Vijaya Bank, Bangalore V. JCIT, Bangalore

ITA 1066/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51253 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 07-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI ADD L

Judgement Text

PAGE 1 OF 12 ITA NO.1066/BANG/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, J.M. AND SHRI A MOHAN ALANKAMONY, A.M ITA NO.1066/BANG/2010 (ASSESSMENT YEAR 2007-08) VIJAYA BANK, HEAD OFFICE, CENTRAL ACCOUNTS DEPARTMENT, 41/2, M G ROAD, BANGALORE-1. - APPELLANT (PAN AAACV4791J) VS THE JOINT COMMISSIONER OF INCOME TAX, LARGE TAX PAYERS UNIT, BANGALORE. - RESPONDENT DATE OF HEARING : 08/08/2011 DATE OF PRONOUNCEME NT : 26/08/2011 APPELLANT BY : SHRI S ANANTHAN, ADVOCATE RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI, ADD L. CIT ORD ER PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER OF LEARNED CIT(A)-LTU, BANGALORE DATED 19.7.2010. THE ASST. YEAR CONCERNED IS 2007-08. T HE ORDER OF THE CIT(A) EMANATES FROM THE ORDER OF JOINT CIT PASSED U/S 115WE(3) OF THE I T ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- PAGE 2 OF 12 ITA NO.1066/BANG/2010 2 THE ASSESSEE IS A NATIONALIZED BANK IN WHICH MAJO RITY OF SHARES ARE HELD BY CENTRAL GOVERNMENT. IT FILED ITS RETURN OF FRINGE BENEFITS FOR THE ASST. YEAR 2007-08 ON 29.10.2007 DE CLARING RS.10,21,07,000/- AS THE VALUE OF THE FRINGE BENEFI TS PROVIDED BY THE BANK. THE TAX PAYABLE ON RETURNED AMOUNT OF FRINGE BENEFITS WAS COMPUTED AT RS.3,43,69,216/-. IN THE ASSESSMENT MADE U/S 115WE(3), THE AO MADE CERTAIN ADDITIONS AND DETERMINED THE TOTAL TAXABLE FRINGE BENEFITS AT RS.11,18,25,549/-. THE AO MADE THE FOLLOWING ADDIT IONS TO THE FRINGE BENEFITS COMPUTATION WHICH IS BEING CONTESTED BY THE ASSESSEE BANK:- SL. NO. PARTICULARS AMOUNT (IN RUPEES) 1. ADDITION OF MEDICAL AID 45,00,000 2. ADDITION OF ENTERTAINMENT EXPENSES INSIDE THE OFFICE PREMISES 49,04,111 3. CONFERENCE FEES 3,14,438 2.1 BEING AGGRIEVED BY THE ORDER OF AO PASSED U/S 1 15WE(3), THE ASSESSEE PREFERRED AN APPEAL TO CIT (A) LTU, BA NGALORE. 2.2 THE CIT(A), LTU, BANGALORE UPHELD THE ORDER OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE BANK. 2.3 BEING AGGRIEVED BY THE ORDER OF THE CIT(A), LTU , THE ASSESSEE IS IN APPEAL BEFORE US. 2.4 LET US EXAMINE EACH OF THE ADDITIONS TO THE FR INGE BENEFITS COMPUTATION, WHICH ARE CONTESTED IN THIS APPEAL. (I) ADDITION OF MEDICAL AID RS.45,00,000/- PAGE 3 OF 12 ITA NO.1066/BANG/2010 3 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE BANK WAS ASKED TO SHOW CAUSE AS TO WHY THE EXPENSES OF RS .45,00,000/- IN RESPECT OF MEDICAL AID SHOULD NOT BE TREATED AS FRI NGE BENEFIT AND BROUGHT TO TAX. IN REPLY, IT WAS SUBMITTED THAT TH E EXPENDITURE REPRESENTED MEDICAL REIMBURSEMENT TO THE EMPLOYEES O F THE BANK FOR THE ANNUAL CHECK UP AND THE SAME WAS TREATED AS A P ERQUISITE IN THE HANDS OF THE EMPLOYEES AS PER SECTION 17 OF THE INCO ME TAX ACT. SINCE IT WAS TREATED AS A PERQUISITE IN THE HANDS OF THE EMPLOYEES, THE SAME CANNOT BE TREATED AS FRINGE BENEFIT IN THE HANDS OF THE BANK. THE ABOVE SAID EXPLANATION OF THE ASSESSEE WAS REJECTED BY THE AO BY HOLDING THUS:- 4) THE ASSESSEE HAS CLAIMED MEDICAL AID OF RS.45,00,000/- AS AN EXPENDITURE IN ADDITION TO MEDICAL EXPENSES OF RS.6,18,77,457/-. MOREOVER, THE ASSESSEE HAS NOT SPECIFIED WHETHER THE REIMBURSEMENT IS MORE THAN RS.15,000/- PER EMPLOYEE. IF THE REIMBURSEMENT TOWARDS MEDICAL EXPENDITURE IS ABOVE RS.15,000/- IT IS TREATED AS PERQUISITE AS PER SEC.17 OF THE INCOME TAX ACT AND AS PER SEC.115WB(2)(E) IF MEDICAL REIMBURSEMENT IS LESS THAN RS.15,000/- IT IS BROUGHT UNDER FRINGE BENEFIT TAX. BUT THE ASSESSEE HAS NOT SPECIFIED CLEARLY IN ITS LETTER DT.22.12.2009. HENCE, THE EXPENDITURE OF RS.45,00,000/- IS CONSIDERED AS FRINGE BENEFITS AND ADDED BACK TO THE FRINGE BENEFITS DECLARED. 3.1 ON FURTHER APPEAL, THE FIRST APPELLATE AUTHORI TY BY RELYING ON THE BOARDS INSTRUCTION NO. 8 OF 2005 DATED 29.8 .2005, AFFIRMED THE VIEW TAKEN BY THE AO. PAGE 4 OF 12 ITA NO.1066/BANG/2010 4 3.2 THE LEARNED COUNSEL FOR THE ASSESSEE, APART FR OM REITERATING THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES, ALSO RELIED ON THE ORDER OF THE MUMBAI TRIBUNAL IN THE CASE OF GODREJ PROPERTIES LTD. V ADDL. CIT. THE LEARNED COUNSEL F OR THE ASSESSEE REFERRED TO THE MEDICAL BENEFIT SCHEME OF THE ASSES SEE AND POINTED OUT THAT FOR AVAILING THE BENEFIT, THE EMPLOYEES CAN SUB MIT THE ACTUAL MEDICAL BILL AND CAN CLAIM REIMBURSEMENT OF THE SAM E. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE BUDGET SPE ECH OF THE FINANCE MINISTER DELIVERED ON 28 TH FEBRUARY, 2005 REPORTED IN 273 ITR (ST.) 25, SPECIFICALLY TO PARA 160. HE ALSO REFERRED TO THE M EMORANDUM EXPLAINING THE PROVISIONS IN FINANCE BILL 2005 AND SUBMITTED T HAT, IT IS VERY CLEAR THAT WHERE PERQUISITES WERE DIRECTLY ATTRIBUTED TO T HE EMPLOYEES, THE SAME WOULD CONTINUE TO BE TAXED IN THE HANDS OF THE EMPLOYEES IN ACCORDANCE WITH THE EXISTING PROVISIONS OF SECTION 17(2) OF THE I T ACT. 3.3 ON THE OTHER HAND, THE LEARNED DR SUPPORTED TH E ORDERS OF THE INCOME TAX AUTHORITIES. 3.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND READ T HE RELEVANT PROVISIONS. AT THE RELEVANT TIME, SECTION 17(2) PR OVISO (V) READS AS FOLLOWS:- (V) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF ANY EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE ON HIS MEDICAL TREATMENT OR TREATMENT OF ANY MEMBER OF HIS FAMILY (OTHER THAN THE TREATMENT REFERRED TO IN CLAUSES (I) AND (II); SO, HOWEVER, T HAT SUCH DOES NOT EXCEED FIFTEEN THOUSAND RUPEES IN THE PREVIOUS YEAR; PAGE 5 OF 12 ITA NO.1066/BANG/2010 5 THIS SUB-CLAUSE TREATS THE EXPENDITURE ACTUALLY INCU RRED BY THE EMPLOYEE ON MEDICAL TREATMENT FOR HIMSELF OR HIS FAM ILY, AND WHICH IS PAID BY THE EMPLOYEE, IN EXCESS OF RS.15,000/- WOULD BE A PERQUISITE WHICH WOULD BE TAXABLE AS SALARY. IT IS CLEAR THAT REIMBURSEMENT OF MEDICAL EXPENDITURE AS IN THE CASE REFERRED TO ABOV E, IS NOT CHARGEABLE TO TAX AS A PERQUISITE IF THE AMOUNT DOES NOT EXCEE D RS.15,000/-. 3.5 SECTION 115WB(3) READS AS FOLLOWS:- FOR THE PURPOSES OF SUB-SECTION (1), THE PRIVILEGE , SERVICE, FACILITY OR AMENITY DOES NOT INCLUDE PERQUISITES IN RESPECT OF WHICH TAX IS PAID OR PAYABLE BY THE EMPLOYEE (OR ANY BENEFIT OR AMENITY IN THE NATURE OF FREE OR SUBSIDIZED TRANSPORT OR ANY SUCH ALLOWANCE PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES FOR JOURNEYS BY THE EMPLOYEES FROM THEIR RESIDENCE TO THE PLACE OF WORK OR SUCH PLACE OF WORK TO THE PLACE OF RESIDENCE) (EMPHASIS OURS). 3.6 IN THE BUDGET SPEECH AT PARA 160 REPORTED IN 2 73 ITR (ST.) 25, AT PAGE 56, IT IS OBSERVED AS FOLLOWS:- I HAVE LOOKED INTO THE PRESENT SYSTEM OF TAXING PERQUISITES AND I HAVE FOUND THAT MANY PERQUISITES ARE DISGUISED AS FRINGE BENEFITS, AND ESCAPE TAX. NEITHER THE EMPLOYER NOR THE EMPLOYEE PAYS ANY TAX ON THESE BENEFITS WHICH ARE CERTAINLY OF CONSIDERABLE MATERIAL VALUE. AT PRESENT WHERE THE BENEFITS ARE FULLY ATTRIBUTABLE TO THE EMPLOYEE THEY ARE TAXED IN THE HANDS OF THE EMPLOYEE; THAT POSITION WILL CONTINUE. IN ADDITION, I NOW PROPOSE THAT WHERE THE BENEFITS ARE USUALLY ENJOYED PAGE 6 OF 12 ITA NO.1066/BANG/2010 6 COLLECTIVELY BY THE EMPLOYEES AND CANNOT BE ATTRIBUTED TO INDIVIDUAL EMPLOYEES, THEY SHALL BE TAXED IN THE HANDS OF THE EMPLOYER . 3.7 IN THE MEMORANDUM EXPLAINING THE PROVISO TO TH E FINANCE BILL, IT IS STATED AS FOLLOWS:- THEREFORE, IT IS PROPOSED TO ADOPT A TWO PRONGED APPROACH FOR THE TAXATION OF FRINGE BENEFITS UNDER THE INCOME-TAX ACT. PERQUISITES WHICH CAN BE DIRECTLY ATTRIBUTED TO THE EMPLOYEES WILL CONTINUE TO BE TAXED IN THEIR HANDS IN ACCORDANCE WITH THE EXISTING PROVISIONS OF SECTION 17(2) OF THE INCOME TAX ACT AND SUBJECT TO THE METHOD OF VALUATION OUTLINED IN RULE 3 OF THE INCOME TAX RULES. IN CASES, WHERE ATTRIBUTION OF THE PERSONAL BENEFIT POSES PROBLEMS, OR FOR SOME REASONS, IT IS NOT FEASIBLE TO TAX THE BENEFITS IN THE HANDS OF THE EMPLOYEE, IT IS PROPOSED TO LEVY A SEPARATE TAX KNOWN AS THE FRINGE BENEFIT TAX ON THE EMPLOYER ON THE VALUE OF SUCH BENEFITS PROVIDED OR DEEMED TO HAVE BEEN PROVIDED TO THE EMPLOYEES. 3.8 FROM THE ABOVE, IT IS CLEAR THAT WHERE PERQUIS ITES /BENEFITS WHICH ARE FULLY ATTRIBUTABLE TO THE EMPLOYE E AND ARE TAXED IN THEIR HANDS, WOULD BE CONTINUED TO BE TAXED UNDE R THE EXISTING PROVISIONS OF SECTION 17(2) OF THE ACT. ONLY IN CAS E WHERE THE BENEFITS ARE USUALLY ENJOYED COLLECTIVELY BY THE EMPLOYE ES AND CANNOT BE ATTRIBUTED TO AN INDIVIDUAL EMPLOYEE, THEY SHALL B E TAXED IN THE HANDS OF THE EMPLOYER. IN THE INSTANT CASE, THE ATTR IBUTION OF PERSONAL BENEFIT DIRECTLY TO AN EMPLOYEE DOES NOT POS E A PROBLEM OR IS A CASE WHERE IT IS NOT FEASIBLE TO TAX THE BENEFIT IN QUESTION IN THE HANDS OF THE EMPLOYEE. PAGE 7 OF 12 ITA NO.1066/BANG/2010 7 3.9 IN SUB-SECTION (3) OF SECTION 115WB, IT IS MA DE CLEAR THAT SECTION 115WB(1)(A) DOES NOT INCLUDE SUCH PERQUISIT E IN RESPECT OF WHICH TAX IS PAID OR PAYABLE BY THE EMPLOYEES. IN THE INSTANT CASE, THE MEDICAL REIMBURSEMENT IS TAXABLE BUT FOR THE EX EMPTION PROVIDED IN THE PROVISO (V) TO SECTION 17(2) UP TO AN AMOUNT OF RS.15,000/-. MERELY BY GRANT OF EXEMPTION, IT CANNOT BE SAID THAT THE TAX IS NOT PAYABLE. THEREFORE, A SPECIFIC ITEM OF PERQUISITE, WHICH IS NORMALLY TAXABLE IN THE HANDS OF INDIVIDUAL EMPLOYEE, CANNOT BE SUBJECTED TO FBT, ONLY FOR THE REASON THAT THE SAME IS EXEMPT IN THE HANDS OF THE EMPLOYEES. IF THE ABOVE PROPOSITION IS NOT ACCEPT ED, IT LEADS TO AN ANOMALOUS SITUATION. FOR EXAMPLE, WHEN THE MEDICA L EXPENDITURE IS ABOVE RS.15,000/- AND THE OVERALL INCOME OF THE IND IVIDUAL EMPLOYEE IS LESS THAN THE MINIMUM AMOUNT NOT CHARGEABLE TO TAX; WHETHER THE MEDICAL EXPENSES IN EXCESS OF RS.15,000/- COULD BE SUBJECTED TO FBT, ONLY ON ACCOUNT OF THE FACT THAT NO INCOME TAX WAS P AID BY THE EMPLOYEE. THE ANSWER TO THE ABOVE QUERY, IN OUR VIEW , WOULD BE IN THE NEGATIVE. LIKEWISE, WHEN AN ITEM WHICH IS TO BE TR EATED AS A PERQUISITE IS EXEMPT IN THE HANDS OF THE INDIVIDUAL EMPLOYEE, THE SAME, ACCORDING TO US, COULD NOT BE SUBJECTED TO FBT. IN TAKING THE ABOVE VIEW, WE ARE ALSO FORTIFIED BY THE ORDER OF THE MUMB AI TRIBUNAL IN THE CASE OF GODREJ PROPERTIES LTD., WHICH HAS DECIDED A N IDENTICAL ISSUE. 3.10. IN THE RESULT, GROUND NOS. 2 TO 4 ARE ALLOWED. (II) ENTERTAINMENT EXPENSES INSIDE THE OFFICE PREMISES RS.49,04,111 PAGE 8 OF 12 ITA NO.1066/BANG/2010 8 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE BANK HAD DEBITED A SUM OF RS.49, 04,111/- AS ENTERTAINMENT EXPENSES INSIDE OFFICE PREMISES. IN RESPONSE TO SHOW CAUSE, THE ASSESSEE EXPLAINED THAT THE AMOUNT REPRE SENTED EXPENDITURE INCURRED FOR PROVIDING SNACKS/REFRESHMENTS TO CUSTO MERS WITHIN THE OFFICE PREMISES AND THEREFORE, THE SAME IS TO BE EX CLUDED FROM THE FRINGE BENEFIT AS PER THE PROVISIONS OF SECTION 115 WB(2)(B)(I). THE ABOVE CONTENTION WAS REJECTED BY THE AO ON THE GROUN D THAT THE EXEMPTION WAS PROVIDED ONLY FOR EXPENDITURE INCURRED ON HIS EMPLOYEES; WHEREAS THE ASSESSEE BANK HAS PROVIDED SNACKS/REFRE SHMENTS TO ITS CUSTOMERS AND ACCORDINGLY, A SUM OF RS.49,04,111/- W AS TREATED AS FRINGE BENEFIT BY THE AO AND BROUGHT TO TAX. 4.1 ON APPEAL, THE CIT(A) HAS AFFIRMED THE VIEW TA KEN BY THE AO. THE RELEVANT FINDING OF THE CIT(A) READS AS FO LLOWS:- (J) AS FOR THE GROUNDS PERTAINING TO THE ADDITION OF RS.49,04,111/- BEING ENTERTAINMENT EXPENSES INCURRED TOWARDS PROVIDING SNACKS/REFRESHMENTS TO CUSTOMERS WITHIN THE OFFICE PREMISES, IT IS PERTINENT TO NOTE THAT THE DEEMING PROVISIONS CONTAINED IN CLAUSE (B) OF SEC.115WB(2) INCLUDE PROVISION OF HOSPITALITY OF EVERY KIND BY THE EMPLOYER TO ANY PERSON, WHETHER BY WAY OF PROVISION OF FOOD OR BEVERAGES OR IN ANY OTHER MANNER WHATSOEVER AND WHETHER OR NOT SUCH PROVISION IS MADE BY REASON OF ANY EXPRESS OR IMPLIED CONTRACT OR CUSTOM OR USAGE OF TRADE (EMPHASIS SUPPLIED). IT IS ALSO OF RELEVANT THAT O NLY EXPENDITURE INCURRED ON FOOD OR BEVERAGES PAGE 9 OF 12 ITA NO.1066/BANG/2010 9 PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES IN THE OFFICE OR FACTORY AND PAYMENTS MADE THROUGH NON TRANSFERABLE PAID VOUCHERS USABLE AT EATING JOINTS OR OUTLETS ARE EXCLUDED FROM THE PURVIEW OF FRINGE BENEFITS BY VIRTUE OF THE EXCEPTION PROVIDED BY SEC.115WB(2)(B) (I) AND (II). CLEARLY, PROVISION OF HOSPITALITY TO CUSTOMERS, IRRESPECTIVE OF WHETHER IT WAS INCURRED WITHIN THE OFFICE PREMISES OR NOT, IS NOT COVERED UNDER THE EXCEPTION PROVIDED BY SEC.115WB(2)(B)(I) SO AS TO BE EXCLUDED FROM FRINGE BENEFITS. ACCORDINGLY, I HOLD THAT THE SU M OF RS.49,04,111/- WILL BE LIABLE TO FBT. THE APPELLANTS GROUNDS ON THIS ISSUE THEREFORE FAIL. 4.2 THE LEARNED COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW WHERE AS THE LEARNED DR SUPPORTED THE ORDERS OF THE INCOME TAX AUTHORITIES. 4.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. SECTION 115WB(2)(B) STATES THA T THE FRINGE BENEFITS SHALL BE DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES, IF THE EMPLOYER HAS INCURRED ANY EXPENSE ON, OR MADE ANY PAYMENT FOR THE PURPOSES ENUMERATED IN CLAUSES (A) TO (Q). IT IS EVIDENT FROM THE PROVISIONS OF SUB-SECTION 2 OF SECTION 115WB THAT T HE MEANING OF THE TERM FRINGE BENEFITS IS EXTENDED TO CERTAIN SPECI FIC TYPES OF EXPENSES WHICH, PERHAPS, MAY NOT OTHERWISE HAVE BEEN CONSIDER ED TO FALL WITHIN THE PURVIEW OF FRINGE BENEFITS AS LAID DOWN IN SUB- SECTION (1) OF SECTION 115WB OF THE ACT. 4.4 AS PER SECTION 115WB(2)(B)(I), THE EXPENDITURE INCURRED FOR PROVIDING SNACKS AND REFRESHMENTS HAVE TO BE EXCLUD ED FROM THE FRINGE PAGE 10 OF 12 ITA NO.1066/BANG/2010 10 BENEFITS. IN OTHER WORDS, THE ACT EXCLUDES CERTAIN SPECIES OF EXPENDITURE FROM THE PURVIEW OF FRINGE BENEFITS. T HE REASON STATED BY THE AUTHORITIES FOR DENYING THE CLAIM OF THE ASSESSE E IS THAT THIS EXPENDITURE ARE INCURRED FOR PROVIDING FOOD/BEVERAG ES TO ITS CUSTOMERS AND NOT TO ITS EMPLOYEES. THE SAID REASON, ACCORDIN G TO US, IS WITHOUT SUBSTANCE, SINCE THE BASIS OF FICTION CONTAINED IN SEC.115WB(2) IS THAT CERTAIN EXPENSES, IF INCURRED, SHALL BE DEEMED TO H AVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES. THEREFORE, IF CERTAIN SPECIES OF EXPENDITURE INCURRED ON THE EMPLOYEES ARE EXCLUDED F ROM THE PURVIEW OF FBT, THE SAME EXCLUSION WILL ALSO HOLD GOOD FOR OTH ER PERSONS. IN VIEW OF THE ABOVE REASONING, GROUND NOS. 5 TO 7 ARE ALLOWED . (III) CONFERENCE FEES RS.3,14,438/- 5. AN EXPENDITURE OF RS.3,14,438/- WAS DEBITED IN THE P&L ACCOUNT TOWARDS CONFERENCE FEES. ACCORDING TO THE ASSESSEE, THE ABOVE EXPENDITURE IS BY WAY OF FEES TOWARDS CONFERENCE ORGA NIZED BY VARIOUS BANKS WHEREIN THE EMPLOYEES OF THE BANK HAD PARTICIP ATED. THE AO WHILE COMPLETING THE ASSESSMENT U/S 115WE TOOK THE VIEW THAT FEES FOR PARTICIPATION BY THE EMPLOYEES IN A CONFERENCE IS EXE MPT U/S 115WB(2)(C) BUT DOES NOT INCLUDE OTHER EXPENSES SUC H AS, TRAVELLING AND CONVEYANCE, BOARDING AND LODGING ETC. ACCORDINGLY, H E HELD THAT THE SAID EXPENDITURE WAS LIABLE FOR FBT. 5.1 ON FURTHER APPEAL BEFORE THE FIRST APPELLATE A UTHORITY, THE ORDER OF THE AO ON THIS ISSUE WAS AFFIRMED. THE RE LEVANT FINDING OF THE CIT(A) READS AS FOLLOWS:- PAGE 11 OF 12 ITA NO.1066/BANG/2010 11 (K) FINALLY, REGARDING THE ADDITION OF RS.3,14,438/- BEING CONFERENCE FEES, IT IS CRYSTAL CLEAR THAT IN TERMS OF THE PROVISIONS OF SEC,.115WB(2)(C), EXPENDITURE IN THE NATURE OF FEE FOR PARTICIPATION BY THE EMPLOYEES IN ANY CONFERENCE IS NOT LIABLE TO FBT. HOWEVER, IF THE PARTICIPATION FEE INCLUDES ANY EXPENDITURE OF THE NATURE REFERRED TO IN CLAUSES (A), (B) AND (D) TO (Q) OF SUB-SECTION (2) OF SEC.115WB, SUCH EXPENDITURE WOULD BE LIABLE TO FBT. IN THE ABSENCE OF ANY FACTUAL EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT IT DID NOT INCLUDE SUCH EXPENDITURE, I HAVE NO OTHER ALTERNATIVE BUT TO AGREE WITH THE AOS STAND THAT THE EXPENDITURE OF RS.3,14,438/- ATTRACTED FBT. 5.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE ASSESSEES REPRESENTATIVE, IN THE COURSE OF HEARING, HAS GIVEN TWO RECEIPTS AMOUNTING TO RS.17, 000/- AND CONFERENCE FEE RS.23,597/-. IT WAS ARGUED THAT THE ABOVE SAID EXPENDITURE WAS INCURRED FOR THE ASSESSEES EMPLOYEES TO ATTEND CONF ERENCE. APART FROM THESE TWO RECEIPTS, THE ASSESSEE HAS NOT PRODUCED A NY FACTUAL EVIDENCE TO SHOW THAT THESE ARE EXPENSES INCURRED AS FEES FO R PARTICIPATION BY ITS EMPLOYEES IN A CONFERENCE. THEREFORE, THIS ISSUE IS REMITTED TO THE FILE OF THE AO TO VERIFY THE GENUINENESS OF THE CLAIM WIT H REFERENCE TO THE RECEIPTS MENTIONED ABOVE. ON VERIFICATION, IF THES E AMOUNTS ARE FOUND TO BE PARTICIPATION FEE FOR ATTENDING CONFERENCE BY THE ASSESSEES EMPLOYEES, THE SAME SHALL NOT BE INCLUDED AS FRINGE BENEFIT FOR THE PURPOSE OF COMPUTATION OF FRINGE BENEFIT TAX IN VIE W OF THE PROVISIONS OF SECTION 115WB(2)(C). PAGE 12 OF 12 ITA NO.1066/BANG/2010 12 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. THE ORDER PRONOUNCED ON FRIDAY, THE 26 TH DAY OF AUGUST, 2011 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE C IT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.