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2015 (6) TMI 932 - ITAT AHMEDABAD

2015 (6) TMI 932 - ITAT AHMEDABAD - TMI - Liability to payment of Fringe Benefit Tax - whether there exists a master servant relationship between the appellant & its consultants? - the liability of Fringe Benefit Tax arises merely because the expenses incurred by the appellant are of the nature as contemplated by section 115WB of the Act even though there are no employees as held by CIT(A) - Held that:- As relying on assessee’s own cases for previous AY's [2013 (5) TMI 713 - ITAT AHMEDABAD]and [ .....

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l findings of the authorities below and direct the AO to give relief accordingly. - Decided in favour of assessee. - I.T.A. No.209/Ahd/2012 - Dated:- 10-4-2015 - Shri N.S. Saini And Shri Kul Bharat JJ For the Appellant : Shri Sanjay R.Shah, AR For the Respondent : Shri M.K.Singh, Sr.DR ORDER Per Shri Kul Bharat, JUDICIAL MEMBER : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-Gandhinagar ( CIT(A) in short) dated 30/12/2011 pertaining to As .....

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CIT(A) has erred in confirming and justifying the action of the AO & holding that appellant was liable to payment of Fringe Benefit Tax under provisions of chapter XII-H of the Act even after observing that in fact & law the appellant does not have any employee. 3. The CIT(A) has erred in confirming that there exists a master servant relationship between the appellant & its consultants ignoring the fact that the appellant does not pay any benefits of an employee to the consultants. 4 .....

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& mobile expenses, guest house expenses, insurance expenses, entertainment expenses and club membership fees which are business expenditure and cannot be said to be fringe benefit to employees. 7. The CIT(A) ought to have deleted addition in respect of expenses where benefits of expenses are not enjoyed collectively by employees of the company or where no benefits are being enjoyed by any employee in view of speech of Finance Minister & Memorandum explaining provisions for Finance Bill, .....

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ssessee s own case for AY 2006-07 in ITA No.906/Ahd/2010 vide order dated 01/05/2013. He further submitted that the Coordinate Bench (ITAT C Bench Ahmedabad) in another ITA No.2065/Ahd/08 for AY 07-08, order dated 31/05/2013, has followed the decision of the Coordinate Bench passed in ITA No.906/Ahd/2010(supra). He submitted that the facts are identical, therefore, the same view may be adopted. 3.1. On the contrary, ld.Sr.DR has supported the orders of the authorities below. However, he has not .....

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(A) has observed as under: 3. The appellant had raised similar issue in the preceding years i.e. 2006-07 and 2007-08. My predecessor had disposed the appeal for AY 2007-08 with the following detailed finding: "5. A similar appeal of the appellant for assessment year 2006- 07 stands disposed off by the undersigned's order dated 31/12/2009. As per that, it has been held that looking at the arrangement, the so called consultants and the assessee had, these relationships were in the nature .....

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two parties. The Assessing Officer in the assessment order has been able to highlight that the relation between the company and the so called consultants is in the spirit of master-servant relation only and not a contract of service. Not only these consultants get money on monthly basis, they also work full time for the company, their work is subject to the overall control of the company (may be controlled from the U.S.A.), they have also nominated one person as the controlling head or the proj .....

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to tax such personal expenses and perks afforded by the employer as listed in section 115W to its employees, which are otherwise difficult to monitor at individual level. Therefore, whether one is an employee in the legal sense of the term or an employee as per the spirit of the relationship, the expenses which this taxation wants to cover would still be there. In the instant case, we have expenses like club payments, employees' welfare expenses or entertainment expenses, among the various .....

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s raised by the appellant, including the applicability of circular No.8 of 2005 dated August 29, 2005, falls through." 5. During the present year also, there has been no change with respect to the nature of expenses incurred by the so called nonemployees. As the assessment order would show, besides conveyance and tour expenses, there are expenses concerning employee's welfare, entertainment, club membership etc. Therefore, for all practical purposes there existed an employeremployee - a .....

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s, there are other expenses like employee's welfare, entertainment, club membership etc. which shows there existed an employer-employee relationship and therefore I do not find any reason to deviate from the order of my predecessor for previous years and I hold that the appellant is liable for Fringe Benefit Tax. The action of the AO is therefore upheld and the contention of the appellant is rejected. 4.1. We find that the Coordinate Bench in ITA No.906/Ahd/2010 for AY 2006-07, order dated 0 .....

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resent case. WE hereby reverse the legal findings of the authorities below and direct the AO to give relief accordingly. Grounds are allowed. 4.2. The Coordinate Bench in another ITA No.2065/Ahd/2010 in AY 2007-08, order dated 31/05/2013, has followed the decision of the Coordinate Bench passed in ITA No.906/Ahd/2010, by observing as under:- 2. Facts of the case, as emerged from the assessment order passed under Section 115WE(3) of the I.T.Act dated 29.12.2009 for A.Y.2007- 2008, the order under .....

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