TMI Blog2014 (6) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the CIT(A) – thus, the matter is required to be remitted back to the CIT(A) – Decided in favour of Assessee. Fringe benefit tax u/s 115WB of the Act – Held that:- When the telephone is installed in the business premises of the assessee for the business purpose it cannot be considered as a privilege, service, facility or amenity to the employee. It is a facility for the purpose of carrying on the business of the assessee - that is a business expenditure - the expenditure incurred by the assessee in respect of telephone installed in the office premises for the purposes of carrying out the business activity cannot be considered as a fringe benefit u/s 115WB of the Act - the matter needs to be verified, whether the telephone installed in the premises of business - If the telephone is installed at the residence of the employee, then it shall be taken as fringe benefit - The assessee has to file the details of expenditure with regard to the telephones which were installed for the benefit of the employee and in respect of the telephones which were installed in the office premises – thus, the matter is remitted back to the AO – Decided in favour of Assessee. Exclusion of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t judgment in Bharat Earth Movers Ltd (supra); accordingly, the provisions of section 43B(f) was struck down. The ld.DR submitted that on appeal by the revenue the Apex Court stayed the judgment of the Calcutta High Court in Exide Industries Ltd Anr (supra). Therefore, as on today, the provisions of section 43B(f) remains in the statute book; hence unless it is paid, it cannot be allowed as deduction. Therefore, the CIT(A) has rightly confirmed the order of the assessing officer. 5. We have considered the rival submissions on either side and also perused the material available on record. Section 43B(f) was introduced by Finance Act, 2000 with effect from 01-04-2002. In view of section 43B any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee shall be allowed only on actual payment irrespective of the previous year in which the liability to pay such sum was incurred by the assessee. As rightly submitted by the ld.DR, the provisions of section 43B(f) was struck down by the Calcutta High Court as arbitrary and de hors of the Apex Court judgment in Bharat Earth Movers Ltd (supra). It is also an admitted fact that the Apex Court has staye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erns. 8. On the contrary, Smt. Latha V Kumar, the ld.DR submitted that on identical circumstances, this Tribunal, for the assessment year 2006-07 found that the judgment of the Kerala High Court in assessee s own case for the assessment year 2004-05 is in respect of investments made in the partnership firm. However, in respect of the investments made in the companies, the judgment of the Kerala High Court may not be applicable. This Tribunal found that the matter needs to be re-examined with regard to the claim of the assessee regarding the availability of the own funds and the commercial expediency for making the investment. 9. We have considered the rival submissions on either side and also perused the material available on record. Identical fact was considered by this Tribunal with regard to the investment made in the companies and the partnership firm. The assessee specifically claimed before this Tribunal for the assessment year 2006-07 that the surplus funds were available for making investment and the judgment of the Kerala High Court in assessee s own case for the assessment year 2004-05 may not be applicable to the investments made in companies. This Tribunal examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of disallowing the claim of the assessee with regard to telephone expenses other than leased telephones. 13. We have considered the rival submissions on either side and also perused the material available on record. Fringe benefit expenditure defined in section 115WB of the Act reads as follows: 115WB.(1) For the purposes of this Chapter, fringe benefits means any consideration for employment provided by way of (a) to (d) (ii) xxxxxxxxxxxxxxxxxxxxxxxx (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 the object of deriving income, profits or gains) incurred any expense on, or made any payment for, the following purposes, namely:- (A) to (I) xxxxxxxxxxxxxxxxxxxxxxxxxxxxx (J) use of telephone (including mobile phone) other than expenditure on leased telephone lines; (K) to (Q) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (3) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 14. In view of the above definition, any privilege, service, facility or amenity prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the fixed assets in the books of account and depreciation was also claimed on the same. According to the ld.representative, these are not benefits provided to the employee in consideration of their employment. According to the ld.representative, the demo cars are used only for the purpose of business. Therefore, levy of fringe benefit tax on the depreciation and on the value of the vehicles are not justified. 17. On the contrary, Smt. Latha V Kumar, the ld.DR submitted that the assessee has vehicles for the benefit of the employees and also for the purpose of demonstration. However, no distinction was made in respect of cars used for demonstration and in respect of cars which were used for the benefit of the employees. In the absence of any distinction in respect of the expenditure on demo cars and the cars used by the employees, the assessing officer disallowed 20% of the expenses as fringe benefit value. According to the ld.representative, the CIT(A) has rightly confirmed the disallowance. 18. We have considered the rival submissions on either side and also perused the material available on record. The exclusion of depreciation and the value of the car from the comput ..... X X X X Extracts X X X X X X X X Extracts X X X X
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