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TMI Blog2015 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 201(1)/201(1A) of the Act was passed by AO. The matter was carried in appeal before the CIT (Appeals) and in the appeal, the CIT (Appeals) held in favour of the assessee. The matter was further carried in appeal by the revenue before the Tribunal and the Tribunal dismissed the appeal. Under the circumstances, present appeals have been preferred by the revenue, wherein the aforesaid substantial question of law has been formulated. 3. Mr. Karan Sanghani for learned counsel Ms. Mauna Bhatt has brought to our notice that similar question came to be considered by this court in Tax Appeal No.549 of 2013 and allied matters, which was decided on 5.12.2014 and this court by reasons recorded in the above referred decision, answered the question against the revenue and in favour of the assessee. 4. We may record that in the above referred decision of this court in Tax Appeal No.549 of 2013 and allied matters, it was observed thus: "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER (NT) in the pay slip of salary income, therefore, the assessee was informed that it has been observed that in your ONGC office the employees are being paid certain allowances in the form of uniform allowances CMRE (Conveyance Maintenance Allowance) and some other allowances which are termed as NT (Non Taxable) and these are not included in the total salary of the employee. And the tax is not deducted on this allowances, therefore, this was enquired at the time of survey verification and also as per order sheet entry dated 25.2.2009 (in the case of ONGC Baroda-Basin Office), vide order sheet dated 23.2.2009 & show case dated 24.2.2009 (for ONGC Ankleshwar Asset) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dissatisfied with the said order of CIT(A), the Revenue preferred appeal before the ITAT which came to be partly allowed, against which, the present Tax Appeals are preferred by the Revenue. 10. Heard the learned advocates appearing for the respective parties and considered the submissions. Learned advocate for the appellant has taken us through the Circular of CBDT being No. 8/2005. Clause 74 of the said Circular reads as under: "74. Whether FBT is payable on expenditure incurred on providing safety shoes or uniforms or equipments to the employees or for the purposes of reimbursement of washing charges ? Ans. Any expenditure incurred for meeting the employers 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit or amenity (excluding the fringe benefits chargeable to tax under Chapter XII-H) as may be prescribed;" "115WB(1) (2) The fringe benefit purposes, namely :- (E) employees' welfare. [Explanation - For the purposes of this clause, any expenditure incurred or payment made to- (i) fulfill any statutory obligation; or (ii) mitigate occupational hazards; or (iii) provide first is facilities in the hospital or dispensary run by the employer; or (iv) provide creche facility for the children of the employee; or (v) sponsor a sportsmen, being an employee; or (vi) organize sports events for employees, shall not be considered as expenditure for employees' 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 sub-section 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; welfare. As per clause-E of this sub-section, it does not come out that it has to be enquired and looked into whether the employee has incurred the amount given to him by the employer for the same purpose for which it was given to the employee. In our considered opinion, for this reason that the employer has paid FBT on a particular expenditure, it is considered as payment of income tax only on deemed income of the employee out of various expenditures incurred by the employer and hence, this is not relevant as to whether the employee has actually incurred those expenditures as intended by the employer. 12. Now, we examine the applicability of CBDT Circular No. 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 subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from such expenditure incurred by the employer for the benefits of the employees. Accordingly, in the present case, we hold that TDS was not required to be deducted by the assessee-company from this expenditure incurred by it on providing uniform, washing charges and washing allowances etc., So this ground of assessee's appeal is allowed." 17. Mr. Soparkar has placed reliance on the decision of the Hon'ble Supreme Court in the case of R & B Falcon (A) PTY. Ltd. v. Commissioner of Income-tax, reported in [2008] 301 ITR 309(SC), more particularly, para-17, which reads as under: "Fringe benefit tax is a new concept. The tax to be levied on the fringe benefit 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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