Globe Ecologistics Ltd., Ahmedabad V. The ACIT,Circle-4, Ahmedabad

ITA 1687/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9316 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) ( , !'# $ , ! %& ) ITA NO. 1687/AHD/2011 (ASSESSM ENT YEAR: 2007-08) M/S. GLOBE ECO LOGISTICS LTD. V. K. MOONDRA, C.A., 201, SARAP, OPP. NAVJIVAN PRESS, ASHRAM ROAD, AHMEDABAD VS. ACIT, CIRCLE - 4, AHMEDABAD PAN NO. AAAACG3938J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINIT MOONDRA, A.R. RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. DATE OF HEARING : 21 -01-201 6 DATE OF PRONOUNCEMENT : 16 -02-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-VIII, AHMEDABAD, DATED 02.05.2011 FOR THE ASSESSMENT YEAR 2007-08 . 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS A COMPANY STATED TO BE ENGAGED I N THE BUSINESS OF TRANSPORTATION. IT ELECTRONICALLY FILED ITS RETURN OF FRINGE BENEFIT FOR A.Y. 2007-08 ON 30.10.2007 DECLARING TOTAL VALUE OF FRINGE BENEF IT AT RS. 3,77,875/-. A NOTICE ITA NO.1687/AHD/11 A.Y. 2007-08 (M/S. GLOB E ECO LOGISTICS LTD. VS. ACIT) 2 U/S.115WE(2) WAS ISSUED AND THEREAFTER ASSESSMENT W AS FRAMED U/S.115WE(3) OF THE ACT VIDE ORDER DATED 21.05.2009 AND THE TOTAL V ALUE OF FRINGE BENEFITS WAS DETERMINED AT RS. 11,55,971/-. AGGRIEVED BY THE ORD ER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) W HO VIDE ORDER DATED 02.05.2011 DISMISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND: 1. LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ORD ER OF ACIT IN LEVYING FBT ON ALL EXPENSES SUBJECT TO FBT DESPITE INTERIM RELIEF GRANTED BY HO NORABLE GUJARAT HIGH COURT. THE CHARGING OF FBT IS WRONG AND DESERVE TO BE DELETED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER NOTICED THAT THOUGH THE AUDITOR HAD WORKED OUT THE VALUE OF FRIN GE BENEFITS AT RS.11,55,971/-, ASSESSEE, AFTER RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT GRANTING INTERIM STAY ON THE PETITION OF GCCI, DECLARED FRIN GE BENEFITS OF RS.3,77,875/-. ASSESSING OFFICER AFTER CONSIDERING THE PROVISIONS AND CBDT INSTRUCTION CONSIDERED THE VALUE OF FRINGE BENEFITS TO BE AT RS .11,55,971/-. 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASS ESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF A SSESSEE BY HOLDING AS UNDER: 2.3 I HAVE CAREFULLY CONSIDERED THE FBT ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE APPELLANT. THE PROVISION OF SECTION 115WB(2) IS EXP LICITLY CLEAR THAT IF ASSESSEE HAS MADE ANY PAYMENT TOWARDS EXPENDITURE MENTIONED IN CLAUSE - A TO CLAUSE - Q, ASSESSEE IS LIABLE TO MAKE PAYMENT OF FBT. THE VALUE OF FRINGE BENEFIT IS TO B E WORKED OUT BY APPLYING A PERCENTAGE GIVEN IN SECTION 115WC. BOTH THE SECTIONS DO NOT GIVE ANY DI SCRETION THAT FBT IS REQUIRED TO BE COMPUTED ONLY ON THOSE EXPENDITURE WHICH ARE DIRECTLY RELATE D TO OR WHICH ARE FOR THE BENEFIT OF EMPLOYEES. AS PROVISIONS OF FRINGE BENEFIT TAXES ARE VERY CLEA R, THE SUBMISSION MADE BY APPELLANT FOR NON- LEVY OF FBT ON IMPUGNED EXPENDITURE CANNOT BE ACCEP TED, AS THERE IS NO SCOPE OF ADJUSTMENT IN SECTION AND ALL THE EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT AND COVERED BY THOSE PROVISIONS ARE SUBJECT TO FBT AND ASSESSING OFFICER HAS RIGHTL Y CONSIDERED THOSE EXPENDITURE WHILE DETERMINING FBT IN CASE OF APPELLANT, AS PER THE FI NDINGS OF THE A.O THE AUDITORS OF THE APPELLANT COMPANY ALSO WORKED OUT THE VALUE OF FRINGE BENEFIT AT RS.1155971/-. THE DECISION OF HON'BLE GUJARAT HIGH COURT DOES NOT PUT ANY STAY ON ASSESSM ENT OR APPELLATE PROCEEDINGS AND IN SUCH ORDER IT IS ONLY STATED THAT TILL THE DISPOSAL OF T HE FINAL APPEAL BY THE HIGH COURT, ASSESSEE CAN DEPOSIT FBT TO SEPARATE BANK ACCOUNT FOR EXPENDITUR E WHICH ARE NOT FOR THE BENEFIT OF EMPLOYEES. HENCE, DECISION RELIED UPON BY APPELLANT IN PRESENT CASE IS NOT APPLICABLE. CONSIDERING THIS, ADDITION TO THE VALUE OF FRINGE BENEFITS MADE BY AS SESSING OFFICER IS CONFIRMED. ITA NO.1687/AHD/11 A.Y. 2007-08 (M/S. GLOB E ECO LOGISTICS LTD. VS. ACIT) 3 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS M ADE BEFORE THE ASSESSING OFFICER AND LD. CIT(A) AND FURTHER SUBMITTED THAT T HE EXPENSES THAT HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER FOR FRINGE BENE FITS HAS NOT RESULTED ANY BENEFIT TO THE COMPANYS EMPLOYEES AND THEREFORE, NO FBT WA S LIABLE TO BE PAID BY THE ASSESSEE. HE FURTHER SUBMITTED THAT ALL THE EXPENS ES WHICH HAVE BEEN INCURRED AND WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER TO BE PART OF FRINGE BENEFIT HAVE BEEN INCURRED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS AND, THEREFORE, IT WAS NOT LIABLE FOR FBT. HE FURTHER PLACED RELIANCE ON VARIOUS DECISIONS PLACED IN THE PAPER BOOK. LD. D.R. ON THE OTHER HAND SUPPORT ED THE ORDER OF ASSESSING OFFICER AND LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE DISPUTE IN THE PRESENT CASE IS WITH RESPECT TO CHARGING OF FBT ON THE VARIOUS EXPENSES LIKE ROAD SHOW EXPENSES, STAFF WELFARE EXP ENSE, CONVEYANCE , REPAIRS OF CAR, TELEPHONE EXPENSES ETC. AND IT IS ASSESSEES C LAIM THAT THESE EXPENSES HAVE NOT BEEN INCURRED FOR THE EMPLOYEES OF THE ASSESSEE AND WERE INCURRED PURELY FOR THE PURPOSE OF BUSINESS. WE FIND THAT THERE IS NO FIND ING RECORDED EITHER BY THE ASSESSING OFFICER OR LD. CIT(A) IN THE ORDER AS TO WHETHER THE ADDITIONS THAT WERE MADE WERE IN RELATION TO EXPENDITURE WITH RESPECT T O NON-EMPLOYEES AND WERE FOR THE PURPOSE OF BUSINESS PURPOSES OF ASSESSEE. WE F IND THAT ON IDENTICAL FACTS THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF MUNDRA PORT AND SPECIAL ECONOMIC LTD. VS. ACIT IN ITA NO.3234/AHD/2010 VIDE ORDER DA TED 09.05.2014 HAS HELD AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE DISPUTE IN THE PRESENT CASE IS WITH RESPECT TO CHARGING OF FBT ON SALES PROMOTION EXPENSES WHICH THE ASSESSEE CLAIMS TO HAVE NOT BEEN INCURRED FOR T HE EMPLOYEES OF THE ASSESSEE AND WERE IN RELATION TO NON-EMPLOYEE AND WERE PURELY FOR THE PURPOSE OF BUSINESS. WE FURTHER FIND THAT IN THE CASE OF INTAS PHARMACEUTICALS LTD. (SUP RA) ON SIMILAR FACTS, THE CO-ORDINATE ITA NO.1687/AHD/11 A.Y. 2007-08 (M/S. GLOB E ECO LOGISTICS LTD. VS. ACIT) 4 BENCH OF TRIBUNAL, RELYING ON THE DECISION IN THE C ASE OF ARVIND FASHIONS LTD. VS. DCIT REMITTED THE MATTER TO THE FILE OF A.O BY HOLDING A S UNDER:- 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE ORDER OF THE TRIBUNAL IN ARVIND FASH IONS LTD. VS. DCIT (SUPRA). WE FIND THAT THE DECISION OF THE ITAT, AHMEDABAD BENCH IN ARVIND FASHIONS LTD. VS. DCIT (SUPRA) HAS HELD THAT THE PROVISION OF 'FBT' C OULD NOT BE INVOKED IN RESPECT OF THE EXPENSES WHICH WERE NOT INCURRED ON EMPLOYEES O R THEIR FAMILY MEMBERS. THE TRIBUNAL IN THIS CASE HAS REFERRED TO THE DECISIONS OF THE CO-ORDINATE BENCH OF THE ITAT, AHMEDABAD, PUNE AND BANGALORE, WHICH HAVE SIM ILARLY HELD THAT THE 'FBT' COULD NOT BE INVOKED ON EXPENSES WHICH WERE NOT INC URRED ON THE EMPLOYEES OR THEIR FAMILY MEMBERS. HOWEVER, WE FIND THAT THERE IS NO C LEAR CUT FINDING RECORDED BY THE AO OR THE CIT(A) IN THEIR ORDER THAT WHETHER THE AD DITION MADE WERE RELATING TO THE EXPENDITURE IN RELATION TO NON-EMPLOYEES AND FOR TH E BUSINESS PURPOSE OF THE ASSESSEE. THE CLAIM OF THE .ASSESSEE WAS THAT THE E XPENSES WERE NOT RELATED TO ITS EMPLOYEES AND WERE INCURRED ONLY IN RELATION TO NON -EMPLOYEES AND FOR BUSINESS PURPOSE OF THE ASSESSEE COMPANY. IN THESE FACTS, W E ARE OF THE VIEW THAT IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE IN THE GROUNDS OF THE APPEAL OF THE ASSESSEE FOR ALL THREE YEARS TO THE FILE OF THE AO WITH DIRE CTION TO DECIDE THE SAME DE NOVO IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPO RTUNITY OF HEARING TO THE ASSESSEE IN THE LIGHT OF DECISIONS OF THE ITAT, AHM EDABAD BENCH IN ARVIND FASHIONS LTD. VS. DCIT (SUPRA). THE AO IS FURTHER DIRECTED T O RECORD A CLEAR FINDING THAT WHETHER THE EXPENSES IN QUESTION WERE INCURRED WITH RELATION TO NON-EMPLOYEES FOR THE BUSINESS PURPOSE OF THE ASSESSEE AS CLAIMED BY THE ASSESSEE-COMPANY. IN CASE THE EXPENSES ARE FOUND TO HAVE BEEN INCURRED BY THE ASS ESSEE WITH RELATION TO NON- EMPLOYEES AND FOR THE BUSINESS PURPOSE OF THE ASSES SEE, THE DECISION IN ARVIND FASHIONS LTD. VS. DCIT (SUPRA) SHALL APPLY TO THE C ASE OF THE ASSESSEE. NEEDLESS TO SAY THAT ANY DECISION OF THE HON'BLE GUJARAT HIGH C OURT IN THE WRIT PETITION PENDING BEFORE THE HON'BLE HIGH COURT, AS MENTIONED BY THE CIT(A) IN ITS APPELLATE ORDER, SHALL BE BINDING ON THE AUTHORITIES. WE DIRECT ACCO RDINGLY. 8. IN THE PRESENT CASE IT IS SEEN THAT THE ISSUE IN DISPUTE IS SIMILAR TO THAT IN THE CASE OF INTAS PHARMACEUTICALS (SUPRA). WE THEREFORE FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF INTAS PHARMA (SUPRA) AN D FOR THE SIMILAR REASONS GIVEN THEREIN AND WITH SIMILAR DIRECTIONS REMIT THE ISSUE TO THE FILE OF A.O TO DECIDE THE ISSUE AFRESH. WE THUS DIRECT ACCORDINGLY. 7.1 IN THE PRESENT CASE, WE ARE OF THE VIEW THAT TH E ISSUE IN DISPUTE IS SIMILAR TO THAT OF MUNDRA PORT AND SPECIAL ECONOMIC LTD. VS. A CIT (SUPRA). WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH IN CASE OF MUNDRA PORT AND SPECIAL ECONOMIC LTD. VS. ACIT (SUPRA) AND FOR SIMILAR REASONS GIVEN THEREIN AND WITH SIMILAR DIRECTIONS REMIT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE BY PROMPTLY FURNISHING ALL T HE REQUIRED DETAILS CALLED FOR BY ITA NO.1687/AHD/11 A.Y. 2007-08 (M/S. GLOB E ECO LOGISTICS LTD. VS. ACIT) 5 THE ASSESSING OFFICER. NEEDLESS TO STATE THAT ASSES SING OFFICER SHALL PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. T HUS, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 16 - 02 - 2016. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 16/02/2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD