TMI Blog2016 (7) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... the rationale for levying FBT on the employer lies in the inherent difficulty in isolating the personal element where there is collective enjoyment of such benefits and 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. - Decided against revenue. - I.T.A No.2772/Kol/2013 - - - Dated:- 8-7-2016 - Shri N. V. Vasudevan, JM Shri M. Balaganesh, AM For The Appellant: Shri K. K. Tripathi, JCIT, Sr. DR For The Respondent: Shri A. K. Gupta, FCA ORDER Per Shri M. Balaganesh, AM: This appeal by revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... five per cent , instead of twenty per cent . So in your case 5% depreciation value should be charged on depreciation on Motor car for hire. This has resulted in under assessment of fringe benefit for ₹ 30,78,245/- with consequential tax effect of ₹ 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 clarified vide letter dated 8.9.2010 that the assessee owns a fleet of motor cars, which are classified into the following two categories: 1. Motor Car for hire; and 2. Motor Car not for hire This would be evident from Depreciation Schedule a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s distinction has not been made for first time but even in the earlier years this distinction has been made. The audit report also in the Schedule of Fixed Assets make clear cut distinction between motor car for hire where the applicable depreciation rate is 30% and motor car not for hire where the applicable depreciation rate is 15%. This distinction has been accepted by the A.O. in the assessment of income. However, for the purpose of FBT, the A.O. has not accepted this distinction by stating that No segregation can be made in running/maintenance and depreciation of motor cars into guests and employees as claimed by you in assessment proceedings. Necessary rectification has to be made u/s.154. 4.4 That the motorcars are used for hire purposes has not been challenged by the A.O. It is also not the A.O.'s case that the motor cars claimed to be used by the appellant for hire purposes are being actually used by the employees. No such findings has been given by the A.O. Then, it arises whether FBT will be applicable in case of persons other than employees of the appellant company. I am of the view, that when there is no finding given by the A.O. that cars reflected in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exus 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 by the ld AR on the co-ordinate bench decision of Cochin Tribunal in the case of Popular Vehicles Services Ltd (supra) is well founded and supports the case of the assessee, wherein it was held that :- 18. We have considered the rival submissions on either side and also perused the material available on record. The exclusion of depreciation and the value of the car from the computation of fringe benefit is available only for the cars used for test drive by the potential customers. The Revenue claimed that apart from the car that is used for test drive, the assessee is also maintaining vehicle for the benefits of the employees. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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