9911796707
TMI Blog2012 (12) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for FBT. The assessee submitted that the expenses under the head "visa charges and others cannot be regarded as tour and travel expenses and that this expenditure being a business expenditure, not resulting in any benefit to the employees, would not be liable for FBT. The Assessing Officer completed the assessment by order under section 115WE(3) on 31.12.2008 making an addition of Rs. 3,82,55,579 in respect of expenses incurred by the assessee under the head "Visa Charges and Others" for the following reasons : i) Expenses debited under the "Visa Charges and Others Account" are covered by section 115WB(2)(F) i.e. conveyance, tour and travel (including foreign travel). ii) Work permits, business visas are procedural formalities to be completed for any foreign travel. iii) The only argument of the assessee that visa is for short term purpose whereas work permits are for employment is not acceptable as travel is involved even in long term assignments. iv) The assessee itself has accepted that business visa forms part of tour and travel and is liable for FBT, whereas it has taken a contradictory stand in relation to other visas. v) Section 115WE(2)(F) does not make a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be liable to FBT. The same ratio can be imported here also. Payments for visa and other charges mentioned above are only statutory obligations and therefore FBT is not leviable thereon. Thus the issue raised is answered in the negative in favour of the appellant and against the Revenue. The addition is deleted." 3.1 Revenue is now in appeal before us against the order of the CIT(A). 3.2 The grounds of appeal raised by Revenue are as under : " 1. The order of the learned CIT(A), in so far as it is prejudicial to the interest of Revenue, is opposed to law and the facts and circumstances of the case. 2. The learned CIT(A) has erred in deleting the addition of Rs. 3,82,55,579 as value of fringe benefits on "Visa charges and other account" u/s. 115WB(2)(F) of the I.T. Act, 1961. Without appreciating the facts and circumstances under which the addition was made by the Assessing Officer. 3. The CIT(A), has not appreciated the fact that the expenses debited under the head "Visa Charges and other Account" like work permits, business visas etc. are indispensable part of foreign travel and are covered by the provisions of section 115WB(2)(F) of the I T Act, 1961. 4. For these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e abroad, but a separate agency, the US Citizenship and Immigration Services (USCIS), has the authority to deny admission at the port of entry. It was submitted that the period for which a foreigner is authorized to remain in the USA is determined by the USCIS and not the Department of State Consular Office. 5.4 The learned counsel for the assessee submitted that there are different types of Visas, some provide the right to reside, some provide the right to work either temporarily or permanently and some visas do not involve travel as they refer to a request to continue to reside / work in the foreign countries. 5.5 The learned counsel for the assessee submitted that the ultimate purpose should be the basis for classification of expenditure in order to determine their taxability for the purpose of FBT. It was submitted that since the ultimate purpose of incurring the visa and other related expenditure is for the purpose of carrying out assignments, projects outside India in the course of business and therefore visa and other related expenditure is not liable for FBT. 5.6 The learned counsel for the assessee further submitted that expenses under the head 'Visa charges and others' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d parties and which did not result in any benefit to employees are liable for FBT. After considering the legislative intention in introducing the FBT provisions, the scope of the deeming fiction u/ 115WA(2), CBDT Circular No.8 of 2005, various decisions of Tribunals and Courts, it was concluded that legitimate business expenditure not resulting in any benefit to employees are not liable for FBT. The relevant observations from the above decision at Para 10.4 reads as under : " 10.4 From the above it is evident that the purpose or rationale behind introduction of FBT provisions is to tax a benefit which is enjoyed collectively by the employees which was hitherto untaxed in the hands of the employees and in respect of which the employer was claiming deduction. If the benefit is attributable to employees individually or separately, the question of levying FBT does not arise. This is clear from the Finance Minister's speech and the Memorandum explaining the provisions of the Finance Bill. Likewise, in our opinion, an expenditure which does not result in any benefit to an employee would not be liable for FBT. FBT is leviable only in a case where expenditure is incurred by the employer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to employees, the same continues to be taxable in the hands of the employees. On a plain reading of sub-section 1 and 2 of section 115WB, it would be evident that subsection 1 covers those fringe benefits which can be fully attributed to employees and sub-section 2 covers those fringe benefits the personal attribution of which it is difficult to make. Thus, in our opinion, the deeming fiction under section 115WB(2) is limited to those expenditures which result in collective enjoyment of benefits by the employees and where personal attribution of benefit poses difficulty. It is only under these circumstances that, the deeming fiction under section 115WB(2) comes into play. In a case where the benefit is fully attributable to employees or where the expenditure does not result in any benefit at all to employees, as in the instant case, the deeming fiction under section 115WB(2) is not attracted and consequently, no FBT can be levied on the employer." 6.3 In the instant case, the expenses incurred under the head "Visa Charges and Others" is a legitimate business expenditure incurred by the assessee. They are statutory in nature and are neither paid to the employees nor incurred for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
