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Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH,
Before: Shri Waseem Ahmed & Shri S.S. Viswanethra Ravi
Shri. S.S.Viswanethra Ravi, JM: This appeal by the Assessee is against the order dt: 04-01-2013 passed by the Commissioner of Income Tax-(Appeals), IV, Kolkata for the assessment year 2008-09, wherein the CIT-A upheld the assessment order in terms of applicability of Rule 8 Income Tax Rules for determining the value of fringe benefits under the I.T Act, 1961. M/s.Binguri Tea Co.P.Ltd 1
During the pendency of the appeal the assessee filed an application dated 30/11/2015 with the prayer for withdrawal of said appeal. Accordingly, this appeal was dismissed as withdrawn on 03-12-2015. Thereafter, the assessee filed an Misc. Application in MA No. 07/Kol/2016 arising out of for the AY 2008-09 praying to recall the order dated 03-12- 2015, whereby this Tribunal dismissed the Misc. Application vide order dated 01-06-2016. Before the Hon’ble Calcutta High Court the assessee questioned the said dismissal order dated 01-06-2016. The Hon’ble Calcutta High Court in GA No.2250 of 2016/ITAT No. 304 of 2016 set aside the order under challenge and pleased to direct the Tribunal to consider the appeal on merits. Accordingly, the present appeal fixed for hearing before us.
The ld.AR submits that the issue raised in the appeal is squarely covered by the decision of the Hon’ble High Court of Calcutta in the case of Apeejay Tea Ltd Vs. CIT reported in 370 ITR 775(Cal) regarding applicability of Rule 8 for the purpose of fringe benefits to tax. He also relied on the decision of the Co-ordinate Bench of this Tribunal in the case of Mcleod Russel India Ltd Vs. ACIT, Kolkata for the A.Ys 2008-09 & 2009-10 dated 08-10-2015 in 263/Kol/2013.
On the contrary, the ld.DR relied on the orders of the lower authorities.
Heard rival submissions and perused the material available on record. We find that the Hon’ble Calcutta High Court decided the issue of applicability of Rule 8 of Income Tax Rules in the matter of arriving the value of fringe benefits to tax in favour of assessee by relying on the illustration given by the Hon’ble Supreme Court in the case of CIT Vs. Doom Doom (I) Ltd reported in 310 ITR 392(SC), wherein held that the net profit and loss of the business has to be arrived at after deducting all the expenses, once that is done at 40% of M/s.Binguri Tea Co.P.Ltd 2 the net profit and loss and Fringe Benefits has to be worked out on such 40%, which shall be chargeable to tax. Relevant portion of which is reproduced herein below:-
" .... We shall take assistance of the illustration to resolve the issue. Let us assume that the other expenses in illustration (a) amounting to Rs.300/- include Rs.100/- spent by the employer on account of fringe benefits made available to its employees. In that case, 10% of the aforesaid sum of Rs.100/- would also be includible in illustration (b). Therefore, the question posed before us has really been answered by the illustration given by the Apex Court in the aforesaid judgment. It cannot be disputed that the amount of expenditure incurred by the assessee in extending fringe benefits to its employees was not solely for the purpose of business. The expenditure incurred is both for the purpose of business and for the purpose of agriculture. The submission made by Mrs. Gulgutia that the expenditure on account of fringe benefits has already been taken into account is not correct. The net profit and loss of the business has to be arrived at after deducting all the expenses as indicated in illustration 'A’ in the case of Dom Dooma (supra). Once that is done 40% of the net profit and loss has to be worked out which shall be chargeable to tax. Once this is done the expenditure on account of fringe McLeod Russel India Ltd.” Respectfully following the above, we hold that the assessee is entitled to claim the value of fringe benefits at 40% as against 100% as determined by the AO.
In the result, the appeal of the Assessee is allowed.
Order pronounced in the open Court on 13-01-2017.
Sd/- Sd/- Waseem Ahmed S.S. Viswanethra Ravi Accountant Member Judicial Member Dated 13-01-2017 Copies to :**PP/SPS (1) Appellant/Assessee : M/s.Binaguri Tea Co. Pvt. Ltd 238A, AJC Bose Road, 4th Floor, Kolkata-700 020. (2) Respondent/Department: Deputy Commissioner of Income Tax, Cir-4, Kolkata, Aaykar Bhawan, 8th Floor, P-7 Chowringhee Square, Kolkata 700 069. (3)Commissioner of Income-tax (Appeals) (4) Commissioner of Income Tax, Kolkata (5) The Departmental Representative (6) Guard File By order Assistant Registrar ITAT Kolkata ITA No. 630/Kol/2013
M/s.Binguri Tea Co.P.Ltd 3
M/s.Binguri Tea Co.P.Ltd 4