TMI Blog2015 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act. While reading clause(E), the provisions of section 17(2)(vi) whether the payment made under FBT is excluded or not, in our view, it is excluded. - Decided in favour of the assessee - Tax Appeal No. 16 2015, Tax Appeal No. 19 of 2015 - - - Dated:- 15-1-2015 - Jayant Patel And S. H. Vora,JJ. For the Petitioner : Mr Karan Sanghani, Adv. Mrs Mauna M Bhatt, Adv. For the Respondent : None ORDER (Per : Honourable Mr. Justice Jayant Patel) 1. In all appeals, common question of law has been formulated by the revenue for consideration of this court. The same reads as under: Whether on facts 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 I.T. Act? 2. The common facts are that AO found that the assessee did not deduct TDS from the payment/reimbursement of the allowance for the uniform and therefore, the assessee was found to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide the salary slips for the month of January, 2009. 4.1 The salary slips shown for employees for January, 2009 reflected that besides salary there was substantial amount of money has paid to each employee against the item CMRE under the column of Earnings . The cumulative receipts of above CMRE amount were reflected under the column YTD Earning and this amount was exceeding ₹ 50 thousands in each case. Below the above CMRE amount, there were other allowances under the earnings named as OTHER (T) and OTHER (NT). The amount of earnings reflected under the above allowances was substantial (in the range of ₹ 1 lakh). 5. On enquiring it was told that the amount of allowances shown as OTHER(NT) was presenting the amount of uniform allowance. On verification from Form 16 produced for test check for FY 2007-08, it was observed that the amount of (NT) allowances was not reflected in Form 16 for the relevant FY i.e. 2007-08. 5.1 The above facts were enquired for the FY 2008-09 as well (as Form 16 was not yet due for this year). But no evidence was produced to justify the non inclusion of these allowances in salary and no reasonable explanation was offered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to FBT) that this payment being a reimbursement of conveyance expenses incurred by the employees is taxable only as a fringe benefit (FBT) in the employers hand u/s 115WA of the IT Act, 1961. It was further claimed that the ONGC is paying FBT on this, and hence, the same is not taxable in the employees hand by virtue of the exclusion contained in Section 17(2)(vi) of the IT Act. 8. It was also claimed that CMRE (Non-taxable) paid at the rate of ₹ 800/- per month, which is exempt u/s. 10(14) r.w.r. 2BB of the IT Rules. Whereas, the ONGC, Ankleshwar office has claimed that it may be pointed out that the allowances which are exempt u/s. 10(14) r.w.r. 2BB of the IT Rules are not included in the salary for the purpose of deduction of tax at source u/s. 192, therefore, the same are not shown in the Form No. 16. 9. Further, it was claimed that it was only those allowances, which are specifically excluded from the taxability by Rule 2BB, that are treated as exempt in the hands of the employees. After considering the replies filed by the assessee and the material on record, the assessment order came to be filed. The assessee has challenged the said assessment order b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 192 of the Income Tax Act which makes it obligatory on the part of the employer to deduct TDS provided it is salary. He has taken us through the same provisions of section 17(1)(vi) and sec. 17(20(vi), and contended that this will not fall within section 115WB(2)(E), and therefore, it is not part of salary and since the employer is governed by FBT,is not required to pay tax or not required to deduct TDS under section 194. 16. He has taken us through para-9, 10 and 12 of the Tribunal. The Tribunal accepting the contention of assessee has held as under: 9. We have considered the rival submissions and perused the material on record and gone through the orders of authorities below and judgments cited by both the sides. First,we deal with this aspect that whether FBT was payable by the assesseecompany on this expenditure or not and if it is found that FBT was payable by the assessee on this expenditure, which was actually paid also, whether there is a liability of the assessee to deduct TDS from this expenditure incurred for the welfare of the employees. In this regard, we feel that provisions of section 17(2)(vi) and section 115 WB 2E with explanation are relevant and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced above which includes those expenditures which are incurred to fulfill any statutory obligation or to mitigate occupational hazards etc. The impugned expenditure which is in dispute before us does not fall in any of the exclusion clause of the explanation. The second argument of the Ld. DR of the Revenue is this that actual expenditure was not incurred by the employees of the assessee because at the time of survey also, no employees was found wearing any uniform. Regarding this contention also, we find that there is no exclusion provided in section 115WB to exclude those expenditures incurred by the assessee company for employees' welfare which were not actually incurred by the employees as per the intention for which the expenditure was incurred. As per sub-section 1 of section 115WB,any privilege service,facility or amenity directly or indirectly provided by an employer whether by way of reimbursement or otherwise to his employees is covered within the definition of fringe benefit on which FBT is payable. Asper sub-section 2 of section 115WB, it is provided that fringe benefit shall be deemed to have been provided by the employer to its employee if the employer has in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding entertainment etc., and on the other, when an employee is getting the perks are not to be taxed. Those who get direct or indirect benefit from the expenditure incurred by the employer, no tax is leviable. In para-30 of the judgment, it is also noted by the Hon'ble apex court that Parliament, in introducing the concept of fringe benefit, was clear in its mind that in so far as on the one hand, it has avoided imposition of double taxation i.e. tax both in the hands of employee and employer and on the other hand, it is intended to bring succor to the employer for offering some privilege, service facility or amenity, which was otherwise though to be necessary or expedient. From this observation of the Hon'ble apex court in this judgment and also from the relevant provisions of section 17(2) (vi) and 115WB(2) as reproduced above, it becomes very clear that on fringe benefit like uniform and washing allowance etc. provided by assessee to its employees otherwise than for a statutory obligation, is liable to FBT and same is not liable to income tax in the hands of the employee because the same cannot be considered as perquisites as per the provisions of section 17(2)(vi) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry are accepted by the Revenue as benefit deductible and has not been considered as part of salary. Since assessee was governed FBT provision and the applicability of provision for salary will not apply and contention raised by assessee is rightly accepted by the Tribunal. 20. We have gone through the provisions of section 12H and benefits which are conferred under section 115WB(2)(E) of the Income Tax Act. While reading clause(E), the provisions of section 17(2)(vi) whether the payment made under FBT is excluded or not, in our view, it is excluded. 21. In that view of the mater, concurring with the view taken by the Tribunal, we answer the question against the department and in favour of the assessee. All these tax Appeals are dismissed. We have not examined the question regarding whether the payment made is exempted under sec. 10(14) or not. 5. Learned counsel for the appellant has not been able to show any distinguishing ground which may lead to this court to take any other view. 6. As the appeals are already covered by the above referred decision of this court, the answer to the question has to be in favour of the assessee and against the revenue. Resultantly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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