GDPA FASTNERS, Jalandhar V. The Addl. Commissioner of Income Tax, Jalandhar

ITA 163/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8765 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDH AR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NOS.162 & 163 (ASR)/2016 ASSESSMENT YEAR: 2008-09 & 2009-10 GDPA FASTENERS, NEAR RAILWAY GODOWN, JALANDHAR. PAN: AAAF-G6649P VS. ADDL. CIT, RANGE, II JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. NIRMAL MAHAJAN (CA ) RESPONDENT BY: SH. BHAWANI SHANKAR (DR.) DATE OF HEARING: 18.01.2017 DATE OF PRONOUNCEMENT:21.02.201 7 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY ASSESSEE AGAINST THE CONSOLIDATED ORDER OF LD. CIT(A) DATED 18.12.2015 FOR ASST. YEAR 2008-09 & 2009-10. 2. SIMILAR GROUNDS OF APPEAL HAS BEEN TAKEN IN T HESE APPEAL EXCEPT THE DIFFERENCE IN AMOUNTS. THOUGH THE ASSESSEE HAS TAKE N VARIOUS GROUNDS OF APPEAL, HOWEVER, CRUX OF GRIEVANCE OF ASSESSEE I S THE ACTION OF LD. CIT(A) BY WHICH HE HAD CONFIRMED DISALLOWANCE MADE BY ASSESSING OFFICER BY TAKING THE EXPENSES INCURRED BY PARTNERS AS BEING LIABLE FOR FRINGE BENEFIT TAX (FBT). ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 2 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT AS PER THE RETURN OF FRINGE BENEFIT FILED BY ASSESSEE THE ASSE SSEE HAD CALCULATED FRINGE BENEFIT ONLY FOR EXPENDITURE OF RS.97,631/- AND WHEREAS THE EXPENSES LIABLE FOR FRINGE BENEFIT TAX AS PER P&L A CCOUNT WAS MUCH HIGHER, THEREFORE, THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN THE SAME. IN REPLY THE ASSESSEE SUBMITTED THAT AS PER THE PROVIS IONS OF FRINGE BENEFIT TAX ONLY THOSE EXPENDITURE WAS LIABLE FOR FBT WHICH HAS BEEN INCURRED OR ARE DEEM TO HAVE BEEN INCURRED BY THE EMPLOYER F OR HIS EMPLOYEES. IT WAS SUBMITTED THAT THE EXPENSES ON WHICH THE ASSESS EE HAD NOT PAID FBT RELATED TO EXPENDITURE INCURRED BY PARTNERS AND THERE WAS NO RELATIONSHIP OF EMPLOYER AND EMPLOYEES BETWEEN THE ASSESSEE AND ITS PARTNERS. IT WAS SUBMITTED THAT THE EXPENSES INCURR ED BY PARTNERS OF THE FIRM WERE NOT LIABLE FOR FRINGE BENEFIT TAX. IN THI S RESPECT, THE ASSESSEE FURTHER SUBMITTED THAT IT HAD DULY SEGREGATED EXPEN DITURE UNDER VARIOUS HEADS INCURRED BY PARTNERS FOR THE PURPOSE OF BUSIN ESS AND EXPENDITURE INCURRED BY EMPLOYEES FOR THE PURPOSE OF ITS BUSINE SS. THE ASSESSEE FURTHER SUBMITTED FOR THE CONTENTS OF FINANCE MINIS TER SPEECH WHEREIN THE FINANCE MINISTER HAD SAID THAT THE FBT WAS BEIN G INTRODUCED AS SOME PERQUISITES GO UNTAXED BOTH IN THE HANDS OF EM PLOYER AND EMPLOYEE. IN VIEW OF THE FINANCE MINISTER SPEECH, I T WAS SUBMITTED THAT THE INTENTION IN LEVYING FRINGE BENEFIT TAX WAS TO CHARGE FBT IN THE CASE ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 3 OF EXPENDITURE INCURRED BY EMPLOYEES. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ARGUMENTS RAISED BY ASSE SSEE AND HELD THAT THE PROVISIONS OF SEC. 115WB (2) WERE AMPLY CLEAR A ND DID NOT ENVISAGED ANY SUCH DISTINCTION. IT WAS HELD THAT READING OF S EC. 115WB(2) MAKES IT EXPLICIT THAT ALL ITEMS OF EXPENDITURE DEBITED IN P &L ARE LIABLE TO BE INCLUDED IN FBT CALCULATION. 4. AGGRIEVED WITH THE ORDER, THE ASSESSEE FILED APP EAL BEFORE LD. CIT(A) AND FILED DETAILED SUBMISSIONS AND RELIANCE WAS ALSO PLACED ON VARIOUS CASE LAWS FOR THE PROPOSITION THAT EXPENDIT URE INCURRED BY PARTNERS OF THE FIRMS WERE NOT LIABLE FOR FRINGE BE NEFIT TAX. HOWEVER, THE LD. CIT(A), DISMISSED THE CONTENTIONS OF ASSESSEE A ND ALSO RELIED UPON VARIOUS CASE LAWS AND HELD THAT THE PROVISIONS OF F RINGE BENEFIT TAX WERE ALSO APPLICABLE TO EXPENSES INCURRED PARTNERS AND T HEREFORE, DISMISSED THE APPEALS. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LD. AR FILED SYNOPSIS RELATIN G TO THE FACTS AND CIRCUMSTANCES OF THE CASES AND ALSO RELATING TO ARG UMENTS AND SUBMITTED THAT THE PROVISIONS OF SEC.115WA (1), SPECIFICALLY PROVIDES THAT FRINGE BENEFITS PROVIDED OR DEEMED TO HAVE BEEN PROVIDED B Y AN EMPLOYER TO HIS EMPLOYEES AND THEREFORE, HE SUBMITTED THAT MAIN POI NT FOR APPLICABILITY IS RELATIONSHIP OF EMPLOYER AND EMPLOYEE. THE LD. A R SUBMITTED THAT THE PARTNERS WERE NOT EMPLOYEES OF THE ASSESSEE AND THE REFORE, EXPENSES ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 4 INCURRED BY THEM WERE NOT LIABLE FOR FRINGE BENEFIT TAX. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWING JUDGMENTS. (I) DCIT VS. KOTAK MAHINDRA OLD MUTUAL LIFE INSURAN CE LIMITED 134 ITD 0388 (MUMBAI TRIBUNAL). (II) GLAXO SMITHKLINE CONSUMER HEALTHCARE LTD. VS. ADDL. CIT 76 DTR 0114 (CHG.TRIB.). (III) INTERVALVE (INDIA) LTD. VS. ADDL. CIT 77 DTR 0113 (PUNE) (IV) TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED VS. ADD L. CIT, ITA NO.20/BANG/2011. WITH RESPECT TO QUESTION AS TO WHETHER PARTNER WAS AN EMPLOYEE OR NOT. IT WAS SUBMITTED THAT NO DOUBT PARTNER WAS ALLOWED TO GET SALARY OR COMMISSION FORM THE FIRM BUT HIS SALARY AND COMMISS ION IS TAXED UNDER THE HEAD BUSINESS AND PROFESSION UNLIKE IN CASE OF EMPLOYEES WHERE IT IS TAXED UNDER THE HEAD SALARIES. IT WAS SUBMITTED THAT LD. CIT(A) HAD RELIED ON THE DECISION IN THE CASE OF ITO VS. MODI MOTORS 31 DTR 0347 (MUM. TRIB.) WHICH WAS NOT APPLICABLE AS THE CASE L AW RELATED TO KEYMAN INSURANCE POLICY AND WHEREIN THE HONBLE TRIBUNAL H AD NOWHERE SAID THAT THE PARTNER IS AN EMPLOYEE OF THE FIRM. RELIAN CE WAS PLACED ON THE FOLLOWING CASE LAWS, FOR THE PROPOSITION THAT PARTN ER CANNOT BE AN EMPLOYEE OF THE FIRM. (I) REGIONAL DIRECTOR ESIC VS. RAMANUJA MATCH INDUSTRIE S 1985 AIR 278 (SC). (II) S. MAGNUS VS. CIT 33 ITR 0538 (BOMBAY HC) (III) CIT VS. K.L. BHASIN 59 CTR 01112 (PATNA HC) (IV) CIT VS. KALURAM PURANMAL 119 ITR 0564 (BOMBAY) ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 5 IT WAS ALSO SUBMITTED THAT FOR ASST. YEARS: 2006-07 & 2007-08, THE HONBLE TRIBUNAL HAD REJECTED THE APPEALS OF THE AS SESSEE ON TECHNICAL GROUNDS BEING BELATED AND NO VIEWS WERE EXPRESSED O N MERITS OF THE CASE, AND SINCE THE AMOUNT IN THESE YEARS WAS NOT M UCH, THEREFORE, FURTHER APPEALS WERE NOT PREFERRED. 7. THE LD. DR HEAVILY PLACED HIS RELIANCE ON THE OR DER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE QUESTIO NS TO BE ANSWERED BY US IN THESE APPEALS IS AS TO WHETHER THE PARTNERS O F THE FIRM ARE EMPLOYEES OF THE FIRM OR NOT AND WHETHER THE PROVIS ION RELATING TO LEVYING OF FRINGE BENEFIT TAX IS APPLICABLE TO THE EXPENDIT URE INCURRED BY PARTNERS OR NOT. 9. AS REGARDS THE ISSUES OF EXPENDITURE INCURRED BY PARTNERS OF THE FIRM AS TO WHETHER THESE ATTRACT PROVISIONS THE FRI NGE BENEFIT TAX PROVISION, WE DEEM IT APPROPRIATE TO DISCUSS THE CR UX OF PROVISIONS OF SEC.115WA(1) AND 115WA(2). 4.1 SECTION 115WA(1) BRING TO CHARGE THE VALUE OF FRINGE BENEFIT PROVIDED OR DEEMED TO HAVE BEEN PROVIDED BY THE EMP LOYER TO HIS EMPLOYEES DURING THE PREVIOUS YEAR. THERE ARE, THUS , TWO CATEGORIES OF FRINGE BENEFITS, NAMELY (I) FRINGE BENEFITS WHIC H ARE PROVIDED BY THE EMPLOYER TO THE EMPLOYEES, AND (II) FRINGE BENE FITS WHICH ARE DEEMED TO BE PROVIDED BY THE EMPLOYER TO THIS EMPLO YEES. SUB SECTION (1) OF SECTION 115WB DEFINES FRINGE BENEFI T AS CONSIDERATION FOR EMPLOYMENT PROVIDED BY WAY OF VARIOUS FACILITIE S AND SERVICES. SUB-SECTION (2) OF SECTION 115WB, ON THE OTHER HAND , STATES THAT THE ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 6 EXPENDITURE INCLUDED WITHIN THE SUB-SECTION WOULD B E DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEE IF THE EMPLOYER HAS INCURRED THE EXPENDITURE IN THE COURSE OF HIS B USINESS OR PROVISIONS ON PROVIDING THE FACILITIES OR SERVICES INCLUDED THEREIN. IT IS APPARENT THAT THE SUB-SECTION (1) DEALS WITH CONSID ERATION FOR EMPLOYMENT, WHEREAS SUB-SECTION (2) DOES NOT REQUIR E CONSIDERATION FOR EMPLOYMENT AS A CONDITION FOR DEEMING THE EXPEN DITURE INCLUDED IN THE SUB-SECTION FRINGE BENEFIT. IN FACT, EXPENDI TURE ON ENTERTAINMENT, ON HOSPITALITY OF EVERY KIND BY EMPL OYER TO ANY PERSON, EXPENDITURE ON CONFERENCE, ETC. ARE DEEMED TO BE FRINGE BENEFIT PROVIDED BY THE EMPLOYER TO THE EMPLOYEES E VEN IF THE EXPENDITURE HAS NOT BEEN INCURRED BY THE EMPLOYER D IRECTLY ON HIS EMPLOYEES. THE ABOVE PROVISION CLEARLY LAYS EMPHASIZE ON EMPLO YER EMPLOYEE RELATIONSHIP FOR THE APPLICATION OF FBT. THE DEEMIN G PROVISIONS AS CONTAINED IN SUB-SECTION 2 OF SEC.115WB ALSO STATES THAT THE EXPENDITURE INCLUDED WITHIN THE SUB-SECTION WOULD B E DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEE IF TH E EMPLOYER HAS INCURRED THE EXPENDITURE IN THE COURSE OF HIS BUSIN ESS OF PROVISION, THEREFORE, THE FINDINGS OF LD. CIT(A) ARE WRONG AS THE SECTION SPECIFICALLY STATES THAT EXPENDITURE INCLUDED WITHIN THE SECTION WOULD BE DEEMED TO HAVE BEEN PROVIDED BY EMPLOYER TO HIS EMPLOYEES . THEREFORE, ONLY THAT EXPENDITURE WOULD BE LIABLE FOR FRINGE BENEFIT TAX WHICH HAS BEEN INCURRED BY EMPLOYER FOR HIS EMPLOYEES AND PARTNERS CAN NOT BE SEND TO BE EMPLOYEE OF THE FIRM. WE FIND THAT THE HONBLE TRIBUNAL IN THE CASE OF DCIT VS. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE ( SUPRA) VIDE PARA 10 HAD DECIDED SIMILAR ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: SUB-S. (2) OF S. 115WB IS A DEEMING PROVISION WHER E CERTAIN EXPENDITURES INCURRED BY THE EMPLOYEE, FRINGE BENEFIT ARE DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEE. IN OUR OPINION, SU B-S. (1) OF S. 115WB WHICH DEFINES 'FRINGE BENEFIT' UNDER CHAPTER-XII-H, CONTROL SUB-S. (2) AND ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 7 ANY EXPENDITURE INCURRED BY AN EMPLOYER IN THE COUR SE OF HIS BUSINESS OR PROFESSION, WHICH IS NOT A CONSIDERATION FOR EMPLOY MENT, CANNOT BE CONSIDERED AS 'FRINGE BENEFIT. THUS, THE DEEMING PR OVISIONS OF SUB-S. (2) OF S.115WB, APPLIES ONLY WHEN THE EXPENDITURE IS IN TH E NATURE OF CONSIDERATION FOR EMPLOYMENT. THUS, WHILE RESTORING THE ISSUE BACK TO THE FILE OF AO FOR ADJUDICATION AFRESH, WE DIRECT THE A O TO APPLY THE PROPOSITION OF HAW AS INTERPRETED BY US WHILE DETERMINING THE V ALUE OF FRINGE BENEFIT. ON THE ISSUE OF EXPENDITURE INCURRED ON CONFERENCE AND MEETINGS, THE AO SHALL CONSIDER BIFURCATION SUBMITTED TO HIM WITH RE SPECT TO THE EXPENDITURE INCURRED - ON THE AGENTS AND BROKERS AND PASS APPROPRIATE ORD ERS. '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 NOT PAYMENTS TO CLUBS. WITH THESE OBSERVATIONS, WE REST ORE THE ISSUE BACK TO THE FILE OF AO FOR ADJUDICATION AFRESH. SIMILARLY, WE FIND THAT THE HONBLE TRIBUNAL IN THE CASE OF GLAXO SMITHKLINE CONSUMER HEALTHCARE VS. ADDL. CIT, 76 DT R 0114 HAS DECIDED IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: 18. COMING TO THE PROVISIONS OF SECTION 115WB(2) O F THE ACT WE FIND THAT THE SAID DEEMING PROVISIONS HAVE BEEN INTRODUCED WH ERE CERTAIN EXPENDITURE HAS BEEN INCURRED BY THE EMPLOYER IN TH E COURSE OF HIS CARRYING OF THE BUSINESS AND THE SAME WOULD BE DEEM ED TO HAVE BEEN PROVIDED BY THE EMPLOYER . SUB-SECTION (1) TO SECTI ON 115WB OF THE ACT WHICH DEFINES FRINGE BENEFITS FOR THE PURPOSES OF C HAPTER-XII-H I.E. ANY CONSIDERATION FOR EMPLOYMENT PROVIDED BY THE EMPLOY ER TO HIS EMPLOYEE, WOULD GOVERN THE DEEMING PROVISIONS LAID DOWN IN SU B-STLDFTT2) TO SECTION 115WB OF THE ACT. ANY EXPENDITURE INCURRED BY AN ASSESSEE WHICH IS NOT IN THE CONSIDERATION OF THE EMPLOYMENT PROVI DED BY THE EMPLOYER TO HIS EMPLOYEE, WOULD NOT BE CONSIDERED AS FRINGE BEN EFITS WITHIN THE MEANING OF SECTION 115WB OF THE ACT. WE FIND SUPPOR T FROM THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN DCIT VS . KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD. (2012) 134 ITP 388 ( MUMBAI) WHEREIN IT HAS BEEN HELD AS UNDER: '10. SUB-SECTION (2) OF SECTION 115WB IS A DEEMING PROVISION WHERE CERTAIN EXPENDITURES INCURRED BY THE EMPLOYEE, FRINGE BENEF IT ARE DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEE. IN O UR OPINION, SUB-SECTION (1) OF SECTION 115WB WHICH DEFINES 'FRINGE BENEFIT' UNDER CHAPTER-XII-H, CONTROL SUB-SECTION (2) AND ANY EXPENDITURE INCURRE D 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 SUBSECTION (2) OF SECTION 115WB, APPL IES ONLY WHEN THE EXPENDITURE IS IN THE NATURE OF CONSIDERED FOR EMPL OYMENT. THUS, WHILE RESTORING THE ISSUE BACK TO THE FILE OF ASSESSING O FFICER FOR ADJUDICATION AFRESH, WE DIRECT THE ASSESSING OFFICER TO APPLY TH E PROPOSITION OF LAW AS ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 8 INTERPRETED BY US WHILE DETERMINING THE VALUE OF FR INGE BENEFIT. ON THE ISSUE OF EXPENDITURE INCURRED ON CONFERENCE AND MEE TINGS, THE ASSESSING OFFICER 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 EXPENDIT URE IS INCURRED ON PERSONS WHO ARE NOT EMPLOYEES. ON THE ISSUE OF CLUB MEMBERSHIP FEE, THE PAYMENTS MADE TO LIMRA AND ACTUARIAL SOCIETY OF IND IA, ARE TO BE EXCLUDED AS THEY ARE NOT PAYMENTS TO CLUBS. WITH TH ESE OBSERVATIONS, WE RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFF ICER FOR ADJUDICATION AFRESH.' THE CASES OF THE ASSESSEE ARE DULY COVERED BY THESE TWO DECISIONS OF HONBLE TRIBUNAL WHERE THE HONBLE TRIBUNAL HAS DECIDED SIMILAR ISSUES IN FAVOUR OF ASSESSEE. THE CASE LAWS RELIED UPON BY LD. CIT(A) ARE NOT DIRECTLY APPLICABLE TO THE FACTS OF ASSESSEE CO MPANY. FURTHER, WE FIND THAT THE QUESTION AS TO WHETHER T HE PARTNER OF A FIRM IS AN EMPLOYEE OR NOT HAS BEEN ANSWERED BY HON BLE SUPREME COURT IN CASE OF REGIONAL DIRECTOR ESIC VS. RAMANUJA MATC H INDUSTRIES, 1985 AIR 278 (SC). THE FINDINGS OF THE HONBLE COURT ARE REPRODUCED HEREIN BELOW. IT IS THUS CLEAR THAT IN THE UNITED STATES, GREAT BRITAIN AND AUSTRALIA, A PARTNER IS NOT TREATED AS AN EMPLOYEE OF HIS FIRM M ERELY BECAUSE HE RECEIVES A WAGE OR REMUNERATION FOR WORK DONE FOR T HE FIRM. THIS VIEW IS IN COMPLETE ACCORD WITH THE JURISPRUDENTIAL APPROACH. IN THE ABSENCE OF ANY STATUTORY MANDATE, WE DO NOT THINK THERE IS ANY SCO PE FOR ACCEPTING THE VIEW OF THE RAJASTHAN HIGH COURT. COUNSEL FOR THE APPELLANT EMPHASIZED ON THE FEATURE THAT THE STATUTE IS A BENEFICIAL ONE AND THE COURT SHOULD NOT INTERPRET A PROVISIONS OCCURRING THEREIN IN SUCH A WAY THAT THE BENEFIT WOULD BE WIT HHELD FROM EMPLOYEES. WE DO NOT DOUBT THAT BENEFICIAL LEGISLATIONS SHOULD HAVE LIBERAL CONSTRUCTION WITH A VIEW TO IMPLEMENTING THE LEGISL ATIVE INTENT BUT WHERE SUCH BENEFICIAL LEGISLATION HAS A SCHEME OF ITS OWN THERE IS NO WARRANT FOR THE COURT TO TRAVEL BEYOND THE SCHEME AND EXTEND TH E SCOPE OF THE STATUTE ON THE PRETEXT OF EXTENDING THE STATUTORY BENEFIT T O THOSE WHO ARE NOT COVERED BY THE SCHEME. THE ACT COVERS ALL FACTORIES OR ESTABLISHMENT WITH ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 9 20 OR MORE EMPLOYEES AND THE BENEFIT IS INTENDED TO BE GIVEN TO INSTITUTIONS WITH MORE THAN THAT NUMBER. IT IS NOT THE (1) [1951 ] 84 C.L.R.118. CONTENTION OF COUNSEL THAT BECAUSE THE LEGISLATION IS BENEFICIAL IT SHOULD ALSO APPLY TO FACTORIES OR ESTABLISHMENTS WITH LESS THAN 20 EMPLOYEES. IF THAT BE NOT SO, IN FINDING OUT WHETHER A PARTNER WO ULD BE AN EMPLOYEE A LIBERAL CONSTRUCTION IS NOT WARRANTED. A PERSON WHO WOULD NOT ANSWER THE DEFINITION CANNOT BE TAKEN INTO ACCOUNT FOR THE PUR POSE OF FIXING THE STATUTORY MINIMUM. WE ARE THEREFORE, NOT INCLINED T O ACCEPT THE CONTENTION OF COUNSEL THAT ON THE BASIS OF THE STATUTE BEING B ENEFICIAL, A PARTNER SHOULD ALSO COUNT AS AN EMPLOYEE. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS, WE ARE IN AGREEMENT WITH THE ARGUMENTS OF LD. AR AND WE HOLD THAT THE EXPEND ITURE INCURRED BY PARTNERS IS NOT LIABLE FOR FRINGE BENEFIT TAX AND O NLY THE AMOUNT INCURRED BY EMPLOYEES OF THE FIRM ARE LIABLE FOR FR INGE BENEFIT TAX. HOWEVER, SINCE THE AUTHORITIES BELOW HAS CALCULATED THE VALUE OF FRINGE BENEFIT TAX BY CONSIDERING THE TOTAL AMOUNT DEBITED IN P&L ACCOUNTS ACCOUNT, THEREFORE, WE DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE ASSESSING OFFICER TO CALCULATE THE AMOUNT OF FRINGE BENEFIT TAX PAYABLE BY ASSESSEE ON ACCOUNT OF EXPENDITURE INCURRED BY E MPLOYEES ONLY. 10. IN VIEW OF THE ABOVE, THE APPEALS FILED BY ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 .02. 2017. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21.02.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: ITA NO.16 2 & 163(ASR)/2016 ASST. YEARS: 2008-09 & 2009-10 10 (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER