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TMI Blog2015 (7) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... of fringe benefits were reduced by an amount of Rs. 5,86,75,815/-. On examining these returns, it was noted" that the above difference is on account "of different value of fringe benefits adopted for repair, running (including fuel) and maintenance of air craft and the amount of depreciation thereon. In the original return, the assessee adopted the value of fringe benefits @ 20% on total expenditure of Rs. 29,33,79,076/- incurred for repair, running (including fuel) and maintenance of aircraft and the amount of depreciation thereon. Thus, this value was taken at Rs. 5,86,75,815/-. In the revised return, the assessee adopted the above value at Rs. Nil. This caused the difference of Rs. 5,86,75,815/- in value of fringe benefits in the return. The assessee was asked to provide the reason for revising the value of fringe benefits. Vide letter dated 23.10.09, the assessee submitted as under: " "In the original return tiled, the value of Rs. 5,86,75,81S/- in respect of repair; running and maintenance expenses of aircrafts had been- wrongly included in the , ) total value of Rs. 1 1,29,71,006/- but the same should be liable for FET at NIL rate in view of section 115WC(2)(1) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion thereon is considered as fringe benefit. Section 115WC prescribes the value of such fringe benefits, The relevant portion of section is reproduced below: 115WC (1) - For the purpose of this Chapter, the value of fringe benefits shall be aggregate of the following namely. , ... , . , . , , , , , . (c) 20% of the expenses referred to in clause (A) to (K) of sub-section (2) of section 11 S WB. Sub-section (2) of section 11 SWC provides relied in value of fringe benefits under certain circumstances. Clause (1)of this sub-section (2) of 11 SWC reads as under. (t) In the case of an employer engaged in the business of carriage of passengers or goods by aircraft, the value of fringe benefits for the purposes referred to in clause (J) of sub-section (2) of section 11 SWB shall be taken as Nil . Thus , the value of fringe benefits on repair, running (including fuel) and maintenance of air craft and the amount of depreciation there on will be calculated @ 20% in normal business and will be taken at Nil in the case of an employer, who is engaged in the business of carriage of passengers or goods by aircraft. In light of above, the issue which is required to be examined is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on he contented as follows :- "Without prejudice to the above, it is respectfully submitted, that in case it is held that giving aircraft on charter basis is not an activity of carriage of passengers, the aforesaid expenses to the extent attributable to the period of hire are not liable to fringe benefit tax for the following reasons: In terms of section 115WA of the Act, an additional tax by way of fringe benefit tax is payable in respect of fringe benefits provided or deemed to have been provided by an employer to its employees. Sub-section (2) of section 115WB deems certain expenses incurred by an employer as resulting in a fringe benefit to an employee, which are subject to fringe benefit tax at the value to be determined in accordance with the provisions of section 115WC of the Act. It is respectfully submitted, that where an expenditure incurred does not clearly result In any benefit/fringe benefit to an employee, no portion thereof can be deemed to be subject to fringe benefit tax under section 115WB(2) read with section 115WC of the Act. A certain percentage of the expenditure incurred on running, repairing and maintenance of aircraft including amount of depreciation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act provides for presumption that part of the expenses are used for the personal benefits of employees. The exemption in respect of employer engaged in the business of carriage of passengers or goods has been provided because there it was felt that the expenses will be mainly relating to business of carriage of goods or passengers. In the appellant's case, there is no dispute that major amount. of the expenses is relating to the own use by the company which is also evident from the fact that the total expenditure on account of repair, running and maintenance of helicopter/aircraft is Rs. 31,80,00,223/- whereas the revenue (that too from rental hire charges) of Aircraft/helicopter is Rs. 2,46,26,147/- only. Merely because the appellant was authorized by the other objects clause of the memorandum to do the business of carrying on of passengers/goods or that it was permitted by the competent authority to carry on such business, it will not imply that the appellant has actually carried on the business of carrying on of passenger/goods and that the expenditure on repair, renewal and depreciation etc. have been incurred in relation to the business of carrying on of passengers/goods. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The contention of the assessee is that, the AO has given a finding that the expenditure in question was incurred for the purpose of business, as there is no disallowance of any expenditure on an allegation of personal use and that the expenditure in question is not "consideration for employment" and hence not fringe benefit tax as contemplated u/s 115WB (1) of the Act. This argument has to be rejected for the reason that fringe benefit tax can be levied only when the expenditure incurred is for the purpose of business. Even salary paid to an employee, is consideration for employment and is expenditure incurred for the purpose of business. 11. On the contention of the assessee that there is no consideration for employment, we find that the assessee had submitted before the CIT(A) that there is a possibility of the aircraft having being used for benefit of the employees. The submissions have been extracted by us at para 3 of this order. 12. When the assessee admits of a possibility of the air craft having been used for the use of benefit of employee, to plead otherwise at this stage cannot be countenanced. The assessee has not provided any evidence in support of this contention. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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