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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI MANOJ KUMAR AGGARWAL
Aforesaid appeal has been filed by the assessee challenging the order dated 30th June 2016, passed by the learned Commissioner (Appeals)–1, Mumbai, for the assessment year 2010–11.
There is a delay of three days in filing the aforesaid appeal. After considering the submissions of the learned Authorised Representative and reason shown for the delay, we are satisfied that the delay in filing
2 Media Research Users Council the appeal is due to reasonable cause. Hence, condoning the delay of three days, we admit the appeal for adjudication on merit.
The dispute in the present appeal is confined to levy of fringe benefit tax (FBT) on the taxable fringe benefit determined at ` 2,08,325.
Brief facts are, the assessee is a trust registered under section 12A of the Income Tax Act, 1961 (for short “the Act”). The assessee is engaged in the activity of market research and analysis. The Assessing Officer having reason to believe that fringe benefit chargeable to tax for assessment year 2007–08 has escaped assessment, issued a notice under section 115WH of the Act on 25th February 2010. In response to the said notice, the assessee submitted that since it is registered under section 12A of the Act, it is exempt from levy of FBT. The Assessing Officer, however, did not find the explanation of the assessee acceptable and proceeded to determine the value of fringe benefit at ` 2,08,325 and imposed FBT accordingly. Being aggrieved with of the aforesaid order of the Assessing Officer, the assessee preferred appeal before the first appellate authority.
Before the learned Commissioner (Appeals), though, the assessee contended that since it is registered under section 12A of the Act the provisions of FBT are not applicable, however, the learned
3 Media Research Users Council Commissioner (Appeals) did not find merit in the submissions of the assessee. He observed, proviso to section 115WA of the Act refers to a person registered under section 12AA of the Act. Accordingly, he upheld the order passed by the Assessing Officer.
The learned Authorised Representative reiterating the stand taken before the Departmental Authorities submitted that the assessee was registered under section 12A of the Act on 7th June 1994. He submitted, before introduction of section 12AA of the Act, one of the conditions for allowability of exemption under section 11 of the Act is, the person claiming such exemption must be registered under section 12A of the Act. He submitted, after introduction of section 12AA to the statute by Finance Act, 1996, w.e.f. 1st April 1997, grant of registration under section 12A was discontinued and registration recognising a person as a charitable trust or institution is granted under section 12AA(1) of the Act. He submitted, as per the proviso to section 115W of the Act any person eligible for exemption under section 10(23C) of the Act or registered under section 12AA of the Act or a political party registered under section 29A of the Act of the Representation of the People Act, 1951, shall not be deemed to be an employer for the purpose of applicability of FBT provision. He submitted, since registration granted under section 12A and section 12AA of the Act stand at par, the persons registered under section 12A
4 Media Research Users Council of the Act should also get the benefit of proviso to section 115W of the Act. He submitted, if the assessees / persons registered under section 12A of the Act are excluded from the proviso to section 115W of the Act it will lead to absurdity. Therefore, even in the absence of specific mention of section 12A of the Act in the proviso to section 115W of the Act, a purposive interpretation has to be given. In support of his contention, the learned Authorised Representative relied upon the decision of the Tribunal, Delhi Bench, in Muzaffarnagar Development Authority v/s ACIT, ITA no.4211/Del./ 2011, dated 30th November 2011. He also drew our attention to the clarification issued by the Department to frequently asked questions. He also relied upon the decision of the Hon'ble Supreme Court in CIT v/s J.H. Gotla, 156 ITR 323 (SC)
The learned Departmental Representative strongly relying upon the observations of the learned Commissioner (Appeals) submitted, the provision of a fiscal statute has to be interpreted strictly on the basis of language used therein. He submitted, while dealing with exemption provisions no addition or subtraction can be made to the words used therein. He submitted, had it been the intention of the legislature to exclude the persons registered under section 12A of the Act from the definition of employer under section 115W of the Act, they would have specifically mentioned section 12A of the Act in the 5 Media Research Users Council proviso to section 115W of the Act. Thus, he submitted, no benefit can be given to the assessee which militates against the statutory provision. In support of his contention, the learned Departmental Representative relied upon a decision of the Hon'ble Supreme Court in case of Orissa State Warehousing Corporation v/s CIT [1999] 237 ITR 589 (SC).
We have considered rival submissions and perused materials on record. We have also applied our mind to the decisions relied upon. Undisputedly, the assessee has been registered as a trust under section 12A of the Act. It is also not in dispute that the assessee has been subjected to levy of FBT. It is the specific claim of the assessee before the Departmental Authorities as well as before us that as per proviso to section 115W of the Act, the assessee cannot be treated as an employer, hence, the provisions of FBT will not be applicable. The proviso to section 115W inserted to the Act by Taxation Laws (Amendment) Act, 2005, w.e.f. 1st April 2006, reads as under:– “Provided that any person eligible for exemption under clause (23C) of section 10 or registered u/s 12AA or a political party registered u/s 29A of the Representation of the People Act, 1951 (43 of 1951) shall not be deemed to be an employer for the purposes of this Chapter.”
A careful reading of the aforesaid proviso makes it clear that the following classes of persons are not to be treated as employer for the purpose of FBT.
6 Media Research Users Council i) Person eligible for exemption under section 10(23C); ii) Person registered u/s 12AA of the Act; iii) A political party registered u/s 29A of the Representation of the People Act, 1951.
Thus, the aforesaid proviso is very limited in its scope. When the language of the proviso is clear and unambiguous, there is no need to interpret it in a different manner by adding or subtracting words or expressions which are not there. When the legislature has intended certain class or classes of people not to be treated as employer as per the proviso to section 115W of the Act, it cannot be interpreted in a different manner. More so, when the proviso is in the nature of an exemption provision, hence, has to be interpreted strictly. Had it been the intention of the legislature to allow the benefit of the proviso to section 115W to persons registered under section 12A of the Act, they would have specifically provided for it in the statute. However, that is not the case. It is further necessary to observe, wherever the legislature wanted to treat the trust registered under section 12A and 12AA of the Act at par they have specifically made such enactment, as could be seen from sub–section (7) of section 11 of the Act where both the sections 12A and 12AA are mentioned. However, that is not the case in respect of proviso to section 115W of the Act. In view of the aforesaid, we do not find any reason to interfere with the decision of the learned Commissioner (Appeals). Grounds raised are dismissed.
Media Research Users Council
In the result, assessee’s appeal is dismissed. Order pronounced in the open Court on 12.10.2018