TMI Blog2017 (10) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... s by following its order in CIT v/s. Tata Consultancy Services Ltd. (2013 (6) TMI 516 - ITAT MUMBAI) to hold that the relationship of employer and employee is a sine-qua-non of levy of Fringe Benefit Tax. Expenses incurred on non employees are outside the purview of FBT. Medical reimbursement, medical facilities and education facilities made available to its employees - liable to tax as perquisites in the hands of employees/individuals. - I.T.A./5057/Mum/2015 - - - Dated:- 8-9-2017 - Sh. Rajendra, Accountant Member And C. N. Prasad, Judicial Member For The Revenue : Shri Vidyadhar- DR For The Assessee : Shri Ronak G. Doshi PER Rajendra A. M. - Challenging the order dtd.30.07.2015 of the CIT(A)-13, Mumbai, the assessee had filed the present appeal. Assessee-company, engaged in the business of manufacturing and trading filed the Fringe Benefit Tax(FBT) on 29/09/2009, showing value of chargeable Fringe Benefit (FB) at ₹ 36.80 crores. In the return it had offered various expenses as chargeable to FBT. But, by way of a note it claimed that FBT was payable on such expenditure. The AO completed the assessment u/s.115WE(3)of the Act, on 17.10.2011, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Pruthvi Brokers Shareholders (supra) has held that appellate authorities have power to consider claim not make in the return. The question before the Hon ble Jurisdictional High Court was whether on the facts and the circumstances of the case, the Hon ble Income Tax Appellate Tribunal, in law, was right in holding that claim of deduction not made in the original return and supported by revised return is admissible. The question is answered in the affirmative and while answering this question, the Hon ble Jurisdictional High Court has considered various decisions of the Supreme Court. Respectfully following the decision of the Jurisdictio9nal High Court, we proceed with the grounds of appeal one by one. Moreover, we find that the assessee has returned fringe benefits with a rider that taking abundant precaution the value is offered for fringe benefit tax and this fact has also been acknowledge by the AO while dealing with every item of Fringe benefits in his assessment order. We find that the Department had filed appeals before the honorable Bombay High Court against the above order of the Tribunal (ITA No.s 2325 of 2013, 2399 of 2013 and 464 of 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the claim of Fringe Benefit Tax being payable is given up in having filed its Return; ( e) In our view in all cases where a deduction/ exemption is not claimed by an assessee before the Assessing Officer would normally amount to giving up t he claim with regard to it. Nevertheless, this Court has held in Pruthvi Builde rs (supra) it could be raised in appeal. Moreover, in the present facts, the clai m had already been made by the Respondent in its Return of Fringe Benefit by way of note therein. Thus, it is not a new claim. In any case, on account of the decis ion of this Court in Pruthvi Brokers and Shareholders (supra), the Respondent Assesseeis well entitled to raise the claim before the Appellate Authority even it not raised before the Assessing Officer; (f)In the above circumstances, the Question 1 does not give rise to anysubstantial que stion of law. Hence not entertained. 4 Regarding Question (2): - The impugned order of the Tribunal allowed relief of FringeBenefit Tax levied on exp enses incurred as non-employees and gifts givento non-employees by following its ord er in CIT v/s. Tata ConsultancyServices Ltd. (ITA/3457/MUM/2011 rendered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile deciding the appeals for the earlier years and the honorable jurisdictional High Court had endorsed the views of the tribunal. We are reproducing the relevant portion of the order of the tribunal, dated 19/06/2013 for the AY.s 2006-07 to 2008- 09(supra) and it reads as under: 6. Ground No. 1 relates to levy of FBT on expenses incurred on nonemployees. 7. The AO at page-2 para 3.1 of his order states that as a matter of abundant caution, the assessee company had offered for tax expenses of ₹ 16, 61, 19, 107/-, fringe benefit value at ₹ 3, 91, 08, 627/-. It was contended that the expenses of ₹ 16, 61, 19, 107/- do not involve employees/nor incurred on employees and are not liable to Fringe benefit tax. 78. The assessee relied upon the speech made by the Finance Minister while presenting the budget on 28.2.2005 and the explanation given in explanatory memorandum. The AO did not accept the contentions made by the assessee. The AO was of the firm belief that expenses incurred by the assessee on any item specified under clause (A) to( P) of Sec. 115WB are chargeable to fringe benefit tax irrespective of the fact that the expenses involve employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that in the present case, these two items are directly attributed to the personal benefit of the employees therefore deserves to be kept outside the purview of fringe benefit tax. The AO is accordingly directed to exclude the value of such fringe benefit. The other three items in ground No. 2 relates to education facilities ₹ 77, 97, 961/-, maintenance of residential colony for employees ₹ 93, 78, 107/- and Insurance premium paid by employer to keep in force an insurance on health of employees ₹ 8, 64, 967/-. 15. It is the say of the Ld. Counsel that these are all perquisites liable to be taxed in the hands of the employees individually. As we have held hereinabove, that perquisites which are directly attributable to the employees deserves to be kept outside the purview of FBT. Accordingly, we direct the AO to exclude these items of perquisites outside the ambit of taxable value of fringe benefit. This ground is accordingly allowed. 16. Ground No. 3 relates to administration expenses incurred on driver/pilot who are in pay role of the company is chargeable as salary, therefore, such salary should not be taxed again as fringe benefit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of guest house. 23. The Tribunal had the occasion to decide the issue of accommodation not in the nature of guest house while disposing of WTA Nos. 41/Mum/1998 and 242 to 244/M/199 in the case of M/s. Grasim Industries Ltd., and in that Wealth Tax appeal order, the Tribunal has held that where the buildings have been used by the employees and other related visitors such as customers, surveyors, contractors, government officials, auditors etc., cannot be considered as guest house as they are connected with assessee s business. Taking a leaf out of the said decision relating to Wealth tax proceedings, we direct the AO to exclude value of such fringe benefit at ₹ 30, 08, 558/- from the taxable value of fringe benefit. Ground No. 6 is accordingly allowed. XXXXX 28. Ground No. 7 relates to expenses on presentation articles distributed to business related persons. 29. We have already held that expenses incurred on non employees are outside the purview of FBT. As these expenses are incurred on persons related to or connected with the business but are not employees. We accordingly direct the AO to exclude value of such fringe bene ..... X X X X Extracts X X X X X X X X Extracts X X X X
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