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TMI Blog2015 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07, (11) ITA No. 284/2012 for AY 2007-08, (12) ITA No. 285/2012 for AY 2008-09, (13) ITA No. 286/2012 for AY 2009-10, (14) ITA No. 329/2012 for AY 2006-07, (15) ITA No. 330/2012 for AY 2007-08, (16) ITA No. 331/2012 for AY 2008-09, (17) for ITA No. 152/2012 for AY 2006-07. 2. While admitting these appeals, this Court has framed the following substantial question of law: "Whether on facts and in law the ITAT was right in holding that payment of uniform allowance etc. to the employees by the assessee is liable for FBT and by holding so it did not consider the fact that the payment of uniform allowance was nothing but additional salary paid in the form of an allowance within the meaning of section 17(1) (iv) attracting the TDS provisions of section 192 of the IT Act ?" 3. The facts of the present case are that for verification of compliances of TDS provisions survey were conducted in the offices Oil and Natural Gas Corporation Limited at its following offices: 1.ONGC workshop at Baroda 2.ONGC Basin office at Baroda, and 3.ONGC Ankleshwar Asset, falling under the jurisdiction of this office. 4. At the time of survey, besides details of contract payments and other miscellane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and vide order sheet dated 18.2.2009 (for ONGC Baroda Workshop), the employer was asked to explain the following points and to furnish reasons and necessary evidence as to:- a) What are the NT termed allowances, please specify. Give a list of all the employee of your organization showing their salary and allowances, all taxable and non taxable for FY 2007-08 & 2008-09. b) Why the NT termed allowances are not included in Form 16 issued for FY 207-08 to the employees ? Please produce copies of Form 16. c) In Form-16, no deduction have been claimed for expenses on account of CMRE and uniform allowances (NT) u/s 10, therefore, assessee was requested to specify under what provisions of Income Tax Act, these allowances has been claimed as exempted and was requested to provide details and copy of such provisions. Also to show cause as to why an order u/s. 201 and 201(1A)may not be passed. 6. All the offices of ONGC in reference covered for verification of compliances of TDS provisions filed their written replies on the above points. As the ONGC is a big corporation and all the offices covered for verification fall under the same management at the higher level and as all offices are ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statutory obligations under the Employment Standing Orders Act, 1948, fall within the scope of the exclusion in the Explanation to clause (E) of sub-section (2) of Section 115 WB. Therefore, expenditure incurred on providing safety shoes or uniform or equipment to the employees or incurred for the purposes of reimbursement of washing charges, is exempt from FBT to the extent such expenditure is incurred to meet such statutory obligation. 11. Mr. Bhatt has also taken us through para 4.1, 4.3 of the order of CIT(A). 12. Mr. Bhatt has made an endeavour that the Tribunal has not decided the issues as contended by the Department that uniform allowance is part of the salary under section 17(1), and even if it is considered to be perquisite, in view of the statutory provisions, the same will be part of the salary, and therefore, TDS was required to be deducted. 13. He has taken us through the provisions of section 10(14)(i), which reads as under: "Sec.10(14)(i) any such special allowance or benefit, not being in the nature of a perquisite within the meaning of clause (2) of section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' welfare;] 10. From the provisions of section 17(2) (vi), we find that perquisites does not include the fringe benefit chargeable to tax under Chapter-XIIH. In Chapter-XIIH, the relevant section regarding liability to pay FBT on employees' benefits welfare is as per clause-E of subsection 2 of section 115WB which has been reproduced above. As per the same, FBT is payable on any expenditure incurred on employees' welfare excluding those expenditures which are incurred to fulfill any statutory obligation or to mitigate occupational hazards etc. This is not in dispute that FBT was paid by assessee-company on this expenditure and this is also admitted position that this expenditure is in the nature of employees' welfare. One more contention was raised by the Ld. DR of the Revenue that in the present case, these allowances are given to each employee separately and the benefit arising to each employee is ascertainable and therefore on such benefit, FBT is not payable and only those expenditures in respect of employees' welfare are liable to FBT, which are common expenditure and benefit obtained by each employee is not ascertainable. We do not find any merits in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 8 of 2005 dated 29.8.2005 (supra). From the relevant question of this Circular i.e. question No. 74 as per which, the question was as to whether FBT is payable on a expenditure incurred on providing safety shoes or uniforms or equipments to the employees or for the purpose of reimbursement of washing charges. Reply was this that any expenditure incurred for meeting the employer's statutory obligation under the Employment Standing Order Act, 1948 fall within the scope of exclusion in the explanation to clause-E of subsection 2 of 115WB and, therefore, to the extent, such expenditure is covered by this exclusion, FBT is not required to be paid. In the present case, we have seen that the expenditure incurred by the assessee in respect of uniform,washing charges etc. is not a statutory obligation of the assesseecompany and therefore it is not covered by the exclusion clause of Explanation to clause-E of sub-section 2 of section 115WB. The consequence of this is that the same is not perquisites asper section 17(2)(vi) of the IT Act. Now, we examine the applicability of the judgment of Hon'ble apex court rendered in the case of R & B Falcon (A) Pty. Ltd. (supra). In para-17 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit provided or deemed to have been provided by an employer to employees during the previous year is at the rate of 30 per cent on the value of such fringe benefits. The object of imposition of the said tax, as is evident from the said circular dated August 29, 2005, was to bring about an equity. The intention of Parliament was to tax the employer who, on the one hand, deducts the expenditure for the benefit of the employees getting the perks are to be taxed, those who get direct or indirect benefits from the expenditure incurred by the employer, no tax is leviable. As stated in the objective, it is for bringing about a horizontal equity and not a vertical equity." 18. Mr. Soparkar learned advocate has contended that in view of provisions of section 115WB(E), the welfare of the employees is the liability of the employer and therefore, he has pointed out that the question as envisaged under section 10(14) of the Act, the Tribunal has not opined anything and this Court should only examine whether the TDS is required to be deducted. 19. We have heard Mr. MR Bhatt learned advocate for the appellant-Revenue and Mr. SN Soparkar learned advocate appearing for the respondentassessee. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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