ACIT, CHENNAI V. Maya Appliance Pvt Ltd., CHENNAI

ITA 2320/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8536 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NOS.2320 TO 2322/MDS/2015 ( / ASSESSMENT YEARS: 2006-07, 2008-09 & 2009-10) THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -4(1) CHENNAI. VS M/S. MAYA APPLIANCE PVT.LTD., 2, BOAT CLUB I AVENUE, RAJA ANNAMALAIPURAM, CHENNAI-600 028. PAN: AAACM6280D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SHIVA SRINIVAS, JCIT /RESPONDENT BY : MR. SAROJ KUMAR PARIDA, ADVOCATE /DATE OF HEARING : 6 TH JULY, 2016 /DATE OF PRONOUNCEMENT : 9 TH SEPTEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE THREE APPEALS ARE FILED BY THE REVENUE AGGRIEVED BY THE COMMON ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS)-8, CHENNAI DATED 08.09.2015 IN ITA NOS.127, 128 & 129/2014-15/MP PASSED UNDER SECTION 115WE(3) R.W.S. 250(6) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEALS, HOWEVER THE CRUX OF THE COMMON ISSUE IS AS FOLLOWS: - THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 27,12,491/-, ` 79,51,610/- AND ` 1,21,57,999/- 2 ITA NOS.2320 TO 2322/MDS/2015 FOR THE ASSESSMENT YEARS 2006-07, 2008-09 & 2009-10 RESPECTIVELY MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 115WE(2) OF THE ACT BEING DEALER MEET EXPENSES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACT URE OF HOME APPLIANCES FILED ITS RETURN OF FRINGE BENEFITS FOR THE RELEVANT ASSESSMENT YEARS. THE CASES WERE TAKEN UP FOR SCRUTINY AND NOTICES UNDER SECTION 115WE(2) WERE IS SUED TO THE ASSESSEE. SUBSEQUENTLY, THE ASSESSMENTS WERE COMPLETED BY THE LEARNED ASSESSING OFFICER FOR THE ASSESSMENT YEARS 2006-07 , 2008-09 & 2009-10, WHERE IN HE LEVIED FRINGE BENEFIT TAX AGAINST THE EXPENSES INCU RRED ON DEALERS MEETING AND INTEREST FREE LOANS TO EMPLO YEES. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE BY S TATING THAT THE ASSESSEE HAD ACCEPTED THE DISALLOWANCES IN THE COURSE OF APPELLATE PROCEEDINGS. HOWEVER, ON APPEAL BEFORE THE TRIBUNAL, IT WAS SUBMITTED THAT THE ASSESSEE HA S ONLY AGREED FOR THE ADDITION AGAINST THE GROUND RAISED W ITH RESPECT TO INTEREST FREE LOANS TO EMPLOYEES AND NOT WITH RESPECT TO 3 ITA NOS.2320 TO 2322/MDS/2015 THE ISSUE OF DEALERS TRIP / MEETING. THE TRIBUNAL SET ASIDE THE MATTER TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO CONSIDER THE GROUND RAISED BY THE ASSESSEE WITH RESPECT TO LEVY OF FRINGE BENEFIT TAX ON THE E XPENSES INCURRED TOWARDS DEALERS MEET. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE ISSUE IN DETAIL CAME TO A CON CLUSION THAT FOR THE LEVY OF FRINGE BENEFIT TAX THERE SHOULD BE EMPLOYER EMPLOYEE RELATIONSHIP. BUT IN THE CASE OF THE ASSES SEE THE EXPENSES INCURRED WAS TOWARDS DEALERS MEETING AND T HE DEALERS DID NOT HAVE ANY EMPLOYER-EMPLOYEE RELATION SHIP. THEREFORE, HE DIRECTED THE LEARNED ASSESSING OFFICE R TO DELETE THE LEVY OF FRINGE BENEFIT TAX. WHILE DOING SO, HE ALSO PLACED RELIANCE IN CIRCULAR NO.8/2005 WHEREIN THIS ASPECT WAS MADE CLEAR. WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. PROVISIONS OF SECTION 115WE(1) & (2) MAKES IT CLEAR THAT FRINGE BENEFIT MEANS ANY CONSIDERATION RECEIVED TOW ARDS EMPLOYMENT AS SPECIFIED BY THE STATUTE OR ANY EXPE NSES INCURRED BY THE EMPLOYER TOWARDS HIS EMPLOYEES WHI CH ARE 4 ITA NOS.2320 TO 2322/MDS/2015 SPECIFIED IN THE STATUTE. HENCE, IT IS ABUNDANTLY C LEAR THAT FOR LEVY FRINGE BENEFIT TAX THERE SHOULD BE EMPLOYER EM PLOYEE RELATIONSHIP. SINCE THE IN THE CASE OF THE ASSESSEE EXPENSES WERE INCURRED ONLY ON THE DEALERS OF THE ASSESSEE WHO ARE NOT THE EMPLOYEES OF THE ASSESSEE, IT IS OBVIOUS TH AT LEVY OF FRINGE BENEFIT TAX IS NOT WARRANTED. THEREFORE, WE HEREBY CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) ON THIS ISSUE. 6. IN THE RESULT, ALL THE THREE APPEALS OF THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 9 TH SEPTEMBER, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAM ONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 9 TH SEPTEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF