Commex Corporation, Kolkata V. DCIT, C ircle- 34, Kolkata, Kolkata

ITA 1890/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9432 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 08-10-2010
• Court: TRIBUNAL
• Department Lawyers: S I BARA
• Assessee Lawyers: R DHAR
• Keywords: Depreciation

Judgement Text

, SMC , , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA () BEFORE . . . . . . . . , , , , ) [BEFORE HONBLE SRI D. K. TYAGI, JM] ! ! ! ! / I.T.A NO. 1890/KOL/2010 '#$ %&' '#$ %&' '#$ %&' '#$ %&'/ // / ASSESSMENT YEAR : 2006-07 COMMEX CORPORATION -VS- DEPUTY COMMISSIONER OF I NCOME-TAX, (PA NO.AACFC 4567 E) CIRCLE-34, KOLKATA. ()* / APPELLANT ) (+)*/ RESPONDENT ) FOR THE APPELLANT: SRI R. DHAR FOR THE RESPONDENT : SRI S. I. BARA , / ORDER THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 12.08.2010 FOR THE ASSESSMENT YEAR 2 006-07 ON THE FOLLOWING GROUNDS : 1. FOR THAT LD. CIT(A) WAS NOT JUSTIFIED TO DISMIS S THE APPEAL. 2. FOR THAT LD. CIT(A) SHOULD HAVE HELD THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESEE WAS NOT LIABLE TO PAY FRINGE BENEFIT TA X ON 20% OF MOTOR CAR EXPENSES & DEPRECIATION USED WHOLLY & FULLY BY PARTNERS FOR TH E PURPOSE OF THE BUSINESS ONLY. 3. FOR THAT LD. CIT(A) SHOULD HAVE REDUCED THE VALU E OF FRINGE BENEFIT FROM RS.2,28,920/- TO RS.33,394/-. 2. THESE GROUNDS RELATE TO ADDITION OF FRINGE BENEF IT. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.9,75,994/- BY WAY OF MOTOR CAR EXPENSES INCLUDING DEPRECIATION TH EREON. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT CONSIDERED 20% OF MOTOR CAR EXPENSES INCLUDING DEPRECIATION OF RS.9,75,994/- AMOUNTING TO RS.1,95,199/- IN THE CALCULATION OF FBT VALUES. HENCE, THE SAID AMOUNT WAS ADDED TO THE TOTAL FBT SHOWN. BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE SUBMITTED THAT THE MOTOR CAR WAS USED FOR THE PURPO SE OF BUSINESS AND THAT IT WAS NEVER PROVIDED TO THE EMPLOYEES AND SO, EXPENSES RELATED THERETO ARE NOT COVERED U/S. 115WA(1) OF THE ACT. CONSIDERING THE SUBMISSIONS OF THE ASSESS EE THE LD. CIT(A) OBSERVED THAT AS PER THE PROVISIONS OF SECTION 115WB(2)(H), THE FRINGE BENEF ITS SHALL BE DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES, IF THE EMPLOYER H AS, IN THE COURSE OF HIS BUSINESS OR PROFESSION, INCURRED ANY EXPENSE ON REPAIR, RUNNING (INCLUDING FUEL), MAINTENANCE OF MOTOR CARS AND THE AMOUNT OF DEPRECIATION THEREON. IN VIEW OF SUCH PROVISIONS, HE HELD THAT THE ACTION OF 2 THE ASSESSING OFFICER IS IN ACCORDANCE WITH LAW AND CALLS FOR NO INTERFERENCE AND CONFIRMED THE ADDITION. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE WHOLLY AND E XCLUSIVELY FOR THE PURPOSE OF THE ASSESSEES BUSINESS AND NO EXPENSES WERE INCURRED O N EMPLOYEES. HE ALSO PLACED RELIANCE ON THE NOTE GIVEN BY THE AUDITOR IN ITS REPORT WHICH S PECIFICALLY STATES THAT FBT NOT CALCULATED ON EXPENSES OF RS.19,93,754.10 WHICH INCLUDED EXPENSES OF RS.9,75,994/-OF MOTOR CAR AND DEPRECIATION HAS BEEN INCURRED BY PARTNER OF THE FI RM. HENCE, PROVISIONS OF SECTION 115WA(1) BEING NOT APPLICABLE, THE ADDITION SUSTAINED BY THE LD. CIT(A).MAY KINDLY BE DELETED. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES AND PRAYED BEFORE THE BENCH TO CONFIRM THE SAME. 5. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOT H THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE ME. I FIND THAT THE ASSESSEE HAS SHOW N AN AMOUNT OF RS.9,75,994/- BY WAY OF MOTOR CAR EXPENSES INCLUDING DEPRECIATION THEREON. THE AO HELD THAT 20% OF SUCH EXPENSES SHOULD BE INCLUDED IN THE VALUE OF FRINGE BENEFITS. THE LD. CIT(A) UPHELD THIS ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT AS PER THE PROV ISIONS OF SECTION 115WB(2)(H), THE FRINGE BENEFITS SHALL BE DEEMED TO HAVE BEEN PROVIDED BY T HE EMPLOYER TO HIS EMPLOYEES, IF THE EMPLOYER HAS, IN THE COURSE OF HIS BUSINESS OR PROF ESSION, INCURRED ANY EXPENSE ON REPAIR, RUNNING (INCLUDING FUEL), MAINTENANCE OF MOTOR CARS AND THE AMOUNT OF DEPRECIATION THEREON. BEFORE ME THE LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF ASSESSEES BUSINESS AND NO EXPENSES WERE INCURRED ON EMPLOYEES. IN SUPPORT OF HIS SUBM ISSION, HE PLACED RELIANCE ON THE NOTE GIVEN BY THE AUDITOR IN HIS REPORT, WHICH IS AVAILA BLE IN THE PAPER BOOK WHEREIN IT HAS BEEN SPECIFICALLY NOTED THAT FBT NOT CALCULATED ON EXPENSES OF RS.19,93,754.10 WHICH HAS BEEN INCURRED BY PARTNERS OF THE FIRM. THE REVENUE AUTHORITIES HAVE NOT REBUTTED THIS NOT ING OF THE AUDITOR BY PRODUCING ANY COGENT MATERIAL ON RECORD AT ANY STAGE OF THE PROCEEDINGS. IN THIS VIEW OF THE MATTER, I ACCEPT THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO TAKE THE VALUE OF FRINGE BENEF IT OF RS.33,394/- AS SHOWN IN THE AUDITORS REPORT. THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- . . , (D. K. TYAGI) JUDI CIAL MEMBER ( - - - -) )) ) DATED : 5TH JANUARY, 2011 3 %./ '#01 '2% JD.(SR.P.S.) , 3 +''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. COMMEX CORPORATION, 17, BRABOURNE R OAD, KOLKATA-700 001. 2 +)* / RESPONDENT : DCIT, CIRCLE-34, KOLKATA. 3 . ',# / THE CIT, , KOLKATA 4 . ',# ( )/ THE CIT(A), KOLKATA 5 . %=' +'# / DR, KOLKATA BENCHES, KOLKATA 4 +'/ TRUE COPY, ,#>/ BY ORDER, ? 1 /DEPUTY REGISTRAR .