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2013 (5) TMI 713 - AT - Income TaxCharge of fringe benefit tax - whether a person is a "servant" or an "agent" - assessee pleaded that the employer is a Foreign Company registered in United States of America (USA) having a project office in India in respect of carrying out exploration of mineral oils which was granted vide a Production Sharing Contract (PSC) with the Government of India - Held that:- Examinaing the terms and conditions in the present case under which these consultants have been hired by the assessee. Once this is an admitted fact, then the consequence is that the Revenue Department has collected the tax with the understanding that the persons in question were in fact not the employee. Since tax had not been deducted u/s.192 of the Act i.e. TDS on salary. Had it been that the persons engaged were employees of the assessee, then the TDS was supposed to be deducted u/s.192. Apart from this, the persons engaged were not granted any retirement benefit, which otherwise is available to an employee. Further those persons were not given any gratuity or superannuation benefit, nor they were provided either leave encashment or rent-free accommodation. Since those services were professional services, therefore accordingly the fees was paid. So the FBT is eligible only in a case where expenditure is incurred by the employer ostensibly for the purpose of business but includes partially a benefit of a personal nature passed on to the employee. But, a legitimate business expenditure not within the ambits of employer & employee relationship is outside the scope of FBT. In view of these observations, we hereby hold that the FBT provisions have wrongly been invoked in the present case. We hereby reverse the legal findings of the authorities below and direct the AO to give relief accordingly. In favour of assessee.
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