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Paschim Gujarat Vij Co. Ltd. Versus Addl. CIT, Range-4, Baroda

2016 (8) TMI 359 - ITAT AHMEDABAD

Liability for paying FBT - Held that:- Assessee is covered under the under the provisions of Chapter XII-H of the I.T. Act and is liable for paying FBT. Accordingly, no interference is called for in the order of ld. CIT(A) and assessee’s appeal is dismissed. - ITA No.1388/Ahd/2012 - Dated:- 27-6-2016 - Shri S. S. Godara, JM, & Shri Manish Borad, AM. For The Appellant : Shri M. K. Patel, AR For The Respondent : Shri Prasoon Kabra, Sr.DR ORDER PER Manish Borad, Accountant Member. Assessee is i .....

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its of Rs.Nil offered by the appellant. 2.0 The learned Commissioner of Income Tax (Appeals) erred in law and on facts has dismissed the ground relating to the charging interest under section 115WJ of the Income Tax Act, 1961 on the assessed tax liability. 3.0 The learned Commissioner of Income 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 furnishin .....

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BT) 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 ₹ 2,17,98,200/- and FBT payable thereon at ₹ 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 a .....

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ndustry and Others before the Hon 'ble High Court of Gujarat, while challenging the validity of the CBDT Circular No. 8, dated 29- 8-2005 seeking to interpret the previsions of FBT as providing for levy of FBT, even in respect of expenditure incurred for non-employees or for the business of the employer itself, without conferring any benefit whatsoever en the employees. The Hon 'ble High Court has been pleased to admit the aforesaid Writ Petitions and has also granted interim relief, whi .....

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he aforesaid items of expenditure and accordingly although the company had paid the Paschim Gújarat Vij Co. Ltd. Order u/s 1!5WE(3) of the Act. Fringe Benefit Tax the same have not been included m the Return of Fringe Benefits being filed for A Y. 2008-09. The matter was a/so clarified by way of a Note attached to the Return of income, it was claimed that the above submission is as its honest and bonafide belief that the scope of Section 115WB(2) is restricted only to those expenditure wh .....

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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 ₹ 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 fri .....

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2,17,99,200/- certified by the auditors are held to be taxable under provisions of I.T. Act. The same were rightly brought to tax by the AO. Levy of interest u/s 115WJ is also justified in this situation. Hence all these grounds are dismissed. 5. Aggrieved, assessee is now in appeal before the Tribunal. 6. At the outset the ld. DR submitted that the issue raised in this ground is squarely covered against the assessee by the decision of the co-ordinate bench, Ahmedabad in the case of Gujarat Ene .....

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d accepted that the issue is covered against the assessee by the decision of the co-ordinate bench in the case of Gujarat Energy Transmission Corpn. Ltd. (supra). 8. We have heard the rival contentions and perused the material on record. Assessee has raised four grounds of appeal but the solitary grievance raised in ground no.1 is against the order of ld. CIT(A) confirming the payable value of FBT at ₹ 2,17,98,200/- as against the return filed at Rs.NIL offered by the assessee. We observe .....

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te bench in the case of Gujarat Energy Transmission Corpn. Ltd. (supra). It would be worthwhile to mention the facts dealt in the decision of co-ordinate bench along with the decision thereon which reads as under :- 5. During the course of assessment proceedings, Assessing Officer noticed that the value of Fringe Benefit Tax (FBT) was declared at Rs. Nil by the assessee but in the tax audit report filed under Section 44AB of the Act, the value of fringe benefit was stated at ₹ 2,87,55,560/ .....

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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 .....

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as granted ad-interim relief by directing that the assessees shall deposit the amount of FBT in a separate account to be opened and maintained with a scheduled nationalized bank subject to the condition that amount so deposited shall not be utilized for any purpose and no charge shall be created on such deposits nor it shall be used as a collateral for obtaining any loan against the same. However, the Hon. High Court at para 3 of the judgment has very categorically clarified that the ad-interim .....

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e is not covered by the decision of Hon. High Court of Gujarat, assessee is liable to pay FBT on the value of FB under the provisions of Chapter XII-H of the I.T. Act. Assessee has not produced any proof as regards payment of FBT on the value of FB as reported in the Tax Audit Report. Therefore it is held that assessee is liable to pay FBT and amount deposited by it, if any, in the separate bank account in terms of said judgment of Hon. High Court, such deposit shall not operate as payment towar .....

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der of the Hon. High Court are not extended to the facts of the assessee. 6. Aggrieved by the order of Assessing Officer, 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 &q .....

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pe 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. 4.7 It is seen that the statutory auditors of the assessee. in the tax audit report filed u/s 44AB have themselves quantified the value of fringe benefits taking into account t .....

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as fully covered by the provisions. Having regard to the totality of the circumstances, I am of the opinion that the assessee was liable to FBT. The Action of the Assessing Officer in this regard is accordingly confirmed. Further, the Assessing Officer has merely accepted the valuation of taxable fringe benefits as worked out by the assessee itself. Hence valuation of the fringe benefits at ₹ 1,34,91,288/- is also confirmed. This ground thus fails. 7. Aggrieved by the order of CIT(A), Asse .....

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