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Bengal Srei Infrastructure Development & Others Versus Union of India & Others

2017 (9) TMI 320 - CALCUTTA HIGH COURT

Fringe Benefits Tax chargeability - Reading down of Section 115WB(2) of the Income Tax Act, 1961 - as contended 17 broad heads stipulated in Subsection (2) of Section 115WB will prompt any Assessing Officer to charge FBT - Employer-employee relationship - legal fiction extension beyond the purpose for which it is created - Held that:- A statute is to be read as a whole is the view expressed in Hindustan Bulk Carriers (2002 (12) TMI 10 - SUPREME Court). Ajmera Housing Corporation (2010 (8) TMI 35 .....

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ferred to as Fringe Benefits Tax would be payable in respect of fringe benefits provided or deemed to have been provided by an employer to his employee during the previous year at the rate of 30 per cent of the value of such fringe benefits. There has to be an employer employee relationship between the persons for considering whether the employer is giving any fringe benefit to the employee or not. In other words, whether an employee is receiving a fringe benefit from the employer has to be cons .....

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re Ganesh Joshi (2004 (10) TMI 610 - SUPREME COURT) and Sadan K. Bormal & Anr. (2004 (4) TMI 582 - SUPREME COURT) have held that, a fiction cannot be extended beyond the purpose for which it is created. Chapter XII-H of the Income Tax Act, 1961 is premised upon the legal fiction of fringe benefits being given by the employer to the employee. - The petitioner is yet to establish that, the assessing officer has charged a Fringe Benefits Tax on an item which is not chargeable. Therefore, the pe .....

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d against the petitioners. - W. P. No. 116 of 2006 - Dated:- 1-9-2017 - Debangsu Basak , J. For the Petitioners : Mr. Abhratosh Majumder, Addl. Adv. General Ms. Anupa Banerjee, Advocate Mr. Paritosh Sinha, Advocate Mr. Amitava Mitra, Advocate Mr. Aritra Chakraborty, Advocate For the Respondents : Md. Nizamuddin, Advocate Mr. R.K. Sinha, Advocate ORDER Debangsu Basak , J. The petitioners have assailed Chapter XII-H of the Income Tax Act, 1961 as unconstitutional being opposed by Article 14 and 24 .....

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efits Tax was introduced by such Chapter. The Chapter was, thereafter, deleted subsequently in the year 2009-2010. He has referred to the budget speech for such year also. Referring to Section 115WB(2) of the Act of 1961 learned Additional Advocate General has submitted that, Section 115WA provides for Fringe Benefits Tax to be charged in respect of fringe benefit provided or to be provided by an employer to his employees during the previous year at a stipulate rate. He has submitted that, Secti .....

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he purpose of charging Foreign Fringe Benefits Tax. Such legal fiction may not exist in the provisions of Section 115WB of the Act of 1961. He has relied upon 2004 Volume 11 Supreme Court Cases page 417 (Nandkishore Ganesh Joshi v. Commissioner, Municipal Corporation of Kalyan & Dombivali & Ors.) and 2004 Volume 6 Supreme Court Cases page 59 (State of West Bengal v. Sadan K. Bormal & Anr.) in support of the contentions that, a legal fiction cannot be extended beyond the purpose for w .....

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ned Advocate appearing for the revenue has submitted that, the section as it stands, does not require a reading down. Chapter XII-H has to be read as a whole. There is no justification in the apprehension that the first petitioner or an assessee would be slapped with a Fringe Benefits Tax when such assesse is not liable for the same. In any event, assuming that, such a situation does arise, such individual assesse is entitled to challenge the order of assessment in terms of the Act of 1961. He h .....

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come Tax Reports page 449 (SC) (Commissioner of Income-Tax v. Hindustan Bulk Carriers) learned Advocate appearing for the revenue has submitted that, a statute must be read as a whole. One provision of the Act should be construed with reference to the other provisions of the said Act. A statute or any enacting provision thereto must be so construed so as to make it effective and operative. He has also relied upon (2010) 326 Income Tax Reports page 642 (SC) (Ajmera Housing Corporation v. Commissi .....

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nship. So far as the Hindustan Bulk Carriers (supra) is concerned, he has submitted that, the Court should reject a construction of a statute which will defeat the plain intention of the legislature. With regard to Ajmera Housing Corporation (supra) he has submitted that, the principle of reading down can be pressed into service to save any provision from the vice of unconstitutionality. The issues that have arisen in this writ petition can be summarised as follows:- (i) Is Chapter XII-H of the .....

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iers (supra). Ajmera Housing Corporation (supra) has held that, a taxing statute is to be construed strictly and that nothing is to be read in and nothing is to be implied, in respect of a taxing statute. Section 115WB is a part of Chapter XII-H of the Income Tax Act, 1961. Chapter XII-H of the Income Tax Act, 1961 was introduced to the statute from the year2005-2006. It was deleted from the year 2009- 2010. Chapter XII-H deals with Fringe Benefits Tax. Section 115WA contemplates that, additiona .....

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has to be considered and decided for Fringe Benefit Tax to be attracted. Fringe benefits are defined in Section 115WB. Sub-section (2) of Section 115WB stipulates that, 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 incurred any expense on or made any payment for, the purposes stipulated thereunder. Basically 17 heads have been specified under Sub-section (2) of Section 115WB which attracts the legal fic .....

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ad account is looked at, without considering whether or not it is fringe benefit given by an employer to an employee. An employer, in its usual course of business, may be called upon to entertain its customers. Such entertainment of customers should not attract Fringe Benefits Tax, as an employee of such employer is not receiving any benefit out of the entertainment extended by the employer to the customers. With respect, whether Fringe Benefit Tax is attracted to a given transaction or not has .....

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