TMI Blog2021 (12) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... pra]. The revenue is interested in contending as would appear from the impugned orders that the expenditure on account of fringe benefit cannot be reduced to 40% for the purpose of computing fringe benefit tax. If that is done, the result would be that the agricultural income itself would become liable to tax, which is not permissible under sub-Section 1 of Section10 of the Income Tax Act. The provisions contained in Chapter XII H of the Income Tax Act have to be read subject to Section 10 of the Income Tax Act. For the aforesaid reasons, we are of the opinion that the judgment of the learned Tribunal cannot be sustained. The submissions advanced naturally do not help the revenue. The judgment cited by her was with regard to the question as to whether fringe benefit tax amounts to double taxation. That question was answered by Their Lordships in the negative. Before us, the question of double taxation has not arisen for consideration. The question formulated above is, therefore, answered in the affirmative and in favour of the assessee. - IA NO: GA/2/2017 (OLD NO. GA/3682/2017) IN ITAT/378/2017 - - - Dated:- 30-11-2021 - THE HON BLE JUSTICE T.S. SIVAGNANAM AND THE HON BLE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier judgment in the case of the assessee itself in ITA No.557/Kol/2010 wherein the following view was expressed: 7. We have carefully considered the submissions of the Ld. Representatives of the parties and the orders of the authorities below. We have also considered the relevant provisions i.e. Section 1125WA, 115WB 115WE of the Income Tax Act. We observe that an employer assessee is liable to pay Fringe Benefit Tax u/s. 115WA of the Income Tax Act, in relation to Fringe Benefits provided by him to its employees, Sub-section (2) of Section 115WA starts with a non obstante clause and states that notwithstanding that no income-tax is payable by an employer to its total income computed in accordance with the provisions of the Act, the tax on Fringe Benefits shall be payable by such an employer. Therefore, an employer is liable to pay Fringe Benefit Tax even when no income-tax is payable by an employer on his total income computed in accordance with the provisions of the Income Tax Act. Therefore, the contention of the Ld. Authorised Representative for the assessee that value of Fringe Benefit should be computed by applying Rule 8 of the Income Tax Rule has no merit as Frin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 16. In our view, in cases where rule 8 applies, the income which is brought to tax as business income is only 40 per cent of the composite income and consequently proportionate depreciation is required to be taken into account because that is the depreciation actually allowed. Hence we find no merit in the civil appeals filed by the Department. The next judgment cited by Mr. Majumdar in the case of Jayshree Tea and Industries Limited vs. Union of India reported in 285 ITR 506 (Cal) wherein a Division Bench of this Court held that Rule 8 was applicable to the additional income tax payable under Section 115-O. The Division Bench clarified its opinion by the following illustration: If a tea company has a net income of ₹ 100, ₹ 40 would be liable to income tax at the prescribed rate and the assessee would be assessed accordingly. By virtue of Section 115-O if the company declares ₹ 50 for distribution amongst the shareholders it would have a proportionate liability. It is true that in case of company decides to distribute a part of the income it would be impossible to find out whether that part of the income included the whole of the agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the charging provisions of the Act it is discernible that the words income or profits and gain should be understood as including losses also, so that, in one sense profits and gains represent plus income whereas losses represent minus income . The Supreme Court observed as follows:- From the charging provisions of the Act, it is discernible that the words income or profits and gains should be understood as including losses also, so that, in one sense profits and gains represent plus income whereas losses represent minus income . In other words, loss is negative profit. Both positive and negative profits are of a revenue character. Both must enter into computation, wherever it becomes material, in the same mode of the taxable income of the assessee. Although section 6 classifies income under six heads, the main charging provision is Section 3 which levies income-tax, on the total income of the assessee as defined in Section 2(15). An income in order to come within the purview of that definition must satisfy two conditions. Firstly, it must comprise the total amount of income, profits and gains referred to in section 4(1) . Secondly, it must be compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing for the revenue, submitted that - (a) Chapter XII H is a complete code in itself in the matter of taxation on fringe benefits. She drew our attention to sub-section 2 of Section 115 WA and contended that the sub-Section starting with a non-obstente clause makes it clear that the provisions contained in the aforesaid Chapter are applicable to fringe benefits made available to the employees by an employer. She contended that no concession has been made in the statute for applicability of Rule 8. It is, therefore, not possible to hold that Rule 8 would be applicable in assessing the fringe benefit tax. (b) She submitted that the expenditure incurred by the assessee in providing fringe benefits to the employees has already been taken into account for the purpose of arriving at the total taxable income. There is as such no reason why the apportionment should once again be allowed by applying Rule 8. (c) The judgments cited by Mr. Majumdar are not applicable. The judgments cited by Mr. Majumdar are with respect to topics other than the question with which we are concerned in this appeal. Therefore, those judgments have no manner of application. (d) She contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 40 per cent the pro rata depreciation is 40. What is important to be noted is that at the end of computation under both the Illustrations, the Income taxable by applying rule 8 comes to ₹ 240 in both the cases. The only difference is that in Illustration B we have gone by pro rata basis. The question for consideration before Their Lordships was whether deduction on account of depreciation is allowable from the business income arrived at after applying Rule 8. This question was answered by Their Lordships in the affirmative. From illustration (a) it would appear that business profit after taking into account the expenses was computed at ₹ 600/-. Applying the Rule 8 taxable income on account of business was computed at ₹ 240/-, that is to say, 40% of ₹ 600/-. From illustration (b) it would appear that 40% of the total income from sale of tea was taken into account. From illustration (a) it would appear that total depreciation is ₹ 100/-. For the purpose of computing business Profit Loss of 40% of the total depreciation was taken into account. From illustration (a) it would appear that other expenses were computed at ₹ 300/- and illust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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