TMI Blog2014 (9) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... iciaries. Therefore, respectfully following the decision of the coordinate Bench of the Tribunal to which one of us i.e., the Judicial Member is a signatory, these grounds of appeals are allowed. there is no benefit derived by the employees of the assessee-company from bundling of one product with another and therefore, fringe benefits tax is not attracted. - Decided in favour of assessee. Fringe benefits tax - expenses incurred towards payment of fees, venue hiring charges on trainees enrolled as students in BITS and scholarship given to the trainees - Held that:- the assessee, in association with BITS, has incurred certain expenditure on training programme of fresh gradu ates to prepare them to work with the application programmes and for this purpose has incurred an expenditure of ₹ 4,41,96,480 towards payment of stipend to the trainees which is in the nature of salary, course fees, venue hiring charges etc. It is the contention of the assessee that the amount paid towards training is taxable in the hands of the trainees as perquisites under section 17(2) which is exempt under section 10(16) as the same is paid to meet the cost of education of student and hence, it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fringe benefits tax liability. After considering the same, the Assessing Officer observed that the assessee has made reimbursement of medical expenses to its employees and it has claimed that up to ₹ 15,000 is exempt in the hands of the employee and they are not liable to fringe benefits tax (FBT). It was submitted to the Assessing Officer that these expenses are incurred by the company, pursuant to the contract of employment and it is a part of compensation to its employees and falls within the purview of consideration for employment used in section 115WB(1) but is not taxable, as it is a perquisite taxable in the hands of the employee and fringe benefits tax is not attracted merely on the ground that the medical benefit is not taxed in the hands of the employee up to ₹ 15,000. The contention of the assessee was not accepted by the Assessing Officer and he held that the exempt portion of the medical reimbursement, i.e., up to ₹ 15,000 is liable to fringe benefits tax as it is a fringe benefits under sub-clause (e) of section 115WB(2) of the Act. He accordingly, brought to tax the following amounts : Assessment year Amount (Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Revenue reads as follows : 4. On the facts and in the circumstances of the case the learned Commissioner of Income-tax (Appeals) has erred in holding that the provisions of fringe benefits tax are not applicable in respect of sales promotion expenses including publicity expenses incurred by the assessee during the course of business activities without appreciating the fact that by virtue of deeming provisions of section 115WB(2), there is no distinction between expenses incurred towards employees and towards non-employees. 10. The assessee-company is engaged in the business of fast-moving consumer products, with a scheme in which some products are bundled as free along with other product sold by the company to its customers. According to the assessee, the arrangement is in the nature of a collateral contract and as such the expenditure incurred is in the nature of a purchase cost and not cost of sales promotion. However, the Assessing Officer by invoking the provisions of section 115WB(2)(D) and 115WC(1)(c) of the Act rejected the assessee's contention and held that the expenditure incurred on bundled products is liable to fringe benefits tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the Revenue and dismiss the same. 15. Ground No. 5 raised by the Revenue reads as follows : 5. On the facts and in the circumstances of the case the learned Commissioner of Income-tax (Appeals) has erred in holding that the provision of fringe benefits tax are not applicable in respect of expenses incurred towards payment of fees, venue hiring charges on trainees enrolled as students in BITS and scholarship given to the trainees incurred by the assessee during the course of business activities without appreciating the fact that by virtue of deeming provisions of section 115WB(2), there is no distinction between expenses incurred towards employees and towards non-employees. 16. The facts of this issue are that the assessee-company sponsors science graduates to pursue post graduate courses (with a stipend) which is exempt under section 10(16) as it is granted to meet the cost of education. However, the assessee also incurred an expenditure of ₹ 4,10,81,201 towards course fee, charges towards conducting exams, etc., on the course at BITS. The assessee's contention was that the said amount is not in the nature of scholarship falling within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of salary, course fees, venue hiring charges etc. It is the contention of the assessee that the amount paid towards training is taxable in the hands of the trainees as perquisites under section 17(2) which is exempt under section 10(16) as the same is paid to meet the cost of education of student and hence, it is not to be included as fringe benefits under section 115WB(2). We find that the Tribunal in the case of Toyota Kirloskar Motor Pvt. Ltd., after considering the deci sion of the Tribunal in the case of Vijaya Bank v. Jt. CIT LTU in I. T. A. No.1066(B)/2010 dated October 26, 2011 has held that fringe benefits tax is not leviable in the absence of collective enjoyment of benefits by its employees. In the case before us, the trainees are not the employees of the assessee-company and therefore, there is no benefit to the employees. Therefore, respectfully following the decision of the coordinate Bench, these grounds are allowed. 20. Respectfully following the aforesaid decision of the Tribunal, we uphold the order of the Commissioner of Income-tax (Appeals) and dismiss ground No. 5 raised by the assessee. 21. In the result, all the appeals by the Revenue are di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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