TMI Blog2011 (5) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case, ld. CIT(A), Kolkata has erred in law in directing the AO to recomputed value of fringe benefit with reference to 40% of the expenses incurred and/or laid out in connection with business of growing and manufacturing of tea without appreciating the fact that the applicability of FBT is completely distinct with the applicability of Income Tax on the total income of the assessee and in fact no decisions on FBT of any court was cited by the assessee or considered by the ld. CIT(A). (2) That on the facts and circumstances of the case, the reliance placed by ld. CIT(A) on the judgment of Hon'ble Calcutta High Court in Jayshree Tea Industries Ltd. Ors. v. Union of India Ors. (285 ITR 506) wherein the Hon'ble High Court adjudicated on section 115O relating to Dividend Distribution Tax is not related to Fringe Benefit Tax under section. 115WA. 2. The Department has also filed an affidavit of Deputy Commissioner of Income Tax, Shri Priyabrata Pramanik stating the reasons for the delay. At the time of hearing, ld. D.R. reiterated the contents of the affidavit and submitted that delay was due to a reasonable cause and the same should be condoned. The ld. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plywood Industries (P.) Ltd. [1993] 204 ITR 719/71 Taxman 622 (Cal.). It is relevant to state that in the said case it was held that when 40% of income is considered for taxation purposes in view of Rule 8 of Income Tax Rules, it is to be considered that 40% of depreciation on written down value of block of assets is actually allowed. In view of the above, the Assessing Officer considered the value of fringe benefit for Rs. 5,95,52,870/-as paid by the assessee to its employees as per books of accounts. It is relevant to state that the Assessing Officer deducted sum of Rs. 61,96,721/- being contribution to superannuation fund from value of fringe benefit and accordingly computed the fringe benefit tax liability on the balance amount of Rs. 5,33,56,149/-. Being aggrieved, the assessee filed appeal before the first appellate authority. 6. On behalf of the assessee, it was contended that as per Rule 8 of Income Tax Rules, 1962, only 40% of income from growing, manufacturing and sale of tea becomes chargeable under the Central Income Tax and remaining 60% is chargeable to Agricultural Tax by the concerned State Government, therefore, chargeability of fringe benefit tax should be @ 40% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not relevant and is not applicable to the Fringe Benefit Tax payable. She submitted that the said decision is in respect of section 115-O of the Income Tax Act and it imposes additional income-tax on dividend paying companies. The ld. D.R. submitted that the dividend is paid out of the profits, which is proposed to be distributed by an assessee-company to its shareholders. The ld. D.R. submitted that in the profit 40% is the business income chargeable to tax as per Rule 8 of the Income Tax Rules, 1962 and, therefore, the Hon'ble Kolkata High Court decided that the additional liability of income tax payable under section 115-O of the Act would be in the same proportion, i.e. 40% of the income distributed by way of profits to the shareholders. Ld. D.R. submitted that there is no similarity between section 115-O, vis- -vis section 115WA of the Income Tax Act and the nature of charging fringe benefit tax is different and it is not a charge on the profit of the employer-assessee. Ld. D.R. submitted that similar issue has been considered by ITAT, Kolkata Bench vide order dated 7-1-2011 IT Appeal No. 556 (Kol.) 2010 in the case of Apeejay Tea Ltd. v. Dy. CIT [IT Appeal No. 556 (Kol.) of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries Ltd. (supra). Hence, the earlier decision of ITAT, Kolkata Bench is not in accordance with law. He submitted that the order of ld. CIT (Appeals) should be confirmed. 9. We have carefully considered the orders of the authorities below and the submissions of the ld. representatives of the parties. We have also carefully considered the provisions of section 115-O as well as provisions of Chapter XII-H relating to income-tax fringe benefits and the cases relied upon by the ld. representatives in support of their submissions. 10. The basic issue in this appeal is as to whether Rule 8 of Income Tax Rules applies to compute taxable value of fringe benefit in the case of assessee-company, which is engaged in the business of growing, manufacturing of tea and sale thereof. There is no dispute to the fact that as per Rule 8 of Income Tax Rules in the case of a tea company, only 40% of the total net income is liable to pay tax under the Income Tax Act at the prescribed rate and the balance 60% is to be considered as agricultural income, which is not liable to be taxed under the Income Tax Act, 1961 as it is within the domain of the State. The thrust of the submission of the ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the income of an employer but it is with reference to the expenditure incurred by the employer on the benefits/privileges provided to its employees. Hence, we find merit in the contention of the ld. D.R. that there is no similarity between the provision of section 115WA, vis- -vis section 115-O of the Income Tax Act. In view of the above, we are of the considered view that the decision of the Hon'ble Apex Court in the case of Doom Dooma India Ltd. (supra) relied on by the ld. A.R. is not relevant to the issue before us. On the other hand, the similar issue has been considered by the ITAT, Kolkata Bench vide its order dated 07.01.2011 (supra) and we consider it prudent to refer para-7 of the said order, which is as under :- "7. We have carefully considered the submissions of the ld. Representatives of the parties and the orders of the authorities below. We have also considered the relevant provisions, i.e. Section 115WA, 115WB 115WE of the Income Tax Act. We observe that an employer assessee is liable to pay Fringe Benefit Tax under section. 115WA of the Income Tax Act, in relation to Fringe Benefits provided by him to its employees. Sub-section (2) of section 115WA starts w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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