M/s Madhya Pradesh Madhya Kshetra Vidyut Vitren Company Ltd., Bhopal V. DCIT 2 (1), Bhopal

ITA 181/Ind/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8527 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-09-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Gift; Depreciation; Salary income; Reasonable cause; Fair market value; Set aside

Judgement Text

[ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.181/IND/2018 ASSESSMENT YEAR:2009-10 M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., NISHTHA PARISAR BIJLI NAGAR COLONY GOVINDPURA BHOPAL / VS. DCIT - 2(1) BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AADCM6799G APPELLANT BY SHRI MANOJ MUNSHI, A.R. RESPONDENT BY SMT. ASHIMA GUPTA, D.R. DATE OF HEARING: 11.09.2019 DATE OF PRONOUNCEMENT: 11.10.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-1, BHOPAL DATED 12.12.2017 PERTAINING TO TH E [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 2 ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, BHOPAL, ERRED IN SUSTAINING THE ADDITION OF EXPENSES AMOUNTING TO RS.7,36,09,000/- RELATING TO SUPPLY OF ELECTRICITY AT CONCESSIONAL RATES TO EMPLOYEES AS FRINGE BENEFIT A ND LEVYING TAX THEREON BY THE LD. ASSESSING OFFICER IN THE HANDS OF THE AS SESSEE COMPANY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER, ERRED IN NOT CONSIDERING IN PROPER PERSPEC TIVE, THE SUBMISSIONS MADE BY THE APPELLANT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, ERRED IN NOT GIVING SUFFICI ENT OPPORTUNITY TO THE ASSESSEE COMPANY TO BE HEARD. 4. THE APPELLANT CRAVES LEAVED TO ADD, AMEND ALTER OR OTHERWISE RAISE ANY OTHER GROUND OF APPEAL. 2, FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE DISTRIBUTION OF POW ER IN THE STATE OF MADHYA PRADESH. THE A.O. ISSUED A NOTI CE U/S 115WH OF THE INCOME TAX ACT, 1961 (HEREINAFTER C ALLED AS THE ACT). IN RESPONSE THERETO, THE ASSESSEE FIL ED WRITTEN SUBMISSIONS. THE A.O. AFTER CONSIDERING THE SUBMISS IONS MADE ADDITION OF RS.7,36,09,000/- AS FRINGE BENEFIT TA X (IN SHORT FBT). FURTHER, ON ACCOUNT OF MISTAKE OF THE ASSESSEE IN RESPECT OF VALUATION OF THE FRINGE BENEFIT , THE ASSESSMENT ORDER U/S 115WG R.W.S. 115WE OF THE ACT W AS [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 3 PASSED ON 29.12.2016 BY MAKING THE AFOREMENTIONED ADDITIONS. 3. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. THEREBY, THE ADDITI ONS MADE BY THE A.O. WERE CONFIRMED. LD. COUNSEL FOR TH E ASSESSEE SHRI MANOJ MUNSHI VEHEMENTLY ARGUED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE ADDITIONS. LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE BEFORE THE LD. CIT(A). LD. COUN SEL CONTENDED THAT THE ASSESSEE COMPANY SUPPLIES ELECTRICI TY TO ITS EMPLOYEES AT CONCESSIONAL RATES AS A PERQUISITE. LD. COUNSEL SUBMITTED THAT IT WAS CATEGORICALLY SUBMITTED T HAT THE BENEFIT GIVEN IN THE FORM OF CONCESSIONAL SUPPLY OF ELECTRICITY IS TREATED AS PERQUISITE; THEREFORE, THE S AME WOULD BE OUT OF THE PURVIEW OF THE FBT. IN SUPPORT OF THIS, [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 4 THE LD. COUNSEL HAS DREW OUR ATTENTION TO THE TAX PA YERS INFORMATION SERIES 36 IN RESPECT OF VALUATION OF PERQUI SITES. LD. COUNSEL SUBMITTED THAT IT HAS BEEN CLARIFIED THAT CERTAIN PERQUISITES ARE TAXED IN THE HANDS OF THE EMPLO YEES AS PART OF SALARY INCOME AND THE OTHER FRINGE BENEFITS ARE TAXED IN THE HANDS OF THE EMPLOYER BY LEVYING OF FBT . HOWEVER, WHERE THE PERQUISITE IS TAXED IN THE HANDS O F THE EMPLOYEE, IT IS NOT TAXED IN THE HANDS OF THE EMPLOY ER. LD. COUNSEL HAS FURTHER TAKEN US THROUGH THE RELEVANT PROVISIONS TO BUTTRESS HIS CONTENTION THAT THE SUPPL Y OF ELECTRICITY ON CONCESSIONAL RATES IS A PERQUISITE AND WO ULD BE LIABLE TO BE TAXED IN THE HANDS OF THE EMPLOYEES O F THE ASSESSEE. 4. PER CONTRA, LD. D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. LD. D.R. STRONGLY RELIED UPON TH E IMPUGNED ORDER. SHE FURTHER CONTENDED THAT THE ASSESS EE [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 5 FAILED TO FURNISH EVIDENCE IN SUPPORT OF ITS CONTENT ION THAT THE EMPLOYEES HAVE OFFERED THE BENEFIT FOR TAXATION A ND THE ASSESSEE HAS DEDUCTED TAX THEREOF. IN THE ABSENCE OF SUCH MATERIAL EVIDENCE, THE AUTHORITIES BELOW WERE JUSTIFI ED IN TREATING THE SAME AS FRINGE BENEFIT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY QUESTION THAT REQUI RES OUR CONSIDERATION IS THAT WHETHER ELECTRICITY PROVIDE D TO THE EMPLOYEES AT THE CONCESSIONAL RATES WOULD BE TREATED AS FRINGE BENEFIT TO BE TAXED AT THE HANDS OF THE EMPLOY ER OR PERQUISITE TO BE TAXED AT THE HANDS OF THE EMPLOYEE. WE FIND THAT LD. CIT(A) HAS DECIDED THE ISSUE IN PARAGRAPH 5 TO 10 OF HIS ORDER AS UNDER: [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 6 [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 7 [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 8 6. THERE IS NO DISPUTE WITH REGARD TO THE TAXABILITY OF THE BENEFIT PROVIDED BY THE ASSESSEE TO ITS EMPLOYEES. THE CONTENTION OF THE ASSESSEE THAT THE BENEFIT PROVIDED TO THE [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 9 EMPLOYEES IN THE FORM OF ELECTRICITY AT CONCESSIONAL RATES WOULD PARTAKE THE CHARACTER OF THE PERQUISITE AND WOULD B E TAXABLE AT THE HANDS OF THE EMPLOYEES. LD. CIT(A) RE JECTED THIS CLAIM ON THE BASIS THAT THE ASSESSEE COULD NOT SUP PORT ITS CONTENTION BY FURNISHING MATERIAL EVIDENCES PROVI NG THAT PERQUISITE HAS ALREADY BEEN TAXED IN THE HANDS OF TH E EMPLOYEES. MOREOVER, AUDITOR OF THE ASSESSEE COMPANY OPINED THAT THE AMOUNT WHICH REQUIRED TO BE TAXED AS FB T. LD. COUNSEL SUBMITTED THAT OPINION OF THE AUDITOR WOU LD NOT REPLACE OR SUPERSEDE THE LAW. HE TOOK US THROUG H THE RELEVANT PROVISIONS OF THE ACT. FOR THE SAKE OF CLAR ITY, SECTION 115WB OF THE ACT IS REPRODUCED AS UNDER: SECTION 115WB OF INCOME TAX ACT 'FRINGE BENEFITS' SECTION 115WB. (1) FOR THE PURPOSES OF THIS CHAPTER, 'F RINGE BENEFITS' MEANS ANY CONSIDERATION FOR EMPLOYMENT PROVIDED BY WA Y OF- (A) ANY PRIVILEGE, SERVICE, FACILITY OR AMENITY, DIRE CTLY OR INDIRECTLY, PROVIDED BY AN EMPLOYER, WHETHER BY WAY OF REIMBURSEMENT OR O THERWISE, TO HIS EMPLOYEES (INCLUDING FORMER EMPLOYEE OR EMPLOYEES); (B) ANY FREE OR CONCESSIONAL TICKET PROVIDED BY THE EMPL OYER FOR PRIVATE JOURNEYS OF HIS EMPLOYEES OR THEIR FAMILY MEMBERS; [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 10 (C) ANY CONTRIBUTION BY THE EMPLOYER TO AN APPROVED SUPERANNUATION FUND FOR EMPLOYEES; AND (D) ANY SPECIFIED SECURITY OR SWEAT EQUITY SHARES ALLOTT ED OR TRANSFERRED, DIRECTLY OR INDIRECTLY, BY THE EMPLOYER FREE OF COST OR AT CONCESSIONAL RATE TO HIS EMPLOYEES (INCLUDING FORMER EMPLOYEE OR EMPLOYEES ). EXPLANATION.-FOR THE PURPOSES OF THIS CLAUSE,- (I) 'SPECIFIED SECURITY' MEANS THE SECURITIES AS DEFINED IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1 956 (42 OF 1956) AND, WHERE EMPLOYEES' STOCK OPTION HAS BEEN GRANTED UND ER ANY PLAN OR SCHEME THEREFOR, INCLUDES THE SECURITIES OFFERED UNDER SUCH PLAN OR SCHEME; (II) 'SWEAT EQUITY SHARES' MEANS EQUITY SHARES ISSUED BY A COMPANY TO ITS EMPLOYEES OR DIRECTORS AT A DISCOUNT OR FOR CONSIDERATION OTHER THAN CASH FOR PROVIDING KNOW-HOW OR MAKING AVAILABLE RIGHTS IN TH E NATURE OF INTELLECTUAL PROPERTY RIGHTS OR VALUE ADDITIONS, BY WHATEVER NAME CALLED. (2) THE FRINGE BENEFITS SHALL BE DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES, IF THE EMPLOYER HAS, IN T HE COURSE OF HIS BUSINESS OR PROFESSION (INCLUDING ANY ACTIVITY WHETHER OR NOT SUCH ACTIVITY IS CARRIED ON WITH THE OBJECT OF DERIVING INCOME, PROFITS OR GAINS) INCURRED ANY EXPENSE ON, OR MADE ANY PAYMENT FOR, THE FOLLOWING P URPOSES, NAMELY:- (A) ENTERTAINMENT; (B) PROVISION OF HOSPITALITY OF EVERY KIND BY THE EM PLOYER TO ANY PERSON, WHETHER BY WAY OF PROVISION OF FOOD OR BEVERAGES OR I N ANY OTHER MANNER WHATSOEVER AND WHETHER OR NOT SUCH PROVISION IS MADE BY REASON OF ANY EXPRESS OR IMPLIED CONTRACT OR CUSTOM OR USAGE OF TRADE B UT DOES NOT INCLUDE- (I) ANY EXPENDITURE ON, OR PAYMENT FOR, FOOD OR BEV ERAGES PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES IN OFFICE OR FACTORY; (II) ANY EXPENDITURE ON OR PAYMENT THROUGH PAID VOU CHERS WHICH ARE NOT TRANSFERABLE AND USABLE ONLY AT EATING JOINTS OR OUTL ETS; [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 11 (III) ANY EXPENDITURE ON OR PAYMENT THROUGH NON-TRA NSFERABLE PRE-PAID ELECTRONIC MEAL CARD USABLE ONLY AT EATING JOINTS OR OUT LETS AND WHICH FULFILS SUCH OTHER CONDITIONS AS MAY BE PRESCRIBED; (C) CONFERENCE (OTHER THAN FEE FOR PARTICIPATION BY TH E EMPLOYEES IN ANY CONFERENCE). EXPLANATION.-FOR THE PURPOSES OF THIS CLAUSE, ANY EXPEN DITURE ON CONVEYANCE, TOUR AND TRAVEL (INCLUDING FOREIGN TRAVEL) , ON HOTEL, OR BOARDING AND LODGING IN CONNECTION WITH ANY CONFERENCE SHALL BE D EEMED TO BE EXPENDITURE INCURRED FOR THE PURPOSES OF CONFERENCE; (D) SALES PROMOTION INCLUDING PUBLICITY: PROVIDED THAT ANY EXPENDITURE ON ADVERTISEMENT,- (I) BEING THE EXPENDITURE (INCLUDING RENTAL) ON ADV ERTISEMENT OF ANY FORM IN ANY PRINT (INCLUDING JOURNALS, CATALOGUES OR PRICE LISTS ) OR ELECTRONIC MEDIA OR TRANSPORT SYSTEM; (II) BEING THE EXPENDITURE ON THE HOLDING OF, OR TH E PARTICIPATION IN, ANY PRESS CONFERENCE OR BUSINESS CONVENTION, FAIR OR EXHIBITION; (III) BEING THE EXPENDITURE ON SPONSORSHIP OF ANY SP ORTS EVENT OR ANY OTHER EVENT ORGANISED BY ANY GOVERNMENT AGENCY OR TRADE ASSOCI ATION OR BODY; (IV) BEING THE EXPENDITURE ON THE PUBLICATION IN ANY PRINT OR ELECTRONIC MEDIA OF ANY NOTICE REQUIRED TO BE PUBLISHED BY OR UNDER AN Y LAW OR BY AN ORDER OF A COURT OR TRIBUNAL; (V) BEING THE EXPENDITURE ON ADVERTISEMENT BY WAY OF SIGNS, ART WORK, PAINTING, BANNERS, AWNINGS, DIRECT MAIL, ELECTRIC SPE CTACULARS, KIOSKS, HOARDINGS, BILL BOARDS, DISPLAY OF PRODUCTS OR BY WAY OF SUCH OTHER MEDIUM OF ADVERTISEMENT; [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 12 (VI) BEING THE EXPENDITURE BY WAY OF PAYMENT TO ANY ADVERTISING AGENCY FOR THE PURPOSES OF CLAUSES (I) TO (V) ABOVE; (VII) BEING THE EXPENDITURE ON DISTRIBUTION OF SAMPLE S EITHER FREE OF COST OR AT CONCESSIONAL RATE; AND (VIII) BEING THE EXPENDITURE BY WAY OF PAYMENT TO A NY PERSON OF REPUTE FOR PROMOTING THE SALE OF GOODS OR SERVICES OF THE BUSINESS OF THE EMPLOYER, SHALL NOT BE CONSIDERED AS EXPENDITURE ON SALES PROMOTIO N INCLUDING PUBLICITY; (E) EMPLOYEES' WELFARE. EXPLANATION.-FOR THE PURPOSES OF THIS CLAUSE, ANY EXPEND ITURE INCURRED OR PAYMENT MADE TO- (I) FULFIL ANY STATUTORY OBLIGATION; OR (II) MITIGATE OCCUPATIONAL HAZARDS; OR (III) PROVIDE FIRST AID FACILITIES IN THE HOSPITAL O R DISPENSARY RUN BY THE EMPLOYER; OR (IV) PROVIDE CRECHE FACILITY FOR THE CHILDREN OF THE EM PLOYEE; OR (V) SPONSOR A SPORTSMAN, BEING AN EMPLOYEE; OR (VI) ORGANISE SPORTS EVENTS FOR EMPLOYEES, SHALL NOT BE CONSIDERED AS EXPENDITURE FOR EMPLOYEES' W ELFARE; [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 13 (F) CONVEYANCE; (G) USE OF HOTEL, BOARDING AND LODGING FACILITIES; (H) REPAIR, RUNNING (INCLUDING FUEL), MAINTENANCE OF MOTOR CARS AND THE AMOUNT OF DEPRECIATION THEREON; (I) REPAIR, RUNNING (INCLUDING FUEL) AND MAINTENANCE OF AIRCRAFTS AND THE AMOUNT OF DEPRECIATION THEREON; (J) USE OF TELEPHONE (INCLUDING MOBILE PHONE) OTHER T HAN EXPENDITURE ON LEASED TELEPHONE LINES; (K) [***] (L) FESTIVAL CELEBRATIONS; (M) USE OF HEALTH CLUB AND SIMILAR FACILITIES; (N) USE OF ANY OTHER CLUB FACILITIES; (O) GIFTS; AND* (P) SCHOLARSHIPS; (Q) TOUR AND TRAVEL (INCLUDING FOREIGN TRAVEL). (3) FOR THE PURPOSES OF SUB-SECTION (1), THE PRIVILEGE, SERVICE, FACILITY OR AMENITY DOES NOT INCLUDE PERQUISITES IN RESPECT OF WHICH TAX IS PAID OR [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 14 PAYABLE BY THE EMPLOYEE OR ANY BENEFIT OR AMENITY I N THE NATURE OF FREE OR SUBSIDISED TRANSPORT OR ANY SUCH ALLOWANCE PROVIDED BY T HE EMPLOYER TO HIS EMPLOYEES FOR JOURNEYS BY THE EMPLOYEES FROM THEIR RESI DENCE TO THE PLACE OF WORK OR SUCH PLACE OF WORK TO THE PLACE OF RESIDENCE. 7. FROM THE AFORESAID PROVISION, IT IS CLEAR THAT AS PER SUB-SECTION 3 OF SECTION 115WB OF THE ACT, THE PERQU ISITE IN RESPECT OF WHICH TAXES ARE PAID OR PAYABLE BY THE EMP LOYEE ARE EXCLUDED FROM THE AMBIT OF THE LEVY OF FBT. FURT HER, SECTION 17(2) OF THE ACT DEFINES PERQUISITE AS UNDER: 17(2) OF THE INCOME TAX ACT: 'PERQUISITE' INCLUDES (I) THE VALUE OF RENT-FREE ACCOMMODATION PROVIDED TO TH E ASSESSEE BY HIS EMPLOYER; (II) THE VALUE OF ANY CONCESSION IN THE MATTER OF RENT RESPECTING ANY ACCOMMODATION PROVIDED TO THE ASSESSEE BY HIS EMPLO YER; [EXPLANATION 1.FOR THE PURPOSES OF THIS SUB-CLAUSE , CONCESSION IN THE MATTER OF RENT SHALL BE DEEMED TO HAVE BEEN PROVIDED IF, [(A) IN A CASE WHERE AN UNFURNISHED ACCOMMODATION I S PROVIDED BY ANY EMPLOYER OTHER THAN THE CENTRAL GOVERNMENT OR ANY S TATE GOVERNMENT AND (I) THE ACCOMMODATION IS OWNED BY THE EMPLOYER, THE VALUE OF THE ACCOMMODATION DETERMINED AT THE SPECIFIED RATE IN R ESPECT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCUPIED BY THE AS SESSEE DURING THE PREVIOUS YEAR, EXCEEDS THE RENT RECOVERABLE FROM, O R PAYABLE BY, THE ASSESSEE; (II) THE ACCOMMODATION IS TAKEN ON LEASE OR RENT BY THE EMPLOYER, THE VALUE OF THE ACCOMMODATION BEING THE ACTUAL AMOUNT OF LEASE RENTAL PAID OR PAYABLE BY THE EMPLOYER OR FIFTEEN PER CENT OF SALARY, WHICHEV ER IS LOWER, IN RESPECT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCU PIED BY THE ASSESSEE [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 15 DURING THE PREVIOUS YEAR, EXCEEDS THE RENT RECOVERA BLE FROM, OR PAYABLE BY, THE ASSESSEE;] (B) IN A CASE WHERE A FURNISHED ACCOMMODATION IS PR OVIDED BY THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT, THE LICENCE FEE DETERMINED BY THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT IN RESPE CT OF THE ACCOMMODATION IN ACCORDANCE WITH THE RULES FRAMED BY SUCH GOVERNM ENT AS INCREASED BY THE VALUE OF FURNITURE AND FIXTURES IN RESPECT OF THE P ERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCUPIED BY THE ASSESSEE DURING T HE PREVIOUS YEAR, EXCEEDS THE AGGREGATE OF THE RENT RECOVERABLE FROM, OR PAYABLE BY, THE ASSESSEE AND ANY CHARGES PAID OR PAYABLE FOR THE FURNITURE A ND FIXTURES BY THE ASSESSEE; (C) IN A CASE WHERE A FURNISHED ACCOMMODATION IS PR OVIDED BY AN EMPLOYER OTHER THAN THE CENTRAL GOVERNMENT OR ANY STATE GOVE RNMENT AND (I) THE ACCOMMODATION IS OWNED BY THE EMPLOYER, THE VALUE OF THE ACCOMMODATION DETERMINED UNDER SUB-CLAUSE (I) OF CL AUSE (A) AS INCREASED BY THE VALUE OF THE FURNITURE AND FIXTURES IN RESPECT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCUPIED BY THE ASSESSEE DUR ING THE PREVIOUS YEAR, EXCEEDS THE RENT RECOVERABLE FROM, OR PAYABLE BY, T HE ASSESSEE; (II) THE ACCOMMODATION IS TAKEN ON LEASE OR RENT BY THE EMPLOYER, THE VALUE OF THE ACCOMMODATION DETERMINED UNDER SUB-CLAUSE (II) OF CLAUSE (A) AS INCREASED BY THE VALUE OF THE FURNITURE AND FIXTURES IN RESPE CT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCUPIED BY THE ASSESSEE DURING THE PREVIOUS YEAR, EXCEEDS THE RENT RECOVERABLE FROM, OR PAYABLE BY, THE ASSESSEE; (D) IN A CASE WHERE THE ACCOMMODATION IS PROVIDED B Y THE EMPLOYER IN A HOTEL (EXCEPT WHERE THE ASSESSEE IS PROVIDED SUCH ACCOMMO DATION FOR A PERIOD NOT EXCEEDING IN AGGREGATE FIFTEEN DAYS ON HIS TRANSFER FROM ONE PLACE TO ANOTHER), THE VALUE OF THE ACCOMMODATION DETERMINED AT THE RA TE OF TWENTY-FOUR PER CENT OF SALARY PAID OR PAYABLE FOR THE PREVIOUS YEAR OR THE ACTUAL CHARGES PAID OR PAYABLE TO SUCH HOTEL, WHICHEVER IS LOWER, FOR THE PERIOD DURING WHICH SUCH ACCOMMODATION IS PROVIDED, EXCEEDS THE RENT RECOVER ABLE FROM, OR PAYABLE BY, THE ASSESSEE. EXPLANATION 2.FOR THE PURPOSES OF THIS SUB-CLAUSE, VALUE OF FURNITURE AND FIXTURE SHALL BE TEN PER CENT PER ANNUM OF THE COST OF FURNITURE (INCLUDING TELEVISION SETS, RADIO SETS, REFRIGERATORS, OTHER H OUSEHOLD APPLIANCES, AIR- CONDITIONING PLANT OR EQUIPMENT OR OTHER SIMILAR AP PLIANCES OR GADGETS) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, THE ACT UAL HIRE CHARGES PAYABLE FOR THE SAME AS REDUCED BY ANY CHARGES PAID OR PAYABLE FOR THE SAME BY THE ASSESSEE DURING THE PREVIOUS YEAR. [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 16 EXPLANATION 3.FOR THE PURPOSES OF THIS SUB-CLAUSE, 'SALARY' INCLUDES THE PAY, ALLOWANCES, BONUS OR COMMISSION PAYABLE MONTHLY OR OTHERWISE OR ANY MONETARY PAYMENT, BY WHATEVER NAME CALLED, FROM ONE OR MORE EMPLOYERS, AS THE CASE MAY BE, BUT DOES NOT INCLUDE THE FOLLOWING , NAMELY: (A) DEARNESS ALLOWANCE OR DEARNESS PAY UNLESS IT EN TERS INTO THE COMPUTATION OF SUPERANNUATION OR RETIREMENT BENEFITS OF THE EMPLOY EE CONCERNED; WWW.TAXMANN.COM H (B) EMPLOYER'S CONTRIBUTION TO THE PROVIDENT FUND A CCOUNT OF THE EMPLOYEE; (C) ALLOWANCES WHICH ARE EXEMPTED FROM THE PAYMENT OF TAX; (D) VALUE OF THE PERQUISITES SPECIFIED IN THIS CLAU SE; (E) ANY PAYMENT OR EXPENDITURE SPECIFICALLY EXCLUDE D UNDER THE PROVISO TO THIS CLAUSE.] [EXPLANATION 4.FOR THE PURPOSES OF THIS SUB-CLAUSE , 'SPECIFIED RATE' SHALL BE (I) FIFTEEN PER CENT OF SALARY IN CITIES HAVING PO PULATION EXCEEDING TWENTY-FIVE LAKHS AS PER 2001 CENSUS; (II) TEN PER CENT OF SALARY IN CITIES HAVING POPUL ATION EXCEEDING TEN LAKHS BUT NOT EXCEEDING TWENTY-FIVE LAKHS AS PER 2001 CENSUS; AND (III) SEVEN AND ONE-HALF PER CENT OF SALARY IN ANY OTHER PLACE;] (III) THE VALUE OF ANY BENEFIT OR AMENITY GRANTED O R PROVIDED FREE OF COST OR AT CONCESSIONAL RATE IN ANY OF THE FOLLOWING CASES (A) BY A COMPANY TO AN EMPLOYEE WHO IS A DIRECTOR T HEREOF; (B) BY A COMPANY TO AN EMPLOYEE BEING A PERSON WHO HAS A SUBSTANTIAL INTEREST IN THE COMPANY; (C) BY ANY EMPLOYER (INCLUDING A COMPANY) TO AN EMP LOYEE TO WHOM THE PROVISIONS OF PARAGRAPHS (A) AND (B) OF THIS SUB-CL AUSE DO NOT APPLY AND WHOSE INCOME 17[UNDER THE HEAD 'SALARIES' (WHETHER DUE FR OM, OR PAID OR ALLOWED BY, ONE OR MORE EMPLOYERS), EXCLUSIVE OF THE VALUE OF A LL BENEFITS OR AMENITIES NOT PROVIDED FOR BY WAY OF MONETARY PAYMENT, EXCEEDS 18 [FIFTY] THOUSAND RUPEES:] 19[***] [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE USE OF ANY VEHICLE PROVIDED BY A COMPANY OR AN EMPLOYER FO R JOURNEY BY THE ASSESSEE FROM HIS RESIDENCE TO HIS OFFICE OR OTHER PLACE OF WORK, OR FROM SUCH OFFICE OR PLACE TO HIS RESIDENCE, SHALL NOT BE REGARDED AS A BENEFIT OR AMENITY GRANTED OR PROVIDED TO HIM FREE OF COST OR AT CONCESSIONAL RAT E FOR THE PURPOSES OF THIS SUB- CLAUSE;] (IIIA) 21[***] [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 17 (IV) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF ANY OBLIGATION WHICH, BUT FOR SUCH PAYMENT, WOULD HAVE BEEN PAYABLE BY THE ASSESS EE; (IV) ANY SUM PAYABLE BY THE EMPLOYER, WHETHER DIRECTLY O R THROUGH A FUND, OTHER THAN A RECOGNISED PROVIDENT FUND OR AN APPROV ED SUPERANNUATION FUND 22[OR A DEPOSIT-LINKED INSURANCE FUND ESTABLIS HED UNDER SECTION 3G OF THE COAL MINES PROVIDENT FUND AND MISCELLANEO US PROVISIONS ACT, 1948 (46 OF 1948), OR, AS THE CASE MAY BE, SECTION 6C OF THE EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1 952 (19 OF 1952)], TO EFFECT AN ASSURANCE ON THE LIFE OF THE ASSESSEE OR TO EFFECT A CONTRACT FOR AN ANNUITY; 23[***] 24[ (VI) THE VALUE OF ANY SPECIFIED SECURITY OR SWEAT E QUITY SHARES ALLOTTED OR TRANSFERRED, DIRECTLY OR INDIRECTLY, BY THE EMPLOYE R, OR FORMER EMPLOYER, FREE OF COST OR AT CONCESSIONAL RATE TO THE ASSESSEE. EXPLA NATION.FOR THE PURPOSES OF THIS SUB-CLAUSE, (A) 'SPECIFIED SECURITY' MEANS THE SECURITIES AS DE FINED IN CLAUSE (H) OF WWW.TAXMANN.COM SECTION 225 OF THE SECURITIES CONTR ACTS (REGULATION) ACT, 1956 (42 OF 1956) AND, WHERE EMPLOYEES' STOCK OPTIO N HAS BEEN GRANTED UNDER ANY PLAN OR SCHEME THEREFOR, INCLUDES THE SECURITIE S OFFERED UNDER SUCH PLAN OR SCHEME; (B) 'SWEAT EQUITY SHARES' MEANS EQUITY SHARES ISSUE D BY A COMPANY TO ITS EMPLOYEES OR DIRECTORS AT A DISCOUNT OR FOR CONSIDE RATION OTHER THAN CASH FOR PROVIDING KNOW-HOW OR MAKING AVAILABLE RIGHTS IN TH E NATURE OF INTELLECTUAL PROPERTY RIGHTS OR VALUE ADDITIONS, BY WHATEVER NAM E CALLED; (C) THE VALUE OF ANY SPECIFIED SECURITY OR SWEAT EQ UITY SHARES SHALL BE THE FAIR MARKET VALUE OF THE SPECIFIED SECURITY OR SWEAT EQU ITY SHARES, AS THE CASE MAY BE, ON THE DATE ON WHICH THE OPTION IS EXERCISED BY THE ASSESSEE AS REDUCED BY THE AMOUNT ACTUALLY PAID BY, OR RECOVERED FROM, THE ASSESSEE IN RESPECT OF SUCH SECURITY OR SHARES; (D) 'FAIR MARKET VALUE' MEANS THE VALUE DETERMINED IN ACCORDANCE WITH THE METHOD AS MAY BE PRESCRIBED; (E) 'OPTION' MEANS A RIGHT BUT NOT AN OBLIGATION GR ANTED TO AN EMPLOYEE TO APPLY FOR THE SPECIFIED SECURITY OR SWEAT EQUITY SH ARES AT A PREDETERMINED PRICE; (VII) THE AMOUNT OF ANY CONTRIBUTION TO AN APPROVED SUPERANNUATION FUND BY THE EMPLOYER IN RESPECT OF THE ASSESSEE, TO THE EXTENT IT EXCEEDS ONE LAKH RUPEES; AND (VIII) THE VALUE OF ANY OTHER FRINGE BENEFIT OR AME NITY26 AS MAY BE PRESCRIBED27:] [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 18 [PROVIDED THAT NOTHING IN THIS CLAUSE SHALL APPLY T O, (I) THE VALUE OF ANY MEDICAL TREATMENT PROVIDED TO AN E MPLOYEE OR ANY MEMBER OF HIS FAMILY IN ANY HOSPITAL MAINTAINED BY THE EMP LOYER; 2 (II) [(II) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF AN Y EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE ON HIS MEDICAL TREATMENT O R TREATMENT OF ANY MEMBER OF HIS FAMILY (A) IN ANY HOSPITAL MAINTAINED BY THE GOVERNMENT OR ANY LOCAL AUTHORITY OR ANY OTHER HOSPITAL APPROVED30 BY THE GOVERNMENT FOR THE PURPOSES OF MEDICAL TREATMENT OF ITS EMPLOYEES; (B) IN RESPECT OF THE PRESCRIBED DISEASES31 OR AILM ENTS, IN ANY HOSPITAL APPROVED BY THE 32[PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER HAVING REGARD TO THE PRESCRIBED GUIDEL INES33 : PROVIDED THAT, IN A CASE FALLING IN SUB-CLAUSE (B), THE EMPLOYEE SHALL ATTACH34 WITH HIS RETURN OF INCOME A CERTIFICATE FR OM THE HOSPITAL SPECIFYING THE DISEASE OR AILMENT FOR WHICH MEDICAL TREATMENT WAS REQUIRED AND THE RECEIPT FOR THE AMOUNT PAID TO THE HOSPITAL;] (III) ANY PORTION OF THE PREMIUM PAID BY AN EMPLOYER IN R ELATION TO AN EMPLOYEE, TO EFFECT OR TO KEEP IN FORCE AN INSUR ANCE ON THE HEALTH OF SUCH EMPLOYEE UNDER ANY SCHEME APPROVED BY THE CENT RAL GOVERNMENT 35-36[OR THE INSURANCE REGULATORY AND DEVELOPMENT A UTHORITY ESTABLISHED UNDER SUB-SECTION (1) OF SECTION 3 OF T HE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT, 1999 (41 OF 1999),] FOR THE PURPOSES OF CLAUSE (IB) OF SUB-SECTION (1) OF SECTI ON 36; (IV) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF ANY PREMIUM PAID BY THE EMPLOYEE TO EFFECT OR TO KEEP IN FORCE AN INSURANCE ON HIS HEALTH OR THE HEALTH OF ANY WWW.TAXMANN.COM MEMBER OF HIS FAMILY UNDER ANY SCHEME APPROVED BY THE CENTRAL GOVERNMENT 35-36[OR THE INS URANCE REGULATORY AND DEVELOPMENT AUTHORITY ESTABLISHED UNDER SUB-SEC TION (1) OF SECTION 3 OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORI TY ACT, 1999 (41 OF 1999),] FOR THE PURPOSES OF SECTION 80D; (V) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF ANY EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE ON HIS MEDICAL TREATMENT O R TREATMENT OF ANY MEMBER OF HIS FAMILY [OTHER THAN THE TREATMENT REFE RRED TO IN CLAUSES (I) AND (II)]; SO, HOWEVER, THAT SUCH SUM DOES NOT EXCE ED 37[FIFTEEN] THOUSAND RUPEES IN THE PREVIOUS YEAR; (VI) ANY EXPENDITURE INCURRED BY THE EMPLOYER ON (1) MEDICAL TREATMENT OF THE EMPLOYEE, OR ANY MEMBE R OF THE FAMILY OF SUCH EMPLOYEE, OUTSIDE INDIA; [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 19 (2) TRAVEL 38[AND] STAY ABROAD OF THE EMPLOYEE OR A NY MEMBER OF THE FAMILY OF SUCH EMPLOYEE FOR MEDICAL TREATMENT; (3) TRAVEL AND STAY ABROAD OF ONE ATTENDANT WHO ACC OMPANIES THE PATIENT IN CONNECTION WITH SUCH TREATMENT, 39[SUBJECT TO TH E CONDITION THAT (A) THE EXPENDITURE ON MEDICAL TREATMENT AND STAY A BROAD SHALL BE EXCLUDED FROM PERQUISITE ONLY TO THE EXTENT PERMITT ED BY THE RESERVE BANK OF INDIA; AND (B) THE EXPENDITURE ON TRAVEL SHALL BE EXCLUDED FRO M PERQUISITE ONLY IN THE CASE OF AN EMPLOYEE WHOSE GROSS TOTAL INCOME, A S COMPUTED BEFORE INCLUDING THEREIN THE SAID EXPENDITURE, DOES NOT EX CEED TWO LAKH RUPEES;] (VII) ANY SUM PAID BY THE EMPLOYER IN RESPECT OF AN Y EXPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE FOR ANY OF THE PURPOSES SP ECIFIED IN CLAUSE (VI) SUBJECT TO THE CONDITIONS SPECIFIED IN OR UNDER THA T CLAUSE : [PROVIDED FURTHER THAT FOR THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2002, NOTHING CONTAINED IN THIS CLAUSE SH ALL APPLY TO ANY EMPLOYEE WHOSE INCOME UNDER THE HEAD 'SALARIES' (WH ETHER DUE FROM, OR PAID OR ALLOWED BY, ONE OR MORE EMPLOYERS) EXCLUSIV E OF THE VALUE OF ALL PERQUISITES NOT PROVIDED FOR BY WAY OF MONETARY PAY MENT, DOES NOT EXCEED ONE LAKH RUPEES.] EXPLANATION.FOR THE PURPOSES OF CLAUSE (2), (I) 'HOSPITAL' INCLUDES A DISPENSARY OR A CLINIC 41 [OR A NURSING HOME]; (II) 'FAMILY', IN RELATION TO AN INDIVIDUAL, SHALL HAVE THE SAME MEANING AS IN CLAUSE (5) OF SECTION 10; AND (III) 'GROSS TOTAL INCOME' SHALL HAVE THE SAME MEAN ING AS IN CLAUSE (5) OF SECTION 80B;] 8. THEREFORE, IN OUR CONSIDERED VIEW, THE SUPPLY OF ELECTRICITY BY THE ASSESSEE TO ITS EMPLOYEES AT CONC ESSIONAL RATES WOULD CERTAINLY BE PERQUISITE IN TERMS OF SECTIO N 17(2) OF THE ACT. HOWEVER, IT IS INCUMBENT UPON THE ASSES SEE TO FURNISH EVIDENCE THAT THE BENEFIT GIVEN TO EMPLOYEES IN THE [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 20 FORM OF SUPPLY ON CONCESSIONAL RATES IS TREATED AS PERQUISITE AND DUE TAXES HAS BEEN DEDUCTED AT SOURCE. IN THE ABSENCE OF SUCH EVIDENCES, NO FAULT CAN BE FOUND W ITH THE FINDING OF THE AUTHORITIES BELOW. LD. COUNSEL F OR THE ASSESSEE DURING THE COURSE OF HEARING PRAYED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF THE A.O. WHO CAN VERI FY THIS FACT BY CONDUCTING REQUISITE ENQUIRIES. HOWEVER, LD. D.R. STRONGLY OPPOSED THIS SUBMISSION AND STATED THAT ASSESS EE WAS PROVIDED WITH SUFFICIENT OPPORTUNITY IN THIS REG ARD. IT WILL GIVE SECOND INNINGS TO THE ASSESSEE WITHOUT ANY REASONABLE CAUSE. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS MADE BY THE LD. COUN SEL FOR THE ASSESSEE AND THE LD. D.R. THE LAW IS WELL SE TTLED THAT LEVY OF TAX SHOULD BE AT THE RIGHT HAND. IN THE CASE IN HAND, WE HAVE HELD THAT SUPPLY OF ELECTRICITY TO ITS EMPLOYEES AT A CONCESSIONAL RATE WOULD BE A PERQUISITE FO R [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 21 THE EMPLOYEES. UNDER THESE CIRCUMSTANCES, THE REVEN UE IS AT LIBERTY TO PROCEED AGAINST THE ASSESSEE FOR NON-DEDU CTION OF TAX AT SOURCE IN THE EVENT, IF THE EMPLOYEES HAVE OFFERED THE BENEFIT FOR TAXATION IN THEIR RESPECTIVE RETURNS , THE ASSESSEE WOULD NOT BE LIABLE FOR THE FBT. IT WOULD B E TANTAMOUNT TO DOUBLE TAXATION. WE THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE ISSU E TO THE FILE OF THE A.O. FOR VERIFYING WHETHER THE EMPLOYEE S OFFERED SUCH BENEFIT IN THEIR RETURNS, IF ANY. THE ASSESSEE WOULD COOPERATE BY FURNISHING THE REQUISITE INFORMATION TO T HE A.O. IF THE ASSESSEE FAILS TO PROVE THAT THESE BENEFI TS WERE TREATED AS PERQUISITE IN THE ACCOUNTS OF THE ASSESSEE AN D THE DUE TAX HAS BEEN DEDUCTED THEREON, THE A.O. WOUL D BE AT LIBERTY TO MAKE THE ADDITION AS PER LAW. THE GROUND S RAISED IN THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES . [ITA NO.181/IND/2018] [M/S. MADHYA PRADESH MADHYA KSHETRA VIDYUT VITERAN COMPANY LTD., BHOPAL] 22 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.181/IND/2018 FOR THE A.Y. 2009-10 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11. 10.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 11/102019 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE