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TMI Blog2013 (1) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... tickets issued to the employees for private journeys. 4. Facts giving rise to this grievance show that while scrutinising the return of fringe benefits tax under section 115WE(3), the Assessing Officer noticed that during the year under consideration, the assessee has given the free/concessional tickets to its employees for their private journeys. The Assessing Officer further observed that during the course of the assessment proceedings for the year under consideration under section 143(3) of the Act, a special audit under section 142(2A) of the Act was carried out. The special auditors in their report have given a categorical finding that the company has issued 2,48,334 free/concessional tickets to its employees. The Assessing Officer also observed that the auditors have taken the average value of each free/concessional tickets at Rs. 5,510. Considering the fact that the company has issued 2,48,334 tickets the auditors computed the value of taxable fringe benefit at Rs. 1,36,83,20,340. However, the Assessing Officer noticed that the assessee has taken the value of fringe benefit on account of this issue at nil. The Assessing Officer sought explanation from the assessee. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax (Appeals), the assessee is before us. Learned counsel for the assessee strongly submitted that fringe benefits tax is not at all leviable on the impugned free/concessional tickets provided to the employees or their family members for their private journeys. It is the say of the counsel that the assessee-company never issued any ticket to the employee ; therefore, provisions of section 115WB(1)(b) are not applicable. Learned counsel further submitted that even if it is assumed that the slips/coupons come within the purview of tickets then also the basis of valuation adopted by the Assessing Officer is incorrect and against the facts of the case. The learned counsel further pointed out that the special auditors in their supplementary audit report exhibited from pages 35 to 49 of the paper book have accepted that only 76,633 coupons were issued to the employees for vacation, which may be considered as the fringe benefit to employees therefore, the total number of coupons taken by the Assessing Officer at 2,48,334 is against the finding of the special auditors. 7.1. Learned counsel for the assessee further pointed out that the value of fringe benefit have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Jet privilege members earn JP miles every time they fly Jet Airways. In addition, they also earned JP miles whenever they fly through partner airlines or stay at any partner hotels or use partner car rentals or telecom partner services. The Jet Airways has reciprocal frequent flyer programme agreements with British Airways, KLM and Northwest Airlines. By virtue of it, JP members can redeem their miles for free flights across the world on British Airways, KLM and Northwest Airlines. Learned counsel further explained that Jet Airways has a company branded credit card with Citibank. This card is available in gold variant and has an annual fee payable towards the same. The advantage of this credit card is that the card user collects JP miles for all his spends using the Jet Airways Citibank Company-branded credit card. These JP miles are credited to the Jet privilege account of the member and can be used by him for free flights on Jet Airways or any of its partner airline. The programme gets rewards depending on the membership status, i.e., platinum, gold, silver, blue plus or blue. Other benefits include upgrades to premiere, check-in at club premiere desks, tele check-in and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. 9. We have considered the rival submissions and perused the orders of the lower authorities. We have also considered the paper book submitted by the assessee. At the very outset, we do not agree with the submissions of the counsel that fringe benefits tax is not leviable on the facts of the present issue. Section 115WB(1)(b) specifically provides as under : " Any free or concessional tickets provided by the employer for private journeys of his employees or their family members, charging section is absolutely clear and unambiguous." 10. As it is not in dispute that the assessee has provided free/concessional tickets to its employees during the year under consideration, it is liable for fringe benefit tax. The only dispute remains now is what should be the value assigned to such fringe benefit. Though section 115WC(2)(a) contains the provisions for computing the cost of such benefit but in our considered view that method cannot be applied to the facts of the present case for the simple reason that the cost at which the benefits are provided to the employee cannot be equated with the cost provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cost of benefit recovered by the assessee from its employees. Ground Nos. 2 to 6 are allowed for statistical purposes. 12. Ground No. 7 relates to the charge of fringe benefits tax on festival expenses of Rs. 9,59,442. During the course of the fringe benefit assessment proceedings, the Assessing Officer noticed that the special auditors have pointed out that the assessee has incurred festival expenses amounting to Rs. 9,59,442 which has been debited under the head " business promotion expenses" . The Assessing Officer adopted the value of fringe benefit of such festival expenses. The assessee questioned the finding of the Assessing Officer before the learned Commissioner of Income-tax (Appeals) but without any success. 13. Before us, learned counsel for the assessee drew our attention to the details of expenses considered as business promotion expenses though they are related to festival celebrations as exhibited from pages 60 to 62 of the paper book and pointed out that these expenses have been incurred on travel agents/various Government Departments and therefore are outside the ambit of fringe benefits tax as there is no employer/employee relationship between the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence. The Assessing Officer is directed to verify/examine the same and if satisfied, delete the same from the liability of fringe benefits tax. Ground No. 8 is allowed for statistical purposes. 21. Ground Nos. 9 and 10 together relate to the charging of fringe benefits tax on trade display expenses of Rs. 17,57,496 as being in the nature of gift items and further Rs. 93,86,718 as being in the nature of gift items. 22. During the course of the assessment proceedings, the Assessing Officer relied upon the findings of the special auditor who had observed that out of display expenses, Rs. 1,11,44,214 is in the nature of gifts. It was also observed that the assessee has already offered an amount of Rs. 17,57,496 under the head " sales promotion" for the purpose of fringe benefit tax. The Assessing Officer computed the value of fringe benefit at Rs. 93,26,718 and Rs. 46,93,359 based on the rate of 50 per cent. and at the rate of 30 per cent. of Rs. 17,57,496. 23. The assessee agitated this matter before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) was convinced that out of the total expenditure of Rs. 2,31,33,698 under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the category " tour and travel" . Since the assessee itself has offered per diem expenses for fringe benefits tax in the assessment year 2008-09, we do not find any reason why the same should not be offered for the year under consideration. Accordingly, ground No. 11 is dismissed. 31. This appeal filed by the assessee is partly allowed. ITA No. 5308/Mum/2012 - Assessment year 2007-08 32. The assessee has raised 5 grounds of appeal. Learned counsel for the assessee submitted that ground No. 1 is not pressed. Therefore, ground No. 1 is dismissed as not pressed. 33. Grounds Nos. 2 and 3 relate to levy of fringe benefit tax on free/concessional tickets issued to the employees for private journeys. This issue has already been discussed in paras 4 to 11 of ITA No. 6955/M/2012 of this order. Following the decision above, these grounds are allowed for statistical purpose. The Assessing Officer is directed to consider the provision for frequent flyer programme for the assessment year 2007-08 for levy of fringe benefits tax for this year. Additional ground raised is also accordingly disposed of. 34. Ground No. 4 relates to the charge of fringe benefit tax on festival expenses of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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