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2016 (7) TMI 610 - AT - Income TaxAddition of consideration of tax depreciation of 5% on motor cars used exclusively for hire for the purpose of fringe benefit tax - CIT(A) deleted the addition - Held that:- We find that the assessee has paid FBT in respect of expenses incurred for vehicles which are used for office purposes as well as the expenses incurred for cars used by employees in the course of their performance of duties. However, with regard to the expenses incurred wholly and exclusively for maintenance and running of tourist cars for car rental business , no FBT is paid as the said cars were never used by the employees. In this regard, it would be relevant to understand the intention behind introduction of provisions of FBT u/s 115W to 115WL w.e.f. 1.4.2006 by the Finance Act, 2005. We find that the said provision were introduced where the benefits are usually enjoyed collectively by the employees and cannot be attributed to individual employees then the same shall be taxed in the hands of the employer. In the memorandum explaining the bill , it has been pointed out that the rationale for levying FBT on the employer lies in the inherent difficulty in isolating the personal element where there is collective enjoyment of such benefits and attributing the same directly to the employee. We find that the car expenses incurred for the transport business, the maintenance of such cars are separately accounted for as those car expenses have no nexus or relation to any benefit which can be even said to have been collectively enjoyed by the employees and therefore the expenses incurred on such account do not attract the levy of FBT. It is not the case of the revenue that the employees were allowed to enjoy any benefit directly or indirectly from such transport services. We find from the observations of ld CITA supra that the assessee had duly bifurcated the motor cars used for hire and that not used for hire separately in the depreciation schedule itself. - Decided against revenue.
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