Eltech Engineers Madras Pvt Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1140/CHNY/2015

• Counselvise Citation: 114021714 RSA 2015
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1140/MDS/2015 ( )( / ASSESSMENT YEAR : 2006-07 M/S ELTECH ENGINEERS MADRAS PVT. LTD., 92, 1 ST MAIN ROAD, NEHRU NAGAR, OLD MAHABALIPURAM ROAD, CHENNAI - 600 041. PAN : AAACE 2325 B V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH.V.S.JAYAKUMAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI A.B. KOLI, JCIT 1 / 2% / DATE OF HEARING : 13.08.2015 3') / 2% / DATE OF PRONOUNCEMENT : 04.09.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI , DATED 19.01.2015 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2 I.T.A. NO.1140/MDS/15 2. SHRI V.S. JAYAKUMAR, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THE ASSESSING OFFICER LEVIED FRINGE BENEFIT TAX AFTER DISALLOWING A SUM OF ` 3,76,920/-, BEING THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS EMPLOYEES WELFARE. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS DECLARED NIL VALUE OF FRI NGE BENEFIT TO THE EMPLOYEES. HOWEVER, THE ASSESSING OFFICER ASSE SSED THE FRINGE BENEFIT VALUE UNDER SECTION 115WE(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AT ` 3,76,920/- AND LEVIED FRINGE BENEFIT TAX OF ` 1,75,141/-. REFERRING TO THE PAPER-BOOK, THE LD.CO UNSEL SUBMITTED THAT FOR THE FINANCIAL YEAR 2005-06 RELEV ANT TO THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS INCURRED ` 8,40,345.50 TOWARDS STAFF WELFARE EXPENSES, DETAILS OF WHICH AR E AVAILABLE AT PAGE 1 OF THE PAPER-BOOK. SIMILARLY, THE ASSESSEE HAS INCURRED AN EXPENDITURE OF ` 1,54,945/- TOWARDS VEHICLE MAINTENANCE, DETAILS OF WHICH ARE AVAILABLE AT PAGE 2 OF THE PAPER-BOOK. T HE ASSESSEE HAS ALSO INCURRED EXPENSES IN CAR MAINTENANCE TO THE EX TENT OF ` 1,17,928/-. IN ADDITION TO ABOVE, THE TRAVELLING E XPENSES INCLUDED BY THE ASSESSEE WERE TO THE EXTENT OF ` 4,01,625/- AND THE EXPENDITURE ON TELEPHONE INSTALLED AND USED IN THE OFFICE PREMI SES WAS TO THE EXTENT OF ` 1,46,047/-. ACCORDING TO THE LD. COUNSEL, ALL THES E EXPENSES WERE INCURRED FOR THE BUSINESS PURPOSE, TH EREFORE, THE 3 I.T.A. NO.1140/MDS/15 SAME MAY NOT FALL UNDER THE HEAD FRINGE BENEFIT U NDER SECTION 115WE OF THE ACT. REFERRING TO THE DECISION OF AHM EDABAD BENCH OF THIS TRIBUNAL IN JOSHI TECHNOLOGIES INTERNATIONA L INC. V. ADIT (INTNL. TAXN) (2013) 36 CCH 0054, THE LD.COUNSEL SU BMITTED THAT FOR THE PURPOSE OF TREATING THE PAYMENT AS FRINGE BENEF IT, THERE SHOULD BE EMPLOYER AND EMPLOYEE RELATIONSHIP. IN OTHER WO RDS, THE BENEFIT PROVIDED BY THE ASSESSEE SHOULD BE TO ITS EMPLOYEES . ACCORDING TO THE LD. COUNSEL, THE PAYMENTS ARE MADE NOT TO THE E MPLOYEES DIRECTLY. THE PAYMENTS WERE MADE TO THIRD PARTIES FOR THE PURPOSE OF CARRYING ON THE BUSINESS ACTIVITY EFFECTIVELY AN D EFFICIENTLY. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE PAYMEN TS CANNOT BE TREATED AS FRINGE BENEFIT. 3. ON THE CONTRARY, SHRI A.B. KOHLI, THE LD. DEPART MENTAL REPRESENTATIVE, SUBMITTED THAT THE STAFF WELFARE EX PENDITURE LIKE PROVISION FOR FOOD, COFFEE/TEA, UNIFORM, ETC. WOULD FALL UNDER SECTION 115WB OF THE ACT. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE A LSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 115WB OF THE ACT. SECTION 115WB(2) OF THE ACT CLEARLY SAYS THAT THE EXPENDITU RE INCURRED BY 4 I.T.A. NO.1140/MDS/15 THE EMPLOYER FOR THE PURPOSE OF ENTERTAINING, HOSPI TALITY, PROVISION FOR FOOD OR BEVERAGES, EITHER IN THE OFFICE OR FACT ORY, THE EXPENDITURE INCURRED BY THE EMPLOYER THROUGH PAID VOUCHERS, WHI CH ARE NOT TRANSFERRABLE AND THE EXPENDITURE INCURRED BY THE A SSESSEE THROUGH PREPAID ELECTRONIC MEAL CARD, ETC. ARE DEEMED TO BE FRINGE BENEFITS. THE ASSESSING OFFICER HAS TAKEN ONLY A SUM OF ` 3,76,920/- AS VALUE OF THE FRINGE BENEFIT. IN FACT, THE STAFF WELFARE EXPENDITURE WAS TAKEN BY THE ASSESSING OFFICER AT ` 1,68,069/-. AS PER THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSEE HAS DEBITED A SUM OF ` 8,40,346/-. THE ASSESSING OFFICER HAS TAKEN 20% OF THE SAME. 5. IN RESPECT OF CONVEYANCE EXPENSES, THE ASSESSEE HAS DEBITED A SUM OF ` 1,54,945/- IN THE BOOKS AND THE ASSESSING OFFICER HAS TAKEN ONLY 20% OF THE SAME, I.E. ` 30,989/-. LIKEWISE, CAR MAINTENANCE AND DEPRECIATION, THE ASSESSEE HAS DEBI TED A SUM OF ` 1,17,928/- IN THE BOOKS AND THE ASSESSING OFFICER H AS TAKEN 20% OF THE SAME AT ` 68,420/-. TOUR TRAVEL EXPENSES AND USE OF TELEPHONE AND MOBILES WERE ALSO TAKEN AT 20% OF THE ACTUAL EXPENDITURE, I.E. ` 80,235/- AND ` 29,209/- RESPECTIVELY. THE TOTAL VALUE OF THE FRINGE BENEFITS COMES TO NEARLY ` 3,76,920/-. IN VIEW OF SECTION 115WB(2) OF THE ACT, THIS TRIBUNAL IS OF TH E CONSIDERED 5 I.T.A. NO.1140/MDS/15 OPINION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION OF AHMEDABAD BENCH OF THIS TRIBUNAL IN JOSHI TECHNOLOG IES INTERNATIONAL INC. (SUPRA). IN THE CASE BEFORE THE AHMEDABAD BENCH, THE DISPUTE WAS WITH REGARD TO EMPLOYER AND EMPLOYEE RELATIONSHIP. IN THIS CASE, THERE IS NO SUCH DISPU TE. THE BENEFIT WAS DIRECTLY OR INDIRECTLY PROVIDED TO THE EMPLOYEES OF THE ASSESSEE, THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE DECISION OF AHMEDABAD BENCH IN JOSHI TECHNOLOGIES INTERNATIO NAL INC. (SUPRA) MAY NOT BE APPLICABLE IN THE FACTS OF THE C ASE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LOWER AUTHORITY AND ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON 4 TH SEPTEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 4 TH SEPTEMBER, 2015. KRI. 6 I.T.A. NO.1140/MDS/15 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-6, CHENNAI 4. 1 92 /CIT-II, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.