Addl. CIT, Range-7, Pune V. Tetra Pak India Pvt. Ltd., Pune

ITA 1965/PUN/2012

• Counselvise Citation: 196524514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Gift; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.1961 TO 1963/PN/2012 (A.YS: 2006-07 TO 2008-09) TETRA PAK INDIA PVT. LTD., MAYFAIR TOWER, GROUND FLOOR, MUMBAI PUNE ROAD, SHIVAJINAGAR, PUNE 411005 PAN: AAACT3467B APPELLANT VS. ADDL. CIT, RANGE-7, PUNE RESPONDENT ITA NOS.1964 TO 1966/PN/2012 (A.YS: 2006-07 TO 2008-09) ADDL. CIT, RANGE-7, PUNE APPELLANT VS. TETRA PAK INDIA PVT. LTD., MAYFAIR TOWER, GROUND FLOOR, MUMBAI PUNE ROAD, SHIVAJINAGAR, PUNE 411005 PAN: AAACT3467B RESPONDENT ASSESSEE BY : SHRI NIKHIL P ATHAK DEPARTMENT BY : SHRI P.L. P ATHADE DATE OF HEARING : 07.05.2014 DATE OF ORDER : 27.05.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE ON SIMILAR ISSUES, SO THEY ARE BEING DISPOSED OFF BY THIS COMM ON ORDER. 2 2. IN ITA NO.1961/PN/2012, THE ASSESSEE HAS FILED T HE APPEAL ON THE FOLLOWING GROUNDS. 1. ON FACTS AND IN LAW, THE LEARNED CIT(A) ERRED IN HO LDING THAT THE EXPENSES INCURRED BY THE APPELLANT ON ITEM S SPECIFIED IN SECTION 115WB(2) ARE LIABLE TO FBT IRR ESPECTIVE OF THE FACT WHETHER THE SAID EXPENDITURE INCURRED R ESULTED IN ANY BENEFIT TO THE EMPLOYEES. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECI ATING THAT ONLY SUCH EXPENDITURE WHICH RESULTS INTO A DIRECT BENEFIT TO EMPLOYEE AND WHICH IS NOT CONSIDERED AS SALARY IS L IABLE TO FBT AND HENCE, GENUINE BUSINESS EXPENSES INCURRE D ON ITEMS SPECIFIED IN SECTION 115WB(2) WHICH DID NO T RESULT IN ANY BENEFIT TO THE EMPLOYEES WAS NOT LIABLE TO F BT. 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT T HE EXPENDITURE INCURRED UNDER THE HEAD 'MARKET SUPPORT ', 'TRAVELLING AND CONVEYANCE' 'CONFERENCE', 'SALES PROMOTION'', 'USE OF HOTEL, BOARDING AND LODGING FA CILITIES AND USE OF TELEPHONE WERE GENUINE BUSINESS EXPEND ITURE WHICH WERE NOT RESULTING IN ANY DIRECT BENEFIT TO T HE EMPLOYEES EITHER COLLECTIVELY OR INDIVIDUALLY AND H ENCE, THE SAID EXPENSES WERE NOT LIABLE TO LEVY OF FBT. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THAT : I. RS.2,39,77,624/- BEING EXPENDITURE GROUPED UNDER ADVERTISEMENT AND DISCOUNT ARE RELATING TO BRAND BUILDING OF A PARTICULAR PRODUCT AND HENCE NOT COVERED BY THE EXCEPTION PROVIDED IN SECTION 115WB(2)(D) WITHOUT APPRECIATING THAT THE SAID EXPENDITURE WAS COVERED WITHIN THE EXCEPTIONS PROVIDED IN SECTION 115WB(2)(D) AND HENCE, NO FBT WAS PAYABLE BY THE APPELLANT COMPANY. II. THAT RS.33,74,874/- BEING CREDIT NOTES EACH BE LOW RS.5 LAKHS GROUPED UNDER ADVERTISEMENT AND DISCOUNT ARE PRESUMED TO BE OUTSIDE THE PURVIEW OF ANY OF THE EXCEPTIONS PROVIDED IN SECTION 115WB(2)(D). III. HE ERRED IN HOLDING THAT THERE WAS AN ELEMENT OF INDIRECT BENEFIT TO EMPLOYEES IN RESPECT OF AFORESA ID RS.2,73,52,498/- (RS.2,39,77,624/- AND RS. 33,74,874/-) AND HENCE THE SAID EXPENDITURE WAS DEEMED FRINGE BENEFITS UNDER SECTION 115WB(2)(D) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THAT THERE WAS NO DIRECT OR INDIRECT BENEFIT TO THE EMPLOYEES OF THE APPELLANT COMPANY AND THEREFORE, 3 THERE WAS NO REASON TO LEVY FBT ON THE SAID EXPENSES. IV. THAT RS.2,61,87,749/- BEING EXPENDITURE INCURR ED ON SALES PROMOTION IS NOT COVERED WITHIN THE PURVIEW O F ANY OF THE EXCEPTIONS PROVIDED IN SECTION 115WB(2)(D) WITHOUT APPRECIATING THAT THE SAID EXPENSES WERE ALSO COVERED WITHIN THE EXCEPTIONS PROVIDED IN SECTION 115WB(2)(D AND HENCE, NO FBT WAS PAYABLE ON THE SAME. 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THAT TH E EXPENDITURE OF RS.15,61,400/- ON INTERNAL TRANSPORT EXPENSES AR E DEEMED FRINGE BENEFITS UNDER SECTION 115WB(2)(F) OF THE IN COME TAX ACT, 1961. 6. THE APPELLANT COMPANY CRAVES LEAVE TO ADD TO, ALTERS/AMEND, MODIFY AND 7 OR DELETE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL. 3. IN ITA NO.1964/PN/2012 FOR A.Y. 2006-07, THE REV ENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUND. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXPENS ES OF RS.5,43,42,777/- UNDER THE SUB HEADS (I) DISCOUNT / INCENTIVE (RS.2,90,54,959/-) AND (II) ADVERTISEMENT (RS.2,52,87,818/-) UNDER MAIN HEAD MARKETING SUPPOR T EXPENSES IN VIOLATION OF RULE 46A(3) OF THE IT RULE S BY ADMITTING FRESH EVIDENCE IN THE FORM OF BREAK-UP OF MARKETING SUPPORT EXPENSES (WHICH WERE NOT SUBMITTE D BY THE ASSESSEE AT THE ASSESSMENT STAGE) WITHOUT GIVIN G REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER. 4. AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE HAS POINTED THAT IT IS NOT PRESSING THE APPEAL WITH REGARD TO 'TRAVELLING AND CONVEYANCE' 'CONFERENCE', 'SALES PR OMOTION'', 'USE OF HOTEL, BOARDING AND LODGING FACILITIES AND USE OF TELEPHONE AS RAISED IN GROUND NO.3. SO, THE APPEAL OF ASSESSEE TO THAT EXTENT IS DISMISSED AS NOT PRESSED. 4.1 THE ASSESSEE IS A COMPANY WHICH MANUFACTURES AL L TYPES OF PACKING MATERIAL IN THE FOOD PROCESSING / BEVERAGES INDUSTRY. BESIDES, IT ALSO LEASES INDUSTRIAL PACKAGING MACHIN ERY AND SUPPLY 4 SPARE PARTS THEREOF. THE ASSESSING OFFICER VIDE IT S ORDER PASSED U/S.115WE OF I.T. ACT DETERMINING THE TOTAL FRINGE BENEFITS FOR THE ASSESSMENT YEAR 2006-07, MADE AN ADDITION OF 5,90,88,699/-. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHORITY , WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF ASSESS EE AND HAVING CONSIDERED THE SAME, THE CIT(A) GRANTED PARTIAL REL IEF TO THE ASSESSEE. 4.2 AS STATED ABOVE, THE ASSESSEE IS NOT PRESSING T HE ISSUES WITH REGARD TO 'TRAVELLING AND CONVEYANCE' 'CONFERENCE', 'SALES PROMOTION'', 'USE OF HOTEL, BOARDING AND LODGING FA CILITIES AND USE OF TELEPHONE. THUS, THE ONLY ISSUE OF MARKET SUPPORT SYSTEM SURVIVES. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATI VE HAS SUBMITTED THAT THE CIT(A) ERRED IN SUSTAINING THE PART OF ADD ITION MADE IN RESPECT OF MARKET SUPPORT SERVICE WITHOUT APPRECIAT ING THAT THE ENTIRE MARKET SUPPORT EXPENDITURE WAS NOT LIABLE TO FBT. THE ASSESSEE HAS INCURRED SUCH EXPENSES WHICH ARE BASIC ALLY REIMBURSEMENT OF THE EXPENSES INCURRED BY CUSTOMERS ON ADVERTISEMENT AND SALE PROMOTIONS. THE ASSESSEE HA S NOT INCURRED ANY EXPENDITURE ON ITS EMPLOYEES THE ENTIRE MARKET SUPPORT EXPENDITURE IS IN RESPECT OF EXPENDITURE REIMBURSEM ENT TO THE CUSTOMER AND NOT A SINGLE RUPEE HAS BEEN INCURRED B Y THE EMPLOYEE OF THE ASSESSEE COMPANY. THE FRINGE BENEFIT IS PAY ABLE IN RESPECT OF EXPENDITURE WHICH IS INCURRED FOR THE BENEFIT OF EM PLOYEE EXPENDITURE INCURRED SHOULD BE IN CONSIDERATION OF EMPLOYMENT. IN SUM AND SUBSTANCE, THE LEARNED AUTHORIZED REPRESENT ATIVE HAS SUBMITTED THAT THE MARKET SUPPORT EXPENDITURE HAS N OT INCURRED FOR THE BENEFIT OF EMPLOYEE AND IT HAS PAID TO CUSTOMER ON ACCOUNT OF REIMBURSEMENT OF ADVERTISEMENT AND SALE PROMOTIONS EXPENSES. NO FBT IS PAYABLE IN RESPECT OF SUCH EXPENSES UNDER TH E PROVISIONS OF SECTION 115WE OF THE ACT. THE LEARNED AUTHORIZED R EPRESENTATIVE HAS RELIED ON THE FOLLOWING VARIOUS CASE LAWS WHICH CAN BE DEALT LATTER. ON THE OTHER HAND, LEARNED DEPARTMENTAL RE PRESENTATIVE HAS 5 SUPPORTED THE ORDERS AUTHORITIES BELOW WITH REGARD TO FRINGE BENEFIT ON MARKET SUPPORT SERVICES. 4.3 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS A PRIVATE LIMI TED COMPANY ENGAGED IN THE MANUFACTURE OF DIFFERENT PACKING MAT ERIAL REQUIRED IN FOOD PROCESSING AND BEVERAGES INDUSTRY. THE ASSESS EE COMPANY HAS INCURRED MARKET SUPPORT EXPENSES WHICH ARE IN NATUR E OF PARTIAL OF REIMBURSEMENT OF ADVERTISEMENT AND PUBLICITY EXPENS ES INCURRED BY ITS CUSTOMERS. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. THE PRODUCTS OF ASSESSEE COMPANY ARE INDUSTRIAL PRODUCTS AND THE ASSESSEE DOES NOT NORMALLY UNDERTA KE DIRECT ADVERTISEMENTS OF ITS OWN. THE ASSESSEE HAS AGREED TO SUPPORT ITS CUSTOMERS IN THE FORM OF REIMBURSEMENT OF CERTAIN S ALE PROMOTIONS EXPENSES INCURRED BY THE CUSTOMERS. FOR EXAMPLE, T HE ASSESSEE SELLS ITS PRODUCTS TO NESTLE WHICH IN TURN SELLS MILK PAC K IN THE PRODUCT OF THE ASSESSEE. AT THE TIME OF ADVERTISEMENT, WHEN N ESTLE ADVERTISES ITS PRODUCT, INDIRECTLY, THE PRODUCTS OF THE ASSESS EE ARE ALSO ADVERTISED. THUS, THE ASSESSEE HAS UNDERTAKEN MARKE T SUPPORT EXPENSES. IN THE A.Y. 2006-07, THE ASSESSEE HAD INC URRED TOTAL EXPENDITURE OF 10,78,83,024/- WHICH WAS DEBITED UNDER THE HEAD MARKET SUPPORT. THE BREAK UP OF THE SAID EXPENDITUR E IS AS UNDER:- A DISCOUNT AS A PART OF TEA 10 EXIT COST RS. 2,90,54,959 / - B ADVERTISEMENT & DISCOUNTS RS. 5,26,40,316 / - C SALES PROMOTION (INCLUDING PROVISION FOR MARKET SUPPORT) RS. 2,73,97,192 / - D REVERSAL OF PROVISIONS FOR MARKET SUPPORT MADE IN EARLIER YEARS (RS. 12,09,443 / - ) TOTAL RS. 10,07,83,024 / - 4.4 AS STATED ABOVE, THE ASSESSING OFFICER HAS HELD THAT THE MARKET SUPPORT EXPENDITURE IS LIABLE FOR FBT. ACCORDING T O HIM, THE EXPENSES ARE INCURRED ON ADVERTISEMENT AND PUBLICIT Y AND THEREFORE, 6 SUCH EXPENSES ARE COVERED U/S.115WB(D). ACCORDINGL Y, HE HAS TAXED THE ENTIRE AMOUNT OF 10,78,83,024/- AS LIABLE TO FBT. 4.5 IN APPEAL, THE CIT(A) HAS PARTLY ACCEPTED THE C ONTENTION OF THE ASSESSEE. ACCORDING TO HIM, THE EXPENDITURE WHICH W AS IN THE NATURE OF DISCOUNT AND ADVERTISEMENTS ARE NOT LIABLE TO FB T. THE CIT(A) HAS FURTHER HELD THAT THE EXPENDITURE ON BRAND BUILDING , MARKETING AND SALES PROMOTION IS LIABLE TO FBT. THUS, OUT OF THE TOTAL AMOUNT OF 10,78,83,023/-, THE CIT(A) HAS GIVEN PART RELIEF AS UNDER:- SR. NO. NATURE OF THE EXPENDITURE AMOUNT (RS.) DECISION OF LEARNED CIT(A) I DISCOUNT 2,90,54,959 / - NOT LIABLE TO FBT II BRAND BUILDING, MARKETING & PROMOTION 2,73,52,498 / - LIABLE TO FBT III ADVERTISEMENT 2,52,87,818 / - NOT LIABLE TO FBT IV SALES PROMOTION 2,61,87,749 / - LIABLE TO FBT BOTH PARTIES ARE BEFORE US AS EVIDENT FROM GROUNDS RAISED BY BOTH PARTIES BEFORE US. 4.6 FOR THE SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 115WB ARE REPRODUCED AS UNDER: SECTION 115WB FRINGE BENEFITS 1) FOR THE PURPOSES OF THIS CHAPTER, FRINGE BENEFITS MEANS ANY CONSIDERATION FOR EMPLOYMENT PROVIDED BY WAY OF (A) ANY PRIVILEGE, SERVICE, FACILITY OR AMENITY, DIREC TLY OR INDIRECTLY, PROVIDED BY AN EMPLOYER, WHETHER BY WAY OF REIMBURSEMENT OR OTHERWISE, TO HIS EMPLOYEES (INCLU DING FORMER EMPLOYEE OR EMPLOYEES); (B) ANY FREE OR CONCESSIONAL TICKET PROVIDED BY THE EMP LOYER FOR PRIVATE JOURNEYS OF HIS EMPLOYEES OR THEIR FAMI LY MEMBERS; 7 (C) ANY CONTRIBUTION BY THE EMPLOYER TO AN APPROVED SUPERANNUATION FUND FOR EMPLOYEES. 4.7 THE PROVISIONS OF SECTION 115WB OF THE ACT CONF INES TO THE CHARGEABILITY OF FBT IN RESPECT OF FRINGE BENEFITS PROVIDED OR DEEMED TO HAVE BEEN PROVIDED TO EMPLOYEE OR EMPLOYEES ALON E. THE DEEMING PROVISIONS OF SUB-SECTION (2) OF SECTION 115WB WOUL D OPERATE ONLY IF EXPENDITURE SPECIFIES THEREIN IS INCURRED IN CONSID ERATION FOR EMPLOYMENT OR IN OTHERWISE IT HAS INCURRED IN CONNE CTION WITH EMPLOYEES OF THE ASSESSEE AND NOT OTHERWISE. THE I MPORT AND INTENTION OF INTRODUCING CHAPTER XII-H WAS TO TAX S UCH BENEFITS WHICH ARE COLLECTIVELY ENJOYED BY EMPLOYEES AND NOT BE ATTRIBUTED TO ANY INDIVIDUAL EMPLOYEE. 4.8 THE ASSESSEE HAS INCURRED SUCH EXPENSES WHICH A RE BASICALLY REIMBURSEMENT OF EXPENSES AS PER AGREEMENT INCURRED BY THE CUSTOMERS ON ADVERTISEMENT AND SALES PROMOTIONS. T HE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON ITS EMPLOYEES. THE ENTIRE MARKET SUPPORT EXPENDITURE IS IN RESPECT OF EXPENDI TURE REIMBURSED TO THE CUSTOMER. THERE IS NOTHING ON RECORD TO SUG GEST THAT THE SAME HAS BEEN INCURRED ON EMPLOYEES OF THE ASSESSEE COMPANY IN ANY WAY. THE PROVISIONS OF FRINGE BENEFIT ARE IN R ESPECT OF PAYMENT WITH REGARD TO THE EXPENDITURE WHICH HAS INCURRED F OR THE BENEFIT OF ITS EMPLOYEES. THE EXPENDITURE INCURRED SHOULD BE IN CONSIDERATION OF THE EMPLOYMENT. THE MAIN THRUST OF FBT TAX WAS TO TAX THOSE BENEFITS WHICH ARE ENJOYED BY THE EMPLOYEES AND COU LD NOT BE ATTRIBUTABLE IN THE CASE OF A SINGLE EMPLOYEE. IN THE CASE BEFORE US, THE PAYMENT HAS BEEN MADE TO THE CUSTOMERS AS PER A GREEMENT. THERE IS NOTHING ON RECORD TO SUGGEST THAT MARKET S UPPORT EXPENDITURE HAS BEEN INCURRED FOR THE BENEFIT OF EM PLOYEES OF THE ASSESSEE IN ANY MANNER. THE SAME HAS BEEN PAID TO THE CUSTOMERS ON ACCOUNT OF REIMBURSEMENT OF ADVERTISEMENT AND SA LES PROMOTIONS EXPENSES AS PER AGREEMENT. SO, IT IS NOT JUSTIFIED TO ATTRACT THE PROVISIONS OF FBT IN RESPECT OF SUCH PAYMENTS. THI S IS NOT 8 APPLICABLE TO THE PAYMENT TO THIRD PARTY WHICH DOES NOT RESULT IN ANY BENEFIT TO EMPLOYEES OF THE ASSESSEE, SO THE SAME S HOULD NOT BE CHARGEABLE TO FRINGE BENEFITS TAX U/S.115WB. 4.9 WE FIND THAT THE HONBLE DELHI HIGH COURT IN TH E CASE OF T & T MOTORS LTD. VS. ASST. CIT (2012) 341 ITR 332 (DEL) HAS HELD THAT A CAREFUL READING OF CLAUSES (I) TO (VIII) ELUCIDATES THAT THE LEGISLATION HAS EXCLUDED FROM FBT, THE EXPENDITURE IN THE FORM OF PAYMENTS TO THIRD PARTIES AND THEREFORE, FRINGE BENEFIT TAX IS TO BE LEVIED ONLY IN THE CASE OF EXPENDITURE INCURRED COLLECTIVELY ON EM PLOYEES. ACCORDING TO US, AS PER THE DEFINITION OF FRINGE BE NEFIT CONTAINED IN SECTION 115WB(1), THE FRINGE BENEFIT WOULD INCLUDE ONLY THOSE EXPENSES WHICH ARE INCURRED BY EMPLOYER IN THE COUR SE OF HIS BUSINESS IN CONSIDERATION OF EMPLOYMENT AND HENCE, ANY EXPENDITURE LISTED UNDER CLAUSES (A) TO (Q) OF SECT ION 115WB COULD BE TREATED AS FRINGE BENEFIT ONLY TO THE EXTENT SAME I S INCURRED IN RELATION TO THE EMPLOYEE AS HELD BY PUNE BENCH IN T HE CASE OF DESAI BROTHERS LTD VS. ADDL. CIT [57 SOT 106 (PUNE) (URO) ]. EVEN ANY EXPENDITURE INCURRED BY EMPLOYER IN THE COURSE OF H IS BUSINESS WHICH IS NOT A CONSIDERATION FOR EMPLOYMENT COULD N OT BE CONSIDERED AS FRINGE BENEFIT. HENCE, THE FRINGE BENEFITS CANN OT ARISE WHEN THE EXPENDITURE HAS INCURRED ON A PERSON WHO IS NOT AN EMPLOYEE. IN THE CASE BEFORE US, THE PAYMENT HAS BEEN MADE TO TH E CUSTOMERS OF THE ASSESSEE AS PER AGREEMENT WHO DO NOT FALL IN TH E DEFINITION OF EMPLOYEES. SO, THE PROVISIONS OF FRINGE BENEFIT AR E NOT APPLICABLE TO THEM. SO, THE EMPLOYER OR EMPLOYEE RELATIONSHIP IS MUST TO LEVY FRINGE BENEFIT TAX. EVEN FBT IS NOT LEVIED IN RESP ECT OF GIFT ITEMS GIVEN TO THE TRAVEL AGENT, CUSTOMER WHERE THERE IS NO EMPLOYER OR EMPLOYEE RELATIONSHIP OR ASSESSEE AND RECIPIENT. A PART FROM, THE EMPLOYER EMPLOYEE RELATIONSHIP FOR FBT PROVISIONS W OULD BE APPLICABLE ONLY IN RESPECT OF THOSE EXPENSES WHICH CONTAIN AN ELEMENT OF PERSONAL BENEFIT TO EMPLOYEES AND NOT IN RESPECT OF EXPENSES INCURRED ON NON-EMPLOYEES. IN VIEW OF ABO VE, WE HOLD THAT 9 THE EXPENSES IN QUESTION INCURRED BY ASSESSEE ON MA RKET SUPPORT REIMBURSED TO ITS CUSTOMERS, IT IS NOT ATTRACTS THE PROVISIONS OF SECTION 115WB AND THE SAME IS DIRECTED TO BE DELETE D. 5. THE NEXT ISSUE IS WITH REGARD TO EXPENDITURE OF 15,61,400/- ON INTERNAL TRANSPORT EXPENSES. THE ASSESSING OFFICER AND THE CIT(A) HELD THAT THE EXPENDITURE OF 15,61,400/- ON INTERNAL TRANSPORT EXPENSES ARE DEEMED TO BE FRINGE BENEFITS U/S.115WB . THE LEARNED AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE CI T(A) WAS NOT JUSTIFIED IN CONFIRMING THAT THE EXPENDITURE OF 15,61,400/- ON INTERNAL TRANSPORT EXPENSES ARE DEEMED TO BE THE FR INGE BENEFITS U/S.115WB(2)(F) OF I.T. ACT. IN FACT, THE ASSESSEE HAS INCURRED INTERNAL TRANSPORT EXPENSES OF 15,61,400/-. IT IS UNDISPUTED THAT THE ASSESSEE COMPANYS FACTORY IS SITUATED AT TAKWE BUDRUK, TALUKA MAVAL, DIST. PUNE. THE ASSESSEES OFFICE IS LOCATE D AT MAYFAIR TOWERS, MUMBAI PUNE ROAD, NEAR SHIVAJI NAGAR, PUNE. THE INTERNAL TRANSPORT EXPENSES ARE ON ACCOUNT OF SHUTTLE SERVIC E HIRED BY THE ASSESSEE FOR MOVEMENT OF THE STAFF FROM THE OFFICE TO FACTORY AND BACK. EVEN THE CIT(A) HAS HELD THAT SUCH EXPENDITU RE IS LIABLE TO FBT. THE STAND OF THE ASSESSEE HAS BEEN THAT THE E NTIRE EXPENDITURE IS FOR OFFICIAL PURPOSES EXPENDITURE HAS INCURRED FOR TRANSPORTING EMPLOYEES TO FACTORY AND BACK. NO PERSONAL BENEFIT IS GRANTED TO EMPLOYEES. THE CBDT VIDE ITS CIRCULAR NO.8 OF 2005 HAD CLARIFIED THAT THE EXPENDITURE ON PROVIDING FREE OR SUBSIDIZE D TRANSPORT TO THE EMPLOYEES FOR JOURNEY OF THE EMPLOYEES FROM THE RES IDENCE TO OFFICE IS NOT LIABLE TO FBT, EVEN THAT EVENT, EVEN THE EXPEND ITURE ON TRAVEL OF THE EMPLOYEES FROM ONE OFFICIAL PLACE TO ANOTHER OF FICIAL PLACE SHOULD NOT BE LIABLE TO FBT. MOREOVER, THIS EXPENDITURE H AS NO PERSONAL BENEFIT TO THE EMPLOYEES AND IT HAS INCURRED DURING COURSE OF ASSESSEES BUSINESS. ACCORDINGLY, THE LOWER AUTHOR ITIES WERE NOT JUSTIFIED TO HOLD THAT THE EXPENDITURE OF 15,61,400/- ON INTERNAL TRANSPORT EXPENSES WAS DEEMED FRINGE BENEFIT U/S.11 5WB(2)(F) OF THE ACT. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY . 10 6. SINCE WE HELD THE ISSUE IN FAVOUR OF ASSESSEE ON BROAD PROPOSITION, WE REFRAIN TO COMMENT ON MERIT OF BREA K-UP OF THOSE EXPENSES AS RAISED BY BOTH THE PARTIES IN THEIR RES PECTIVE APPEALS. PRACTICALLY THESE ISSUES GO ACADEMIC. SIMILAR ISSU ES OF FBT AND INTERNAL TRANSPORT EXPENSES AROSE IN A.YS. 2007-08 AND 2008-09. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONIN G, THE ASSESSING OFFICER IS DIRECTED TO DELETE SUCH ADDITIONS MADE I N THE RESPECTIVE YEARS. 7. IN THE RESULT, THE APPEALS FILED BY ASSESSEE ARE ALLOWED AND THAT OF REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF MAY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH MAY, 2014 GCVSR COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. THE DR, A BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE