Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 1161 - AT - Income TaxIncome tax on fringe benefits - fringe benefit tax being 20% of the medical expenses incurred by appellant - whether CIT (A) failed to appreciate that reimbursement of medical expenses to employees falls within the meaning of salary and does not fall within the purview of fringe benefit tax - Held that:- See Grindwell Norton Ltd. vs ACIT [2014 (4) TMI 1203 - ITAT MUMBAI] wherein while dealing with identical issue, it was held that medical expenses were directly attributable to each employee distinctly and were not in the nature of collective benefit enjoyed by the employees. The Hon'ble ITAT observed that medical reimbursement was to be treated as a perquisite u/s 17(2) of Income tax Act, 1961 though a threshold limit of exemption was provided under clause (v) at ₹ 15,000. Accordingly, the ITAT correctly held that reimbursement of medical expenditure did not constitute Fringe Benefit as defined in Sec. 115WB of the Act - Decided in favour of assessee Attributing additional 10% of the composite participation fees as expenditure liable to fringe benefit tax - Held that:- The CBDT Circular No.8/2005 in answer to Q.NO.11 has clarified that one has to go by the primary purpose of the expenditure. In the case of composite fee, it is difficult to apportion the component of expenditure on food and lodging and a proportionate expenditure for participation in conference by the employee. Keeping in mind the spirit of FBT as explained in the CBDT Circular, we are of the view that in the case of composite fee paid for participation of employee in a conference, the same should not be considered as fringe benefit and there is no question of resorting to apportionment of those expenses. In our view in the given facts and circumstances apportionment of the total expenditure as done by the assessee was just and proper. There is no basis for the Assessee/AO or the CIT(A) in concluding that a percentage of composite fee is attributable to food and lodging. Since we have concluded that in the case of composite fee paid with no bifurcation, the expenditure on fee paid for participation of an employee in a conference or seminar will have to be not regarded as fringe benefit, we accept the contention of the assessee and hold that 10% of the composite participation fee be treated as expenditure liable to fringe benefit tax. Liability to FBT - whether the appellant being in the business of plantation and manufacturing of tea, was liable to pay fringe benefit tax only on 40% of the value of fringe benefit arrived at on application of Rule 8 ? - Held that:- As in the case of Apeejay Tea Ltd. (2014 (7) TMI 1118 - CALCUTTA HIGH COURT) wherein took a view that Rule 8 of the IT Rules, 1962, which has to be applied for determining income of a company engaged in the business of growing and manufacturing of tea and in which only 40% of the composite income from the business of growth and manufacture of tea is considered as taxable is also applicable while valuing the fringe benefit for the purpose of levy of FBT in the case of such companies. Addition u/s 14A - Held that:- Referring to the plea of the assessee that the majority of the investment were made by the assessee in the past years and have been carried forward year after year. It was also pleaded by the assessee that major investments are strategic investments in group companies for the purpose of expansion of the business and the assessee does not trade in these investments with the purpose of earning capital gains or dividend. The assessee has also explained that considering that the some managerial time has been spent on portfolio related work, a sum of ₹ 19,82,000/- was offered as expenses incurred in earning exempt dividend income. These submissions of the assessee have neither been dealt with by the revenue authorities in our view, found to be not correct. In these circumstance, we are of the view that the disallowance made by the AO and confirmed by the CIT(A) cannot be sustained. The same is directed to be deleted and ground of appeal are allowed.
|