TMI Blog2012 (12) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... ussain Qureshi. Respondent By : Shri Padam Chand Khincha. O R D E R Per Shri Jason P. Boaz : This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-I, Bangalore dated 19.11.2010 for the Assessment Year 2006-07. 2. The facts of the case, in brief, are as under : 2.1 The assessee, is an Indian company, engaged in the business of software development. For the Assessment Year under consideration, the assessee filed a return of fringe benefits on 29.11.2006 declaring the value of fringe benefits at Rs. 33,42,28,988. The Fringe Benefit Tax (FBT) return was processed u/ 115WE(1) and intimation issued on 10.10.2007. Notice u/s. 115WE(2) was issued to the assessee. In the course of proceedings the assessee was asked to explain as to why expenses under the head Visa Charges and Others were not offered 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re had been incurred in one go for each employee. The safe conclusion is thus that the expenditure incurred under the head Visa Charges and Others cannot be grouped under Tours and Travel. In a nutshell the ultimate intention of the expenses listed by the appellant under the head visa charges and others is to make the employee legally eligible to undertake an entry to foreign country and stay at work place in that country. Such is for the purpose of business. In other words, the expenditure is for business necessity of the employer and not for providing any benefit, privilege or amenity to the employee. Besides, it is a statutory payment. Without such payment undertaking entry to the foreign country and stay there is an impossibility. FAQ 68 reveals that, though it is a question on 115WB(2)(E), statutory obligations on group personal Accident Compensation 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above, the learned Departmental Representative prayed that the appeal be allowed and the order of the Assessing Officer be restored. 5.3 The learned counsel for the assessee sought to explain the meaning of the term visa and the purpose of incurring visa expenses. It was submitted that visa refers to a document issued by a country giving an individual permission to formally request entry to the said country during a given period of time and for certain purposes. It was submitted that even having a visa does not guarantee entry into the issuing country as the border crossing authorities make the final determination to allow entry and may even cancel a visa at the border if the visa holder cannot demonstrate to their satisfaction that he will abide by the status the visa grants him. For example, in the USA, a visa is issued by the Department of State Consular Office 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The purpose of incurring these expenditures is to apply for or make a request for entry to the foreign country by the employees of the assessee company with the objective of carrying on of assignments or projects outside India. The incurring of visa charges may result in tour and travel of employees but the objective and purpose of incurring these and other related expenditure is for the carrying on of business outside India. Further, visa charges are a statutory payment. It is a legitimate business expenditure incurred by the assessee and is neither paid to the employees as a consideration for employment, nor are they incurred for the benefit of the employees of the assessee company. 6.2 In the case of M/s. Toyota Kirloskar Motor P. Ltd (supra) the co-ordinate bench of the Tribunal examined the issue as to whether legitimate business expenditure involving payments to third 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nale for levying FBT on the employer lies in the inherent difficulty in isolating the personal element when there is no collective enjoyment of such benefits and in attributing the same directly to the employee. It further provides that where attribution of the personal benefit poses problems, or for some reasons, it is not feasible to tax the benefits in the hands of the employee, it is proposed to levy a separate tax known as FBT on the employer on the value of such benefits provided or deemed to have been provided to the employees. Thus, the intention of creation of a deeming fiction under section 115WB(2) is to include an expenditure resulting in collective enjoyment of fringe benefits by the employees and it is difficult or not feasible to attribute such benefit personally to employees. The legislature itself has clarified that where the benefits are fully attributable 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 att ..... X X X X Extracts X X X X X X X X Extracts X X X X
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