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TMI Blog2016 (7) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... decided in this appeal is as to whether the ld CITA is justified in deleting the consideration of tax depreciation of 5% on motor cars used exclusively for hire for the purpose of fringe benefit tax in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is a subsidiary of EIH Limited and is engaged in the business of transportation and car rentals. It represents the AVIS worldwide system of car rental in India as the master licensee of Avis Europe plc. Usually chauffeur driven cars are given on rent to customers for a period of time. The assessee operates through is branch offices situated in almost all the major cities and places of tourist interests in India. The assessee for the captioned asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ringe benefit for Rs. 30,78,245/- with consequential tax effect of Rs. 10,36,137/-. In this connection reference is made to circular no.8/2005 of Govt. of India, Ministry of Finance, Dept. of Revenue, CBDT dt.29/8/2005: Explanatory Notes on The Provisions relating To FBT. Para 3.4 (c)(iv) of the said circular states that "where the employer is engaged in carriage of passengers or goods by motor car a lower rate of 5% of expenses on repair, running (including fuel) and maintenance of motor cars and depreciation thereon has been specified". Therefore, the AO was of the view that "no segregation can be made in running, maintenance and depreciation of Motor cars into guests and employees. In reply to the aforesaid notice u/s.154 it was cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon. 4. The ld CITA observed as below in his order :- "4.2 I have examined the A.O's order passed u/s.154 dt. 21.10.2010 as well as the submissions made by the A.R. of the appellant. The larger picture that one must not forget is that FBT comes into being only in a relationship of employer and employee. The relevant section 115WB(2)(H) reads as below :- "(2) The fringe benefits shall be deemed to have been provided by the employer to his employees/ if the employer has, in the course of his business or profession (including any activity whether or not such activity is carried on with the object of deriving income, profits or gains) incurred any expense on or made any payment for, the following purposes, namely:- (H) repair, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when there is no finding given by the A.O. that cars reflected in the audit report as being used for hire are actually being used by the employees, there will be no employer employee relationship established in order to invoke the provision of FBT. Therefore, the action of the A.O. in disallowing Rs. 30,78,245/- u/s.115WB(2)(H) is not upheld." 5. Aggrieved, the revenue is in appeal before us on the following ground:- " The Ld. CIT(A) erred in law as well as on facts in holding that depreciation of 5% does not form part of FBT, ignoring the para 3.4(c)(IV) of Circular No.8/2005 of government of India, Ministry of Finance, Department of Revenue, CBDT dated 29.08.2005, wherein it is declared as FBT." 6. The ld DR vehemently relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd attributing the same directly to the employee. We find that the car expenses incurred for the transport business, the maintenance of such cars are separately accounted for as those car expenses have no nexus or relation to any benefit which can be even said to have been collectively enjoyed by the employees and therefore the expenses incurred on such account do not attract the levy of FBT. It is not the case of the revenue that the employees were allowed to enjoy any benefit directly or indirectly from such transport services. We find from the observations of ld CITA supra that the assessee had duly bifurcated the motor cars used for hire and that not used for hire separately in the depreciation schedule itself. Hence the reliance placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter needs to be considered afresh by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the issue is restored on the file of the Assessing Officer. The Assessing Officer shall reconsider the issue in the light of material that may be filed by the assessee and thereafter find out whether any facility provided by the assessee to the employees in the course of their employment or not, and thereafter decide the issue in accordance with law after giving reasonable opportunity of hearing to the assessee." In view of the aforesaid findings in the facts and circumstances of the case and respectfully following the ratio laid down in the judicial precedent relied upon above, we find no infirmity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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