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2015 (6) TMI 557 - ITAT MUMBAI

2015 (6) TMI 557 - ITAT MUMBAI - TMI - Disallowance of salary of employees - Held that:- AO has asked the assessee company to produce these female members for verification, but no one was produced. Thus, the AO on the basis of the reasons given in the assessment order, disallowed the salary on the plea that expenditure was incurred for non-business purpose. The findings recorded by lower authorities have not been controvered by ld. AR by bringing any positive material on record. Accordingly, we .....

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nses @20% and depreciation also @20% being personal use of the vehicle - Held that:- The issue with regard to disallowance of expenses on which FBT has been paid is covered by the series of decision of the Tribunal, wherein it was held that once fringe benefit tax is levied on such expenses as has been done in the present case, it follows that the same are treated as fringe benefits provided by the assessee as employer to its employees and the same have to be appropriately allowed as expenses in .....

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5A with regard to Modvat credit has been deleted wherein held as per the provisions of section 145A of the Income-tax Act, 1961, the Excise Duty on purchases has to be included in sales. Alternatively, the purchases and sales have to be taken at gross value and whatever credit is left in the Modvat account that would form part of. the closing stock. - Decided in favour of assessee. - ITA Nos.7049,7050,7053 to 7054/Mum/2011, ITA Nos.5437 to 5439/Mum/2011, ITA Nos.6469 to 6472/Mum/2011 - Dated:- 1 .....

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ecord perused. There was a search and seizure operation u/s.132 of the Act was carried out at the residential and business premises of M/s Dimple Drums & Barrels Pvt. Ltd. group and its group associates concerns. While framing assessment u/s.153A, the AO disallowed salary paid to the employees who are stated to be assessee s family members. It was submitted before the AO that in regular assessments, there was disallowance of 50% of the salary so paid against which no further appeal was filed .....

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dy been allowed in the scrutiny assessment. Ld. AR, therefore, pleaded that some part of the salary should be allowed. 5. On the other hand, ld. DR relied on the orders of the lower authorities. 6. We have considered rival contentions and found that during the course of search and seizure operation, it was observed that the female family members were not rendering any services to the company and they are receiving salary from the assessee company. Accordingly, statements were recorded as specifi .....

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sessee to explain as to why the salary paid to female family members may not be disallowed. In response to this show cause notice, the assessee submitted that 50% of the salary were disallowed by the AO which was accepted by the assessee and no further appeal was made before any Court. Further, the AO has asked the assessee company to produce these female members for verification, but no one was produced. Thus, the AO on the basis of the reasons given in the assessment order, disallowed the sala .....

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because they are family members of the directors of the company. Accordingly, ground taken by the assessee in all the years under consideration is dismissed. 7. The next grievance of the assessee in all the years pertains to disallowance of vehicle expenses on which FBT were paid. 8. The AO made the disallowance of vehicle running expenses @20% and depreciation also @20% being personal use of the vehicle. By the impugned order, the CIT(A) also confirmed the action of the AO. 9. Ld. AR before us .....

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salary has been disallowed are provided any car by the company. The figures of motor car expenses which were disallowed under fringe benefit tax are as under :- Assessment year Disallowable Amount in Rs. 2006-07 2,04,825 2007-08 1,56,530 2008-09 1,37,692 2009-10 30,694 The issue with regard to disallowance of expenses on which FBT has been paid is covered by the series of decision of the Tribunal, wherein it was held that once fringe benefit tax is levied on such expenses as has been done in th .....

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record. The learned counsel for the assessee has taken us through the CBDT Circular No. 8/2005 dated 29-08-2005 giving explanatory notes on the provisions relating to fringe benefit tax as introduced by the Finance Act, 2005 and invited our attention to the relevant portion thereof to explain the object behind levying fringe benefit tax. As indicated in the said circular, the fringe benefit tax has been introduced as a surrogate tax on employer with the objects of resolving the problems in taxi .....

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e answering frequently asked question No. 15, fringe benefit is deemed to have been provided if the employer has incurred expenses for any of the purposes referred to in the relevant provisions and there is no requirement to segragate such expenses between those incurred for official purposes and personal purposes. It was further clarified while answering question No. 81 that when expenditure on running and maintenance of motor cars is liable to fringe benefit tax, the employees will not be liab .....

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s has been done in the present case, it follows that the same are treated as fringe benefits provided by the assessee as employer to its employees and the same have to be appropriately allowed as expenses incurred wholly and exclusively incurred by the assessee for the purpose of its business. In that view of the matter, we delete the disallowance made by the AO and confirmed by the learned CIT(Appeals) out of conveyance and telephone expenses and allow ground No. 4 and 5 of the assessee s appea .....

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07 to 2008-09 was deleted by the CIT(A) after having the following observations :- "3.3 I have considered the submissions of the appellant and order of the AO carefully. It is noticed that the Hon ble Tribunal has decided this issue in favour of the assessee for AYs.2000-01, 2003-04 & 2004-05. The AO has made the addition to keep the issue alive as department has filed appeal u/s.260A before the Hon. Bombay High Court. The decision of the Hon ble Tribunal is binding on the lower authori .....

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