TMI Blog2011 (8) TMI 751X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the same is to be excluded from the fringe benefit as per the provisions of section 115WB(2)(B)(i). contention was rejected by the Assessing Officer on the ground that the exemption was provided only for expenditure incurred on his employees; whereas the assessee provided snacks/refreshments to its customers and accordingly, treated as fringe benefit by the Assessing Officer and brought to tax - said reason, without substance, since the basis of fiction contained in section 115WB(2) is that certain expenses, if incurred, shall be deemed to have been provided by the employer to his employees. Therefore, if certain species of expenditure incurred on the employees are excluded from the purview of FBT, the same exclusion will also hold good for other persons, appeal allowed Conference fees - expenditure was incurred for the assessee's employees to attend conference. Apart from these two receipts, the assessee has not produced any factual evidence to show that these are expenses incurred as fees for participation by its employees in a conference - if these amounts were found to be participation fee for attending conference by the assessee's employees, the same should not be included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the employees of the bank for the annual check up and the same was treated as a perquisite in the hands of the employees as per section 17 of the Income-tax Act. Since it was treated as a perquisite in the hands of the employees, the same cannot be treated as fringe benefit in the hands of the bank. The above said explanation of the assessee was rejected by the Assessing Officer by holding thus:- "(4) The assessee has claimed Medical Aid of Rs. 45,00,000 as an expenditure in addition to medical expenses of Rs. 6,18,77,457. Moreover, the assessee has not specified whether the reimbursement is more than Rs. 15,000 per employee. If the reimbursement towards medical expenditure is above Rs. 15,000 it is treated as perquisite as per section 17 of the Income-tax Act and as per section 115WB(2)(E) if medical reimbursement is less than Rs. 15,000 it is brought under fringe benefit tax. But the assessee has not specified clearly in its letter date 22-12-2009. Hence, the expenditure of Rs. 45,00,000 is considered as fringe benefits and added back to the fringe benefits declared". 3.1 On further appeal, the first appellate authority by relying on the Board's Instruction No. 8 of 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch place of work to the place of residence)" (Emphasis ours). 3.6 In the budget speech at para 160 reported in 273 ITR (St.) 25, at page 56, it is observed as follows:- "I have looked into the present system of taxing perquisites and I have found that many perquisites are disguised as fringe benefits, and escape tax. Neither the employer nor the employee pays any tax on these benefits which are certainly of considerable material value. At present where the benefits are fully attributable to the employee they are taxed in the hands of the employee; that position will continue. In addition, I now propose that where the benefits are usually enjoyed collectively by the employees and cannot be attributed to individual employees, they shall be taxed in the hands of the employer". 3.7 In the memorandum explaining the proviso to the Finance Bill, it is stated as follows:- "Therefore, it is proposed to adopt a two pronged approach for the taxation of fringe benefits under the Income-tax Act. Perquisites which can be directly attributed to the employees will continue to be taxed in their hands in accordance with the existing provisions of section 17(2) of the Income-tax Act and subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties Ltd., which has decided an identical issue. 3.10 In the result, ground nos. 2 to 4 are allowed. (ii) Entertainment expenses inside the office premises - Rs. 49,04,111 4. In the course of assessment proceedings, it was noticed that the assessee bank had debited a sum of Rs. 49,04,111 as "Entertainment expenses - inside office premises". In response to show cause, the assessee explained that the amount represented expenditure incurred for providing snacks/refreshments to customers within the office premises and therefore, the same is to be excluded from the fringe benefit as per the provisions of section 115WB(2)(B)(i). The above contention was rejected by the Assessing Officer on the ground that the exemption was provided only for expenditure incurred on his employees; whereas the assessee bank has provided snacks/refreshments to its customers and accordingly, a sum of Rs. 49,04,111 was treated as fringe benefit by the Assessing Officer and brought to tax. 4.1 On appeal, the CIT(A) has affirmed the view taken by the Assessing Officer. The relevant finding of the CIT(A) reads as follows:- "(j) As for the grounds pertaining to the addition of Rs. 49,04,111 being enterta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred for providing food/beverages to its customers and not to its employees. The said reason, according to us, is without substance, since the basis of fiction contained in section 115WB(2) is that certain expenses, if incurred, shall be deemed to have been provided by the employer to his employees. Therefore, if certain species of expenditure incurred on the employees are excluded from the purview of FBT, the same exclusion will also hold good for other persons. In view of the above reasoning, ground nos. 5 to 7 are allowed. (iii) Conference fees - Rs. 3,14,438 5. An expenditure of Rs. 3,14,438 was debited in the P L account towards conference fees. According to the assessee, the above expenditure is by way of fees towards conference organized by various banks wherein the employees of the bank had participated. The Assessing Officer while completing the assessment under section 115WE took the view that fees for participation by the employees in a conference is exempt under section 115WB(2)(C) but does not include other expenses such as, traveling and conveyance, boarding and lodging etc. Accordingly, he held that the said expenditure was liable for FBT. 5.1 On further appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
