TTK Helathcare Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1589/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8308 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI IRS
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , ! ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1589/MDS/2014 ! # $# / ASSESSMENT YEAR : 2006-2007 M/S. TTK HEALTHCARE LTD, NO.6, CATHEDRAL ROAD, CHENNAI 600 086. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(4) CHENNAI 600 034. [PAN AABCT 3312J ] ( / APPELLANT) ( /RESPONDENT) %& ' ( / APPELLANT BY : SHRI. R. VIJAYARAGHAVAN, ADV. )*%& ' ( /RESPONDENT BY : SHRI. A.B. KOLI, IRS, JCIT. ' + / DATE OF HEARING : 03-11-2015 ,-$ ' + / DATE OF PRONOUNCEMENT : 05-01-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENNAI I N ITA NO.894/2013-14, DATED 30.1.2014 FOR THE ASSESSMENT YEAR 2006-2007 PASSED U/S.115WE(3) AND 250 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). ITA NO.1589/MDS/2014. :- 2 -: 2. THE ONLY SUBSTANTIVE GROUND RAISED BY THE ASSESSEE IN APPEAL WITH REGARD TO PROVISION MADE TOWARDS SUPERA NNUATION FUND CONSIDERED FOR VALUATION OF FRINGE BENEFIT TAX BY T HE LOWER AUTHORITIES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACTURING AND MARKETING DRUG S AND MEDICAL PRODUCTS, AND FILED RETURN OF FRINGE BENEFITS TAX O N 24.11.2006 ADMITTING TOTAL VALUE OF FRINGE BENEFITS AT @3,21,8 3,444/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY A ND THE ASSESSING OFFICER COMPLETED ASSESSMENT WITHOUT CONSIDERING T HE SUBMISSIONS ON THE ISSUE OF PROVISION OF SUPERANNUATION FUND CONT RIBUTION @61,06,866/-. THE ASSESSING OFFICER TREATED VALUE OF PROVISION FOR CALCULATION OF FRINGE BENEFIT TAX, THOUGH SUCH CONT RIBUTION TO SUPERANNUATION FUND WAS PAID IN THE NEXT FINANCIAL YEAR IN THE MONTH OF APRIL AND MAY 2006 AND THERE IS NO DISPUTE ABOUT THE SUPERANNUATION FUND WITH THE LIC OF INDIA. THE ASS ESSING OFFICER ALSO ESTIMATED 20% OF SALES PROMOTION EXPENSES, MARKET R ESEARCH EXPENDITURE FOR CALCULATION OF VALUE OF FRINGE BENE FIT. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT PROVISIO N IS NOT SUBJECT TO FRINGE BENEFIT TAX AS THE SAME WAS PAID WELL BEFORE DUE DATE OF FILING OF RETURN U/S.139(1) OF THE ACT . THE LD. ASSESSING OFFICER OVERLOOKED THE LEGAL POSITION, EXPLANATIONS AND JUDICIAL DECIS ION OF THE TRIBUNAL MADE AN ADDITION AND DETERMINED THE VALUE OF FRINGE BENEFIT AT ITA NO.1589/MDS/2014. :- 3 -: @3,83,53,333/- AND RAISED ADDITIONAL DEMAND OF @20 ,76,785/-. AGGRIEVED, BY THE ORDER THE ASSESSEE PREFERRED AN A PPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. THE ASSESSEES APPEAL WAS TRANSFERRED FROM THE COMMISSIONER OF INCOME TAX (APPEALS)-I (ERSTWHILE C IT(A)-III), CHENNAI AS PER THE NOTIFICATION OF THE CCIT, CHENNA I-I IN CHE/COORD/112 (JURSDN.)2012-13 DATED 23.04.2013 AND 26.04.2013. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED RE PRESENTATIVE SUBMITTED THAT SUPERANNUATION FUND IS FOR THE WELF ARE OF THE EMPLOYEES AND CONTRIBUTION TO FUND SHALL BE CONSIDE RED ON ACTUAL PAYMENT BUT ASSESSING OFFICER MADE AN ADDITION, OVE RLOOKED THE PAYMENT MADE IN THE FINANCIAL YEAR 2006-2007 AND RE LIED ON PROVISION MADE BEFORE 31.03.2006. FURTHER, THE LD. AUTHORISE D REPRESENTATIVE RELIED ON DECISION OF CO-ORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF ACIT VS . M/S. BHARAT OVERSEAS BANK LTD IN ITA NO.1541/MDS/2 010, DATED 20.02.2013 WERE SIMILAR ISSUE WAS DEALT. BUT THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS CALLED FOR THE REMAND R EPORT OF THE ASSESSING OFFICER AND ASSESSEE WAS PROVIDED AN OPPO RTUNITY TO COMMENT ON THE VIEWS OF THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HEARD THE EXPLANATIONS AND ALSO LEGAL POSITION BUT DISTINGUISHED THE DECISION OF THE TRIBUNAL AND CONSIDERED THE PROVISION AS ACTUAL CONTRIBUTION AND CONFIRMED THE ORDER OF THE LOWER ITA NO.1589/MDS/2014. :- 4 -: AUTHORITIES. AGGRIEVED BY THE ORDER, THE ASSESSEE ASSAILED AN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE GROUNDS AND SUBMITTED THAT THE PROVISION OF CONTRIB UTION TO SUPERANNUATION FUND SHOULD NOT BE CONSIDERED FOR CA LCULATION OF VALUATION OF FRINGE BENEFIT TAX AND THE LD. COMMISS IONER OF INCOME TAX (APPEALS) HAS ERRED IN UNDERSTANDING THE EXPLANATI ONS OF SEC 115WB(1) (C) OF THE ACT WERE THE FRINGE BENEFIT M EANS ANY CONSIDERATION FOR EMPLOYMENT PROVIDED BY WAY OF ANY CONTRIBUTION BY THE EMPLOYER TO A APPROVED SUPERANNUATION FUND FOR EMPLOYEES. THE ASSESSEE COMPANY QUALIFY FOR DEDUCTION AND RELIED O N THE ORDER OF M/S. BHARAT OVERSEAS BANK LTD(SUPRA) AND EXPLAINED THAT SUCH CONTRIBUTION WAS PAID IN THE NEXT FINANCIAL YEAR AN D WAS SUBJECT TO FRINGE BENEFIT TAX. FURTHER, WHEN THE TAX IS PAID B Y THE EMPLOYEE ON SUCH BENEFIT THE PROVISIONS OF FRINGE BENEFIT TAX A RE NOT APPLICABLE AND PRAYED FOR DELETION OF ADDITION. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND V EHEMENTLY ARGUED FOR DISMISSAL OF THE APPEAL. 7. . WE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIE S, PERUSED THE MATERIALS ON RECORD AND ORDERS OF THE LOWER AUT HORITIES AND JUDICIAL ITA NO.1589/MDS/2014. :- 5 -: CITATION REFERRED BY THE LD. AUTHORISED REPRESENTAT IVE. THE ASSESSEE COMPANY HAS MADE A PROVISION FOR CONTRIBUTION TO SU PERANNUATION FUND AND THE SAME WAS PAID IN THE NEXT FINANCIAL YEAR. THERE IS NO DISPUTE ABOUT THE PROVISION AND THE PAYMENT AND THERE IS NO ESCAPEMENT OF VALUE AND SAME WAS SUBJECT TO FRINGE BENEFIT TAX. SIMILAR ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH IN THE CASE OF M/S. BHARAT OVERSEAS BANK (SUPRA) WHEREIN HELD THAT PROVISION OF CONTRIBUTION TO THE APPROVED SUPERANNUATION FUND WAS NOT SUBJECT TO CHARGING OF FBT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE ADDITION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1589/MDS/2014 IS ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 5TH DAY OF JANU ARY, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI . / DATED:05.01.2016 KV / ' )!+12 32$+ / COPY TO: 1 . %& / APPELLANT 3. 4+ () / CIT(A) 5. 278 )!+! / DR 2. )*%& / RESPONDENT 4. 4+ / CIT 6. 89# : / GF