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TMI Blog2012 (6) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee filed return of fringe benefit declaring total value of fringe benefit at Rs.99,71,836/-. The provisions of Sec.115WB in so far as it relevant for the present appeal read as follows: 115WB. Fringe benefits.-(1) For the purposes of this Chapter, "fringe benefits" means any consideration for employment provided by way of- (a) any privilege, service, facility or amenity, directly or indirectly provided by an employer, whether by way of reimbursement or otherwise, to his employees (including former employee or employees) ; (b) any free or concessional ticket provided by the employer for private journeys of his employees or their family members ; (c) any contribution by the employer to an approved superannuation fund for employees ; and (d) any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees). (2) The fringe benefits shall be deemed to have been provided by the employer to his employees, if the employer has, in the course of his business or profession (including any activity whether or not such activity is carried on with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perannuation fund during the FY 2005-06. The said amount has already been considered as fringe benefits under Section 115WB(1)(c) of the Act liable to FBT at the time of filing the return of income for the AY 2006-07. In the Tax Audit Report ('TAR') of the assessee for AY 2006-07, an amount of Rs.42,40,926/- was shown as contribution towards superannuation fund under Clause 21(i)(B) read with Annexure V. The note to Annexure -V of the TAR mentions that the amount of Rs.42,40,926/- includes a prepaid contribution towards superannuation fund pertaining to F.Y 2006-07 of Rs.32,57,154/-. In the FBT order passed under Section II5WE(3) of the Act ('the FBT order'), the learned AO has considered the amount of Rs.42,40,926/- as disclosed in the TAR as fringe benefits under Section 1I5WB(1)(c) liable to FBT. Since only a sum of Rs.32,57,154/- was shown as contribution to superannuation fund in the return of expenditure incurred on Fringe Benefit , the AO added a sum of Rs. 9,27,342/- to the taxable fringe benefit. 5. Before CIT(A) submitted that as per the revised FBT annexure of Form 3CD, a sum of Rs.32,76,478/- was shown as towards contribution to superannuation fund which was actually d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidend fund 22,01,869 2. Contribution to family pension scheme 8,43,054 3. Contribution to providentfund - Admin charges 2,97,386 4. Contribution to EDLIS 54,068 5. Contribution to EDILS-admin charges 1,082 6. Contribution to gratuity 5,46,247 7. Contribution to superannuation scheme 32,76,478 Total 72,20,184 The Assessee prayed that the AO be directed to exclude the excess amount of contribution to superannuation fund from the total amount liable to fringe benefit tax. 6. The CIT(A) after considering the submissions made on behalf of the Assessee held as follows: "7.3 I have considered the facts of the issue and the submissions made by the AR and find merit in them. The prepaid contribution to superannuation fund could not be taxed in the year to which it does not relate. Since the appellant is following mercantile system of accounting only the amount of superannuation fund relating to the year under consideration and charged to the profit and loss account needs to be considered for the purpose of FBT. This legal position also stands clarified by the CBDT circular quoted by the AR. The fringe benefit for contribution to superannuation fund would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of another group company namely Tata Chemicals Ltd. for A.Y 2007-08, wherein he had taken the view that such payment did not result in benefit to employee and, therefore, not exigible to FBT. Following were the observation of the CIT(A) in this regard. "8.3 I have considered the facts of the issue and the submissions made by the AR. The said issue has already been considered and decided in favour of the appellant by this office in the case of another group company namely- Tata Chemicals Ltd. (A.Y.2007-08). The relevant portion of the said order is extracted as follows: "5. I have considered the facts of the issue and the submissions made by the AR and find merit in them. Section 115WA which deals with 'charge of fringe benefits tax' speaks of levying tax 'in respect of the fringe benefits provided or deemed to have been provided by an employer to his employees.............' Hence, the scheme of the fringe benefits tax focuses on only payments resulting in some benefit to the employees of the assessee. In the present case, the agreement with the Tata Sons, the payments in respect of which have been treated by the AO as fringe benefit would not be covered under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITAT "A" Bench, Bangalore in the case of DCIT vs. M/s. Mescom dated 19.05.2010 also has merit. In this case, the Hon'ble Bench noted that "what is intended to be taxed is a benefit attributed to employees collectively From the reading of the provisions of section 11 5WB(2), it is clear that the benefits given to an employee directly or indirectly only would be taxable under Chapter XII-H ".It is also noted that the single member decision in the case of M/s. Govardhan Associates in ITA No.1094/Bang/2009 held that "where there are no employees, the expenditure can not be treated as 'for the purpose of fringe benefit tax' under the provisions of Section 115WE(3) of the I.T Act". 5.2 Thus, looking at the provisions of the charging section i.e. 115WA, the intent of the legislation as recorded in the Finance Minister's speech while presenting the budget which introduced the concept of FBT, the legal position as brought out above, as well as the clarification issued by the CBDT in. reply to Question No.2, it is held that the FBT could not be levied except in respect of payments which benefit an employee(s) directly or indirectly. In the present case, since the impugned payment did not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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