,83,20,340 under the head free/concessional tickets for employees or their family members. 7. Aggrieved by this finding of the learned Commissioner of Income-tax (Appeals), the assessee is before us. Learned counsel for the assessee strongly submitted that fringe benefits tax is not at all leviable on the impugned free/concessional tickets provided to the employees or their family members for their private journeys. It is the say of the counsel that the assessee-company never issued any ticket to the employee ; therefore, provisions of section 115WB(1)(b) are not applicable. Learned counsel further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the airline to provide alternative flight whereas the same facility is not provided to the employees of the company who have been given free/concessional tickets. Learned counsel thus concluded that the cost of the ticket issued to the general public is not at par with the tickets issued to the employees. 7.3. In alternative, learned counsel suggested that if at all some value has to be allocated towards the cost of the fringe benefit provided by the employer, then the method consistently adopted by the company for making provision in case of the tickets to be issued under the frequent flyer programme (FFP) should be adopted. Thereafter, learned counsel explained the scheme of frequent flyer programme. It was explained that the Jet privilege members earn JP miles every time they fly Jet Airways. In addition, they also earned JP miles whenever they fly through partner airlines or stay at any partner hotels or use partner car rentals or telecom partner services. The Jet Airways has reciprocal frequent flyer programme agreements with British Airways, KLM and Northwest Airlines. By virtue of it, JP members can redeem their miles for free flights across the world on British Airway ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has allowed the claim of the assessee in respect of the provision made on account of frequent flyer programme. 7.4. Learned counsel concluded that the value taken for the assessment year 2006-07 for the provisions of frequent flyer programme at ₹ 446.06 is the most reasonable and fair value to be adopted for computing the fringe benefit on tickets provided free/concessional to the employees. 8. Per contra, the learned Departmental representative strongly placed reliance on the orders of the lower authorities. The Departmental representative pointed out that the charging section as well as the computation section is absolutely clear and unambiguous in computing the value of fringe benefit and therefore the same should be adopted. 9. We have considered the rival submissions and perused the orders of the lower authorities. We have also considered the paper book submitted by the assessee. At the very outset, we do not agree with the submissions of the counsel that fringe benefits tax is not leviable on the facts of the present issue. Section 115WB(1)(b) specifically provides as under : Any free or concessional tickets provided by the employer for priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplementary special audit report as exhibited from pages 38 to 49 of the paper book. We find force in the submission of the assessee. We, therefore, direct the Assessing Officer to verify from the special auditor' s report about the actual figure of the tickets issued. Needless to mention, the Assessing Officer must compute the value of fringe benefit by adopting the correct number of tickets issued to the cost computed in the case of frequent flyer programme. The assessee is directed to furnish the details of the amount recovered from the employees towards the cost/concession/free tickets. The Assessing Officer is directed to reduce the value of the fringe benefit to the extent of the cost of benefit recovered by the assessee from its employees. Ground Nos. 2 to 6 are allowed for statistical purposes. 12. Ground No. 7 relates to the charge of fringe benefits tax on festival expenses of ₹ 9,59,442. During the course of the fringe benefit assessment proceedings, the Assessing Officer noticed that the special auditors have pointed out that the assessee has incurred festival expenses amounting to ₹ 9,59,442 which has been debited under the head business promotio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see which is nothing but a statutory liability. Learned counsel drew our attention to question No. 68 of the Central Board of Direct Taxes Circular No. 8 of 2005 and pointed out that if such expenditure is a statutory obligation then the same would not be liable to fringe benefits tax. 20. After considering the facts and the findings of the lower authorities, it appears that the assessee has not submitted any details before the lower authorities to substantiate its claim. Therefore, in the interest of justice and fair play, we restore this issue back to the files of the Assessing Officer. The assessee is directed to substantiate its claim that such insurance premium is a statutory liability by bringing cogent material evidence. The Assessing Officer is directed to verify/examine the same and if satisfied, delete the same from the liability of fringe benefits tax. Ground No. 8 is allowed for statistical purposes. 21. Ground Nos. 9 and 10 together relate to the charging of fringe benefits tax on trade display expenses of ₹ 17,57,496 as being in the nature of gift items and further ₹ 93,86,718 as being in the nature of gift items. 22. During the course of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g upon to the question No. 79 of the Circular No. 8 of 2005 ([2005] 277 ITR (St.) 20 ) of Central Board of Direct Taxes. The assessee questioned this before the learned Commissioner of Income-tax (Appeals) but without any success. 28. Before us, learned counsel for the assessee submitted that per diem expenditure incurred by the assessee is not collectively enjoyed by the employees but are incurred for the individual benefit. Therefore, it is outside the purview of fringe benefit tax. 29. The learned Departmental representative supported the orders of the lower authorities. 30. We find that in the subsequent assessment year, i.e., 2008-09 for which also the assessee is in appeal vide ITA No. 5309/M/2012, the assessee itself has offered the per diem expenses for fringe benefits tax under the category tour and travel . Since the assessee itself has offered per diem expenses for fringe benefits tax in the assessment year 2008-09, we do not find any reason why the same should not be offered for the year under consideration. Accordingly, ground No. 11 is dismissed. 31. This appeal filed by the assessee is partly allowed. ITA No. 5308/Mum/2012 - Assessment year 2007-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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