TMI Blog2012 (8) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... ce - Rate of 5% should be applied, in view of the provision of section 115WB©(1)(e), wherein 5% of the tax has been prescribed for expenses referred to in clause Q of sub-section 2 of Section 115WB - Assessing Officer is directed to apply the rate of 5% on the fringe benefit value offered by the assessee under the head tour and travel expenses - appeal of the assessee is allowed. - ITA No. 3499/Mum/2011. - - - Dated:- 22-6-2011 - SHRI G.E. VEERABHADRAPPA, AND SHRI AMIT SHUKLA, JJ Appellant by : Mr. Girish Dave Respondent by : Mr. M.B.Jaya Kumar O R D E R PER AMIT SHUKLA (J.M.) : This appeal has been filed by the assessee against the order dated 24-2-2011, passed by the CIT(A)-22, Mumbai in relation to order passed under Section 115 WE(3) r.w.s. 115EF(c) for the assessment year 2007-2008 on the following grounds of appeal :- 1. The learned Commission of Income-tax (Appeals) ( CIT(A) ) has erred in law and on facts in upholding the action of the Assessing Officer and holding that expenses amounting to Rs. .2,54,17,912/- debited under the head communication expenses in the P L account are liable to Fringe benefit tax ( FBT ) under section ( u/s. ) 115 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4,98,09,000 2,43,91,558/-), the Assessing Officer treated the balance sum of Rs. .2,54,17,442/- is also liable for FBT. And after applying the rate of 20% on the same, he held that sum of Rs. .50,83,448/- is FBT, liable to be paid. Similarly, under the head travel expenses , it was noted by him that the assessee had claimed travelling expenses of Rs. .17,14,83,000/- which has been debited to the profit and loss account. However, for the purpose of FBT, the assessee had offered an amount of Rs. .3,97,23,088/- under the head repair and running of motor cars and Rs. .2,46,73,094/- under the head conveyance i.e. Rs. .6,43,96,142/-. In absence of any explanation, the Assessing Officer treated the difference of Rs. .10,70,86,818/-, liable for the purpose of FBT and here also after applying the rate of 20% on sum Rs. .2,14,17,364/- has treated it as fringe benefit liable for tax. 3. In the first appeal, regarding passing of ex-parte order, it was submitted before the learned CIT(A) that the last notice was received beyond the date of assessment and, therefore, no compliance could be made to the show cause notice issued by the Assessing Officer. Thus, in order to explain th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd report, the Assessing Officer has brushed aside the details without examining them as were furnished before him. This is evident from the copy of the remand report itself appearing in the paper book at page 145 146. He further submitted that in the course of the remand proceedings, even after specific request, the Assessing Officer did not look into the reconciliation of the statement of expenses under both the heads. Therefore, the finding of the CIT(A) to the extent that no details have been furnished before him is absolutely erroneous. 4.1 On merits, he submitted that as far as the addition on account of telephone expenses , the details of which are appearing at page 1 of the paper book, all the details have been shown as to what are the items in which FBT is applicable and the items on which FBT is not leviable. From these details he pointed out that the items on which FBT has been shown are telephone expenses, mobile expenses and fax expenses. The expenses relating to postage, email, lease line and courier charges have not been offered for the purpose of FBT, as they do not fall within the Clause J of sub section 2 of Section 115WB. He further submitted that non-taxabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope for any addition. Further he submitted that rate of FBT applied on tour and travel expenses is 5% from the assessment year 2007-2008 in view of the provision of Section 115WC(1)(e) and not 20% as applied by the Assessing Officer. 5. On the other hand, learned CIT DR submitted that the Assessing Officer while making the best judgment assessment, has made an estimate of fringe benefit value, as he had no option. The second limb of argument was that all these details which have been relied upon by the learned AR are not supported by any evidence as have been highlighted by the CIT(A) as well as by the Assessing Officer in the remand report and in absence of such supporting evidence, the matter should be restored back to the file of the Assessing Officer to look into the reconciliation aspect and furnish supporting evidence before the Assessing Officer, if required. He thus, relied upon the finding given by the CIT(A). 6. We have carefully heard the rival submissions and perused the material on record. So far as the issue of additional evidence filed before the CIT(A) and passing of the ex-parte order are concerned, the same are no longer in dispute before us. The issue befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the business expenses as it does not give any fringe benefit to any employee, unless the company is paying for personal email expenses of the employees. So far as the lease line is concerned, the same has been specifically excluded in the clause J. Thus, the assessee has rightly excluded the amount of expenditure debited under the head postage, email, lease line and courier from the FBT. Accordingly, the view taken by the Assessing Officer as well as the CIT(A) is absolutely erroneous under the law and on facts. Thus, the addition of Rs. .50,83,488/- as FBT under the head telephone expenses is deleted. In the result, ground No.1 is allowed. 7. The next contention is on account of addition on travelling expenses . In the profit and loss account, the assessee has claimed travel expenses of Rs. .17,14,83,000/- and for the purpose of FBT, sum of Rs. .12,20,72,623/- was offered for tax. The Assessing Officer has taken note of the figure of Rs. .3,97,23,088/- under the head repairing and running of motor cars and figure of Rs. .2,46,73,094/- under the head conveyance. He has not at all considered the details given in the statement of FBT given by the assessee. From the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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