H V AXCLES LTD, MUMBAI V. ACIT (OSD) 2(1), MUMBAI

ITA 1305/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6615 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 27-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Assessee Lawyers: TEJAS CHANDULAL SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1305/MUM/2011 ASSESSMENT YEAR: 2007-08 HV AXLES LIMITED 3 RD FLOOR, NANAVATI MAHALAYA, 18, HOMI MODI STREET, HUTATMA CHOWK, MUMBAI- 400 001 VS. ACIT (OSD)-2(1) AAYAKAR BHAVAN MUMBAI- 400 020 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAACH 7625 P ASSESSEE BY : SHRI TEJAS CHANDULAL SHAH REVENUE BY : SHRI PITAMBER DAS DATE OF HEARING : 23.04.2014 DATE OF PRONOUNCEMENT : 23.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A)-4, MUMBAI DATED 07.12.2010 FOR THE ASSESS MENT YEAR 2007-08. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN CONFIRMING THE DECISION OF THE AO IN TREATING THE M OTOR CAR EXPENSES AND BRAND SUBSCRIPTION EXPENSES AS FRINGE BENEFITS. 3. BRIEFLY STATED, THE ASSESSEE, A COMPANY, IN THE RETURN OF FRINGE BENEFITS TAX HAD DISCLOSED THE VALUE OF FRINGE BENEFITS TO THE E XTENT OF RS.70,70,700/-. IN THE ASSESSMENT FRAMED U/S 115WE(3) OF THE INCOME TAX AC T, THE AO NOTICED THAT THE ASSESSEE COMPANY INCURRED AN EXPENSE OF RS.9,58,876 /- ON ACCOUNT OF CARS ON HIRE AND A BRAND SUBSCRIPTION EXPENSES OF RS.15,85,129/- . ACCORDING TO THE AO, THE SAID EXPENDITURE ARE INCURRED ON EMPLOYEES ALSO AND ACCO RDINGLY HE DISALLOWED 20% OF THE EXPENSES AMOUNTING TO RS.1,91,775/- AND RS.3,17 ,026/- ON ACCOUNT OF THE IMPUGNED EXPENDITURE AND ADDED THE SAME TO THE VALU E OF FRINGE BENEFITS. ON ITA NO. 1305/MUM/2011 HV AXLES LIMITED ASSESSMENT YEAR: 2007-08 2 APPEAL, THE LD.CIT(A) CONFIRMED THE ACTION OF THE A O. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT IT IS A SETTLED LAW THAT FRINGE BENEFIT TAX IS LIABLE WITH REGARD TO THE PAYMENTS THAT RESULT IN SOME BENEFITS TO EMPLOYEES OF THE ASSESSEE. IF THE EXPENDITURE INCURRED DOES NOT BENEFIT THE EMPLO YEE, THE PROVISIONS OF FBT CANNOT BE INVOKED. IN OTHER WORDS, WHERE THERE IS N O DIRECT OR INDIRECT BENEFIT OF THE EMPLOYEES OF THE ASSESSEE, PROVISIONS OF THE FBT CA NNOT BE INVOKED. IN THE INSTANT CASE, IT IS NOT THE CASE OF THE REVENUE THAT THERE IS ANY ADVERSE DIRECT INCRIMINATING EVIDENCE IN ITS POSSESSION THAT THE EMPLOYEES DERIV ED DIRECT OR INDIRECT BENEFIT. MERELY INCURRING OR REIMBURSEMENT OF EXPENDITURE ON ACCOUNTS OF VARIOUS HEADS BY THE ASSESSEE INVOLVING THE EMPLOYEES CANNOT NOT BE THE BASIS TO INTERPRET THAT THE EMPLOYEES ARE BENEFITED DIRECTLY OR INDIRECTLY. THE SAID VIEW IS FORTIFIED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF HV TRANSMISSIONS LIMITED, IN ITA NO. 7927/MUM/2010 AND M/S. TML DRIVELINES LIMITED IN IT A NO. 251 & 252/MUM/2012 . CONSIDERING THE ABOVE COVERED NATURE OF THE ISSUE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF THE LD.CIT(A) IS REQUIRED TO BE R EVERSED. ACCORDINGLY, THE ADDITION/DISALLOWANCE MADE/CONFIRMED STANDS DELETED . 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF APRIL, 2014. SD/- SD/- (RAJENDRA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.04.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR H BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.