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TMI Blog2016 (8) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Appeals) erred in law and on facts has dismissed the relating to the initiation of penalty proceedings under section 271(l)(d) of the Income Tax Act, 1961 for the alleged concealment and/or furnishing of inaccurate particulars of income. 4.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal. 2. Briefly stated facts of the case as culled out from the records are that the assessee is a limited company engaged in the business of distribution of electricity. During the course of assessment proceedings u/s 115WE(3) of the Act it was observed by ld. Assessing Officer that value of Fringe Benefit Tax (FBT) under chapter XII-H of the Act was shown at Rs.NIL. However, in the Tax Audit Report u/s 44AB of the Act, auditors have reported the FBT value at Rs. 2,17,98,200/- and FBT payable thereon at Rs. 74,09,208/- When the question was raised by ld. Assessing Officer, the reply of assessee was as under :- "It is submitted that keeping m view the FM's Budget Speech and Statement of objects and Reasons for introduction of Fringe Benefit Tax (FBT), such items of business expenditure as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 2,17,98,200/- taking the firm basis of Tax Audit Report. 4. Appeal before ld. CIT(A) could not bring any relief to the assessee and the appeal was dismissed by ld. CIT(A) by observing as under :- 6. .1 have considered the matter. Auditors appointed by the appellant reported fringe benefits as per provisions of Act at Rs. 2,17,98,200/-. In other words, these are taxable fringe benefits as per auditors by applying the provisions of Income-tax Act as they stand. Gujarat High Court in the said writ petition has not yet decided the matter substantively and has only granted that the fringe benefit tax be deposited in a separate account. Appellant has availed of such interim relief, even though as per AO, it is falling under Category-1, i.e. cases covered under provisions of FBT. Appellant has not made any attempt to demonstrate that it falls under Category 2 or 3 of cases for which interim relief was provided by the Court. Be that as may, pending Gujarat High Court's decision on the substantive issue of applicability of fringe benefit provisions, fringe benefits of Rs. 2,17,99,200/- certified by the auditors are held to be taxable under provisions of I.T. Act. The same were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarify the discrepancy and justify its explanation. Assessee interalia submitted that in view of the judgment of Hon. Gujarat High Court in the case of Gujarat Chamber of Commerce and Industries vs. Union of India delivered on 18,10,2005, Assessee is not liable to pay FBT and therefore value of FBT was declared at Rs. Nil in the return. Assessing Officer did not accept the contention of the Assessee. He was of the view that the Assessee was liable to pay FBT on the value of fringe benefit under the provisions of chapter XII-H of the IT Act. He accordingly held as under: "3. Contentions raised by the assessee have been duly considered by me in the light of judgment (supra) of Hon. Gujarat High Court, it is very interesting to note that in the case before Hon. High Court of Gujarat, Hon. High Court was concerned with the issue of applicability of provisions relating to FBT enacted by the Legislature vide Finance Act, 2005 with effect from 1.4.2006 in case of three categories of assessees. The first category of the assessees is the category in which assessees are covered under the provisions of FBT,the second category is of the assessees where they, may be governed partially and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Assessee carried the matter before CIT(A). CIT(A) upheld the order of Assessing Officer by holding as under: "4.6 On a combined reading of the speech of the Finance Minister, the Notes on Clauses and the Explanatory Memorandum (Circular No. 8 dt. 29.8.2005), it is evident that the FBT was introduced in order to tax the benefits which could not be brought within the scope of "perquisite". This includes cases where the benefits are collectively enjoyed by the employees and cannot be attributed to any individual employee. Of course, where the benefit is enjoyed by a person who is not an employee, no FBT can be levied. However, it is for the assessee to show that the benefit was enjoyed by non-employees. The appellant has argued that even if the benefit was enjoyed by its employees, if the expenditure was incurred for the purposes of the business, it would escape the levy of FBT. There is, however, no evidence to substantiate this view. On the contrary, if the expenditure has been incurred on items enumerated at (A) to (P) of sub-section (2) of section 115WB, the same would be deemed to be fringe benefits provided to its employees. Deeming provisions must be strictly construed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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