Gujarat Energy Transmission Corpon.Ltd., Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITA 2264/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67636 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: J P SHAH

Judgement Text

ITA NO 2264 & 2402/AHD/2010 . A.Y. 2006-07 & 2007- 08 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NOS. 2264 & 2402/AHD/2010 (ASSESSMENT YEARS: 2006-07 & 07-08) GUJARAT ENERGY TRANSMISSION CORPORATION LTD. SARDAR PATEL VIDYUT BHAVAN, RACE COURSE CIRCLE, BARODA (APPELLANT) VS. THE ACIT CIRCLE 1(1), BARODA (RESPONDENT) PAN: AABCG 4029R APPELLANT BY : SHRI J.P. SHAH. A.R. RESPONDENT BY : SHRI J.P. JANGID. SR. D.R. ( )/ ORDER DATE OF HEARING :03-09-2013 DATE OF PRONOUNCEMENT :13-09-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-I, BARODA DATED 28.04.2010 FOR ASSESSMENT YEARS 2006-0 7 & 07-08 RESPECTIVELY. SINCE THE ISSUES INVOLVED IN BOTH THE YEARS ARE IDENTICAL, BOTH THE APPEALS ARE DISPOSED OF BY THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO 2264 & 2402/AHD/2010 . A.Y. 2006-07 & 2007- 08 2 2. BEFORE US, AT THE OUTSET BOTH THE PARTIES SUBMITTED THAT THE FACTS AND THE ISSUE INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EX CEPT FOR THE AMOUNT AND THEREFORE THE SUBMISSIONS MADE BY THEM IN CASE OF O NE YEAR WOULD BE EQUALLY APPLICABLE TO THE OTHER. WE THEREFORE PROC EED WITH THE FACTS OF ASSESSMENT YEAR 2006-07 IN ITA NO. 2402/AHD/2010. 3. THE FACTS AS CULLED OUT FROM THE ORDER OF LOWER AUT HORITIES ARE AS UNDER 4. FOR A.Y. 2006-07 ASSESSEE ELECTRONICALLY FILED RETU RN OF INCOME AND FRINGE BENEFIT TAX ON 31.12.2006 SHOWING TOTAL VALU E OF FRINGE BENEFIT AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER NOTICED THAT THE VALUE OF FRINGE BENEFIT TAX (FBT) WAS DECL ARED AT RS. NIL BY THE ASSESSEE BUT IN THE TAX AUDIT REPORT FILED UNDER SE CTION 44AB OF THE ACT, THE VALUE OF FRINGE BENEFIT WAS STATED AT RS. 2,87, 55,560/-. THE ASSESSEE WAS ASKED TO CLARIFY THE DISCREPANCY AND JUSTIFY IT S EXPLANATION. ASSESSEE INTERALIA SUBMITTED THAT IN VIEW OF THE JUDGMENT OF HON. GUJARAT HIGH COURT IN THE CASE OF GUJARAT CHAMBER OF COMMERCE AN D INDUSTRIES VS. UNION OF INDIA DELIVERED ON 18,10,2005, ASSESSEE IS NOT LIABLE TO PAY FBT AND THEREFORE VALUE OF FBT WAS DECLARED AT RS. NIL IN THE RETURN. ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. HE WAS OF THE VIEW THAT THE ASSESSEE WAS LIABLE TO PAY FBT ON THE VALUE OF FRINGE BENEFIT UNDER THE PROVISIONS OF CHAPTER XII-H OF TH E IT ACT. HE ACCORDINGLY HELD AS UNDER: 3. CONTENTIONS RAISED BY THE ASSESSEE HAVE BEEN DU LY CONSIDERED BY ME IN THE LIGHT OF JUDGMENT (SUPRA) OF HON. GUJARAT HI GH COURT, IT IS VERY INTERESTING TO NOTE THAT IN THE CASE BEFORE HON. HI GH COURT OF GUJARAT, ITA NO 2264 & 2402/AHD/2010 . A.Y. 2006-07 & 2007- 08 3 HON. HIGH COURT WAS CONCERNED WITH THE ISSUE OF APP LICABILITY OF PROVISIONS RELATING TO FBT ENACTED BY THE LEGISLATU RE VIDE FINANCE ACT, 2005 WITH EFFECT FROM 1.4.2006 IN CASE OF THREE CAT EGORIES OF ASSESSEES. THE FIRST CATEGORY OF THE ASSESSEES IS THE CATEGORY IN WHICH ASSESSEES ARE COVERED UNDER THE PROVISIONS OF FBT,THE SECOND CATE GORY IS OF THE ASSESSEES WHERE THEY, MAY BE GOVERNED PARTIALLY AND THE THIRD CATEGORY IS OF THE ASSESSEE WHEREIN THE FBT IS SOUGHT TO BE LEV IED BY THE GOVERNMENT DESPITE THE FACT THAT EMPLOYER IS NOT MAKING ANY PA YMENT TO ANY EMPLOYEE OR NOT INCURRING ANY EXPENDITURE FOR ANY EMPLOYEE S O AS TO ATTRACT FBT. VIDE SAID JUDGMENT, HON HIGH COURT HAS GRANTED AD-I NTERIM RELIEF BY DIRECTING THAT THE ASSESSEES SHALL DEPOSIT THE AMOU NT OF FBT IN A SEPARATE ACCOUNT TO BE OPENED AND MAINTAINED WITH A SCHEDULE D NATIONALIZED BANK SUBJECT TO THE CONDITION THAT AMOUNT SO DEPOSITED S HALL NOT BE UTILIZED FOR ANY PURPOSE AND NO CHARGE SHALL BE CREATED ON SUCH DEPOSITS NOR IT SHALL BE USED AS A COLLATERAL FOR OBTAINING ANY LOAN AGAI NST THE SAME. HOWEVER, THE HON. HIGH COURT AT PARA 3 OF THE JUDGM ENT HAS VERY CATEGORICALLY CLARIFIED THAT THE AD-INTERIM RELIEF GRANTED SHALL BE APPLICABLE ONLY IN CASE WHERE THE ASSESSEE DISPUTES THE LIABILITY TO THE EXTENT OF BEING COVERED BY CATEGORY NO.2 OR 3, HOWE VER, IN THE GIVEN CASE, ASSESSEE IS COVERED UNDER CATEGORY 1 I.E. CLA SS OF ASSESSEES WHO ARE COVERED BY PROVISIONS OF FBT, THEREFORE HAVING REGA RD TO THE FACTS OF THE ASSESSEES CASE AND TERMS OF ADDITION-INTERIM RELIE F GRANTED BY HON. HIGH COURT, ASSESSEES CASE IS NOT COVERED ON ANY C OUNT BY THE JUDGMENT OF HON. HIGH COURT. SINCE ASSESSEE'S CASE IS NOT CO VERED BY THE DECISION OF HON. HIGH COURT OF GUJARAT, ASSESSEE IS LIABLE T O PAY FBT ON THE VALUE OF FB UNDER THE PROVISIONS OF CHAPTER XII-H OF THE I.T. ACT. ASSESSEE HAS NOT PRODUCED ANY PROOF AS REGARDS PAYMENT OF FBT ON THE VALUE OF FB AS REPORTED IN THE TAX AUDIT REPORT. THEREFORE IT IS HELD THAT ASSESSEE IS LIABLE TO PAY FBT AND AMOUNT DEPOSITED BY IT, IF AN Y, IN THE SEPARATE BANK ACCOUNT IN TERMS OF SAID JUDGMENT OF HON. HIGH COUR T, SUCH DEPOSIT SHALL NOT OPERATE AS PAYMENT TOWARDS DISCHARGE OF ITS FBT LIABILITY. 4. IN VIEW OF THE ABOVE AFTER VERIFICATION OF THE BOOK S OF ACCOUNT ON TEST CHECK BASIS AND THE RECORDS AVAILABLE, THE TAXABLE FB IS WORKED TO RS. 2,87,55,560/-. 5. IT IS PERTINENT TO MENTION HERE THAT THE ACCOUNTANT IN ITS REPORT IN ANNEXURE-II TO FORM NO. 3CD HAS DULY DISCHARGED HIS ONUS BY QUANTIFYING AND REPORTING THE VALUE OF FB, DESPITE THE INTERIM ORDER OF THE HON. HIGH COURT. THIS ALSO LEADS TO THE CONCLU SION THAT THE INTERIM ITA NO 2264 & 2402/AHD/2010 . A.Y. 2006-07 & 2007- 08 4 RELIEF BENEFIT OF THE ORDER OF THE HON. HIGH COURT ARE NOT EXTENDED TO THE FACTS OF THE ASSESSEE. 6. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER BY HOLDING AS UNDER: 4.6 ON A COMBINED READING OF THE SPEECH OF THE FIN ANCE MINISTER, THE NOTES ON CLAUSES AND THE EXPLANATORY MEMORANDUM (CI RCULAR NO. 8 DT. 29.8.2005), IT IS EVIDENT THAT THE FBT WAS INTRODUC ED IN ORDER TO TAX THE BENEFITS WHICH COULD NOT BE BROUGHT WITHIN THE SCOP E OF 'PERQUISITE'. THIS INCLUDES CASES WHERE THE BENEFITS ARE COLLECTIVELY ENJOYED BY THE EMPLOYEES AND CANNOT BE ATTRIBUTED TO ANY INDIVIDUA L EMPLOYEE. OF COURSE, WHERE THE BENEFIT IS ENJOYED BY A PERSON WH O IS NOT AN EMPLOYEE, NO FBT CAN BE LEVIED. HOWEVER, IT IS FOR THE ASSESS EE TO SHOW THAT THE BENEFIT WAS ENJOYED BY NON-EMPLOYEES. THE APPELLANT HAS ARGUED THAT EVEN IF THE BENEFIT WAS ENJOYED BY ITS EMPLOYEES, I F THE EXPENDITURE WAS INCURRED FOR THE PURPOSES OF THE BUSINESS, IT WOULD ESCAPE THE LEVY OF FBT. THERE IS, HOWEVER, NO EVIDENCE TO SUBSTANTIATE THIS VIEW. ON THE CONTRARY, IF THE EXPENDITURE HAS BEEN INCURRED ON I TEMS ENUMERATED AT (A) TO (P) OF SUB-SECTION (2) OF SECTION 115WB, THE SAM E WOULD BE DEEMED TO BE FRINGE BENEFITS PROVIDED TO ITS EMPLOYEES. DEEMI NG PROVISIONS MUST BE STRICTLY CONSTRUED. 4.7 IT IS SEEN THAT THE STATUTORY AUDITORS OF THE A SSESSEE. IN THE TAX AUDIT REPORT FILED U/S 44AB HAVE THEMSELVES QUANTIFIED TH E VALUE OF FRINGE BENEFITS TAKING INTO ACCOUNT THE ITEMS AT (A) TO (P ) MENTIONED IN SECTION 115WB(2). IT IS PERTINENT TO NOTE THAT ALL THE EXPE NDITURE HAS BEEN INCURRED ON THE EMPLOYEES OF THE ASSESSEE. ADMITTED LY, NO PART OF THE EXPENDITURE IN QUESTION HAS BEEN INCURRED ON NON-EM PLOYEES. MOREOVER, THE ASSESSEE HAS ITSELF DEPOSITED THE FBT INTO GOVE RNMENT TREASURY AND NOT IN AN ESCROW ACCOUNT WITH A SCHEDULED BANK. THU S, THE APPELLANT APPEARS TO HAVE CONSIDERED ITSELF TO BE PART OF CAT EGORY (1) AS HELD BY THE HIGH COURT I.E., AN ASSESSEE WHO WAS FULLY COVERED BY THE PROVISIONS. HAVING REGARD TO THE TOTALITY OF THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE ASSESSEE WAS LIABLE TO FBT. THE ACTION OF THE ASSESSING OFFICER IN THIS REGARD IS ACCORDINGLY CONFIRMED. FURTHER, T HE ASSESSING OFFICER HAS MERELY ACCEPTED THE VALUATION OF TAXABLE FRINGE BENEFITS AS WORKED OUT BY THE ASSESSEE ITSELF. HENCE VALUATION OF THE FRINGE BENEFITS AT RS. 1,34,91,288/- IS ALSO CONFIRMED. THIS GROUND THUS F AILS. ITA NO 2264 & 2402/AHD/2010 . A.Y. 2006-07 & 2007- 08 5 7. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US. BEFORE US, THE LEARNED A.R. REITERATED THE SUBMISSI ONS MADE BEFORE THE LOWER AUTHORITIES AND FURTHER RELIED ON THE DECISIO N OF GUJARAT HIGH COURT IN THE CASE OF GUJARAT CHAMBER OF COMMERCE AN D INDUSTRY (SUPRA). 8. THE LEARNED D.R. ON THE OTHER HAND POINTED TO THE R ELEVANT OBSERVATIONS OF THE ASSESSING OFFICER AND THUS SUPPORTED THE ORD ER OF ASSESSING OFFICER AND CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS CONS IDERED THE VALUE OF FRINGE BENEFIT AT RS. NIL BUT HOWEVER IN THE TAX A UDIT REPORT FILED UNDER SECTION 44AB THE STATUTORY AUDITORS HAVE QUANTIFIED THE VALUE OF FRINGE BENEFIT AND BASED ON THE AFORESAID QUANTIFICATION, THE ASSESSEE HAS ALSO DEPOSITED THE FBT INTO GOVERNMENT TREASURY AND NOT IN AN ESCROW ACCOUNT WITH THE SCHEDULED BANK. WE FURTHER FIND TH AT THE ASSESSING OFFICER HAS CONSIDERED THE ASSESSEE TO BE COVERED I N THE CATEGORY 1 OF THE ASSESSEES WHO WERE COVERED BY THE PROVISIONS OF FBT IN TERMS OF THE DECISION OF HON. GUJARAT HIGH COURT (SUPRA). BEFOR E US, THE LEARNED A.R. COULD NOT CONTROVERT THE FINDINGS OF ASSESSING OFFI CER AND CIT(A) BY BRINGING ANY CONTRARY MATERIAL ON RECORD. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CI T(A) AND THUS THIS GROUND OF THE ASSESSEE IS DISMISSED. ITA NO. 2402/AHD/2010 (FOR A.Y. 2006-07) ITA NO 2264 & 2402/AHD/2010 . A.Y. 2006-07 & 2007- 08 6 10. SINCE THE FACTS OF THE CASE ARE IDENTICAL TO THAT O F AY 2006-07, AND SINCE THE ISSUE HAS BEEN DECIDED BY US AGAINST THE ASSESS EE FOR THE AFORESAID ASSESSMENT YEAR IN ITA NO. 2264/AHD/2010 IN THE FOR EGOING PARAGRAPHS, WE FOR SIMILAR REASONS DISMISS THE GROUND OF THE AS SESSEE. THUS THIS GROUND OF ASSESSEE IS DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 09 - 2013. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH 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,AH MEDABAD