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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order dtd.31.08.2012 of the CIT(A)-4,Mumbai,the assessee has filed the present appeal raising six grounds of appeal
. 2.Assessee-company,engaged in the business of commodities broking,filed its return of fringe benefit tax(FBT) on 28.09.2008,disclosing their value of FB to the extent of Rs.1.68 Crores. Lakhs.The AO finalised the assessment order u/s.115WE(3) on 19.05.2011,determining the total value of FB at 1.71Crores.From the Tax Audit Report,the AO found that the assessee had computed FB on following expenses: SN. Nature of Expense Exp. Amount (Rs.) % of expenses Value of FB(Rs.)
1. Employee Welfare 14,14,623/- 20% 2,82,925/- 2. Motor Car Expenses 8,30,667/- 20% 1,66,133/- 3. Other club expenses 4,814/- 50% 2,407/-
4. ESOP 1,64,14,287/- 100% 1,64,14,287/- As regards remaining value of FB amounting to Rs. 2.37Lakhs it was stated that the value of following benefits was not liable for FBT: SN. Nature of Expense Exp. Amount (Rs.) % of expenses Value of FB
1. Conference & Meeting 18,000/- 20% 3,600/- 2. Business Promotion etc. 2,11,662/- 20% 4,332/- 3. Travel, Hotel Stay etc. 9,17,773/- 20% 1,83,555/-
4. Telephone/Mobile 38,815/- 20% 7,763/- It was contended by the assessee that the above expenditure were admissible as deductible business expenditure,that same were not privileged/service/benefit/amenity directly or indirectly to its employees,that same were not liable for FBT. However, the AO did not agree with the assessee and held that FBT was presumptive tax, that a presumptive method was applied to certain head of expenditure. Finally, he held that expenses incurred on telephone/ mobile,conference and meetings and Business Promotion etc.,amounting to Rs. 2.37 Lakhs was liable to tax for FB.
6897/12(08-09)KotakMIL 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA).After considering the submission and of assessee and the assessment order, he held that similar issue were decided by the then FAA while deciding the appeal filed by the assessee for AY.s.2006-07 and 2007-08,that only expenditure on a fixed telephone and on travelling during office hours by employees for business, including car hire was outside the scope of FBT, that for other items of expenditure the decision of the AO was to reconfirmed.
4.Before us,the Authorised Representative(AR)fairly conceded that the Ground no.1,dealing with the re-opening of the assessment,stood decided against the assessee by the judgment of the Hon’ble Apex Court in the case of Zuari Estate Development and Investment Co.Ltd. (373ITR661), that other grounds have been restored back to the file of the AO by the Tribunal while deciding the appeal for 07-08 (ITA/4644/Mum/2012-AY 07-08 dt.1.4. 15). Departmental Representative (DR) stated that matter could be decided on merits.
5.We have heard the rival submissions and perused the material available on record .We find that while deciding the appeal for the AY 07-08,(supra), the Tribunal has decided the identical issue as under and had restored back the matter to the file of the AO in following manner. ““3. At the very outset, the Ld. Counsel for the assessee submitted that similar issues came up for hearing before the Tribunal in in the case of Kotak Mahindra Old Mutual Life Insurance Ltd., for A.Y. 2006-07 wherein the Tribunal while discussing the levy of FBT on deeming provision of Sec. 115WB(2) which provides for certain expenditures incurred by the employer, fringe benefit are deemed to have been provided by the employer to his employee. The Tribunal at para-10 held as under: "10. Sub-section (2) of section 115WB is a deeming provision where certain expenditures incurred by the employee, fringe benefit are deemed to have been provided by the employer to his employee. In our opinion, sub-section (2) of section 115WB which defines "fringe benefit" under Chapter-XII-H, control sub-section (2) and any expenditure incurred by an employer in the course of his business or profession, which is not a consideration for employment, cannot be considered as "fringe benefit". Thus, the deeming provisions of sub-section 2 of section 115WB, applies only when the expenditure is in the nature of considered for employment. Thus, while restoring the issue back to the file of AO for adjudication afresh, we direct the AO to apply the proposition of law as interpreted by us while determining the value of fringe benefit. On the issue of expenditure incurred on conference and meetings, the AO shall consider bifurcation submitted to him with respect to the expenditure incurred on the agents and brokers and pass appropriate orders. "Fringe benefit" cannot arise when expenditure is incurred on persons who are not employees. On the issue of club membership fee, the payments made to LIMRA and Actuarial Society of India, are to be excluded as they are no payments to clubs. With these observations, we restore the issue back to the file of AO for adjudication afresh."
The Ld. Counsel for the assessee further drew our attention to the order of the Tribunal in ITA No. 5251/M/2010 and pointed out that the Tribunal has followed the decision in ITA No. 63/M/10. Facts and issues being identical, the Ld. Counsel requested to follow the decision of the Tribunal as cited hereinabove.
The Ld. Departmental Representative fairly conceded.
We have carefully perused the orders of the lower authorities. We find force in the contention of the Ld. Counsel. Therefore, respectfully following the decision of the Tribunal in ITA Nos. 63/M/10 and 5151/M/10 (supra), we restore these issues back to the files of the AO for adjudication afresh in the light of the observations made by the Tribunal in ITA No. 63/M/10.”
6897/12(08-09)KotakMIL