TMI Blog2012 (8) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 115JB of the Act. In first appeal, the CIT(A) vide order dated 04.01.2010 held as follows on this issue: 6.3 Since the item Fringe Benefit is not included in the above items [Explanation 2 to section 115JB], the provision in respect of the same has to be reduced from the Book profit for the purposes of calculating MAT liability and the Ld. AO s action in this connection is uncalled for and deserves to be negated. 3. In second appeal, relying upon another ITAT Delhi Bench decision in ITO v. Vintage Distillers Ltd. (2010) 130 TTJ 79 (Del), the Tribunal by order dated 22.09.2011 decided the issue in favour of the assessee. 4. During the appeal, learned counsel for the revenue assailed the Tribunal s decision on this issue on the ground that FBT is not a permissible deduction under Section 115JB. Reliance was placed on Explanation 1 to section 115JB to contend that none of the items which are to be reduced from the net profit for computing book profit for the purposes of the section included FBT. 5. Learned counsel for the assessee, on the other hand, relied on the definition of tax in Section 2(43) and contrasted it with the term income, under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for, if any amount referred to in clauses (a) to (h) is debited to the profit and loss account, and as reduced by- (i) the amount withdrawn from any reserve or provision (excluding a reserve created before the 1st day of April, 1997 otherwise than by way of a debit to the profit and loss account), if any such amount is credited to the profit and loss account: Provided that where this section is applicable to an assessee in any previous year, the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation or Explanation below the second proviso to section 115JA, as the case may be; or (ii) the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof)] or 78[section 10A or section 10B or section 11 or section 12 apply, if any such amount is credited to the profit and loss account; or (iia) the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 115R; (ii) any interest charged under this Act; (iii) surcharge, if any, as levied by the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time. CHAPTER XIIH INCOME-TAX ON FRINGE BENEFITS B.-Basis of charge 115WA. Charge of fringe benefit tax. (1) In addition to the income-tax charged under this Act, there shall be charged for every assessment year commencing on or after the 1st day of April, 2006, additional income-tax (in this Act referred to as fringe benefit tax) in respect of the fringe benefits provided or deemed to have been provided by an employer to his employees during the previous year at the rate of thirty per cent on the value of such fringe benefits. (2) Notwithstanding that no income-tax is payable by an employer on his total income computed in accordance with the provisions of this Act, the tax on fringe benefits shall be payable by such employer. Section 40. Amounts not deductible. Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above discussion clearly proves that as per Clause (a) of Explanation to Section 115JB, payment or provision for FBT is not required to be added back for the purpose of computing book profit under Section 115JB of the IT Act, 1961. This is also important to note that there was controversy as to whether provision for deferred income-tax is required to be added back for computing book profit under Section 115JB. As per retrospective amendment w.e.f. 1st April, 2001 by the Finance Act, 2008, a new Clause (h) was added in Expln. 1 to Section 115JB to the effect that if provision for deferred tax is debited to the P L a/c, the same is to be added back for computing book profit. At this time also, there is no such provision to add back provision for FBT . It is also worth noting that as per Section 40(a)(ic), it was provided that FBT is not allowable as deduction for computing taxable income. Hence it is seen that this is an expenditure for the assessee company, which is specifically disallowed as per Section 40(a)(ic) but there is no such provision for adding back the same in Explanation to Section 115JB. Hence, we do not find any reason to add back FBT for comput ..... X X X X Extracts X X X X X X X X Extracts X X X X
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