Gujarat State Electricity Corporation Ltd., Baroda V. The ACIT.,Circle-1(1), Baroda

ITA 2336/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68090 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 30-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2010
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2335/AHD/2010 A.Y. 2006-07 ITA NO.2336/AHD/2010 A.Y. 2007-08 GUJARAT STATE ELECTRICITY CORPORATION LTD., BARODA PAN: AAACG6864F VS ACIT, CIRCLE-1(1) BARODA (APPELLANT) (RESPONDENT) REVENUE BY : SH. R.K. DHANESTA, SR.D.R. ASSESSEE(S) BY : SH. M. J. SHAH ALONGWITH AR SH. P.M. MEHTA, AR / // / DATE OF HEARING : 30/12/2013 / DATE OF PRONOUNCEMENT : 31/12/2013 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF CIT(A)-I, BARODA DATED 25.05.2010 AND 28.04.2010 RE SPECTIVELY FOR AY 2006-07 AND 2007-08. 2. THE ONLY ISSUE INVOLVED IN BOTH THE APPEALS UNDE R CONSIDERATION IS THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS I N CONFIRMING THE TOTAL VALUE OF FRINGE BENEFIT AT RS 2,87,69,370/- I N THE AY 2006-07 AND RS 2,78,55,648/- IN THE AY 2007-08 ASSESSED BY THE ASSESSING OFFICER AS AGAINST THE RETURNED FRINGE BENEFIT OF R S NIL OFFERED BY THE ASSESSEE. ITA NO.2335/AHD/2010 & 2336/AHD/2011 GUJ. STATE ELEC. CORP. LTD. VS. ACIT, CIR-1(1), BAR ODA. FOR A.Y. 2006-07 & 2007-08 - 2 - 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE VALUE OF FRINGE BENEFIT TA X (FBT) WAS DECLARED AT RS NIL BY THE ASSESSEE BUT IN THE TAX A UDIT REPORT FILED U/S 44AB OF THE ACT, THE VALUE OF FRINGE BENEFIT WA S SHOWN AS RS 2,87,69,370/- IN THE AY 2006-07 AND RS 2,78,55,648/ - IN AY 2007-08. ON SHOW CAUSE NOTICE ISSUED BY THE ASSESS ING OFFICER AS TO WHY THE VALUE OF FRINGE BENEFIT SHOULD NOT BE TAKEN AT THE VALUE MENTIONED IN THE TAX AUDIT REPORT INSTEAD OF NIL AS SHOWN IN THE RETURNED FILED, THE ASSESSEE RELIED ON THE DECI SION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT C HAMBER OF COMMERCE & INDUSTRIES VS. UNION OF INDIA, CIVIL APP EAL APPLICATION NO. 21124 OF 2005, ORDER DATED 18.10.20 05 AND CONTENDED THAT THE HONBLE GUJARAT HIGH COURT CLASS IFIED THE ASSESSEES INTO THREE CATEGORIES, I.E. (I) THOSE WHO WERE FULLY COVERED BY PROVISIONS OF FBT (II) THOSE WHO WERE PA RTIALLY COVERED AND (III) THOSE WHO WERE NOT AT ALL COVERED . THE COURT DIRECTED THE ASSESSEES FALLING UNDER CATEGORY (I) T O DEPOSIT THE TAX. IN RESPECT OF THE ASSESSEES FALLING UNDER CATEGORY (II) AND (III), THE HONBLE HIGH COURT DIRECTED THEM TO DEPOSIT THE TAX PAYABLE IN AN ESCROW ACCOUNT WITH A SCHEDULED BANK TILL THE FINAL DISPOSAL OF THE CASE. CLAIMING TO FALL UNDER CATEGORY (II) AND (II I), THE ASSESSEE DISCLOSED NIL VALUE TAXABLE FRINGE BENEFIT IN THE R ETURN FILED BY HIM. HOWEVER, THE ASSESSEE MADE PAYMENT OF FBT AS PER VALUATION OF ITS AUDITOR U/S 44AB. THE ASSESSING O FFICER WAS NOT SATISFIED WITH THE ABOVE EXPLANATION OF THE ASSESSE E AND HELD THAT SINCE THE ASSESSEES OWN AUDITORS HAD QUANTIFIED TH E VALUE OF TAXABLE FRINGE BENEFIT AND NO CASE WAS MADE OUT TO SHOW THAT THE ASSESSEE FELL UNDER THE CATEGORY (II) OR (III) OF H ONBLE GUJARAT ITA NO.2335/AHD/2010 & 2336/AHD/2011 GUJ. STATE ELEC. CORP. LTD. VS. ACIT, CIR-1(1), BAR ODA. FOR A.Y. 2006-07 & 2007-08 - 3 - HIGH COURT JUDGEMENT, IT WAS LIABLE TO PAY FBT. AC CORDINGLY, HE VALUED THE FRINGE BENEFITS AT RS 2,87,69,370/- IN T HE AY 2006-07 AND RS 2,78,55,648/- IN AY 2007-08 AS PER TAX AUDIT REPORT AND FBT WAS CHARGED THEREON. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION O F THE ASSESSING OFFICER, OBSERVING THAT ON A READING OF THE SPEECH OF THE FINANCE MINISTER, THE NOTES ON CLAUSES AND THE EXPLANATORY MEMORANDUM TO CIRCULAR NO. 8 DATED 29.08.2005, IT IS EVIDENT THAT FBT WAS INTRODUCED TO TAX THE BENEFITS WHICH COULD NOT BE B ROUGHT WITHIN THE SCOPE OF PERQUISITE. THIS INCLUDES CASES WHERE THE BENEFITS ARE COLLECTIVELY ENJOYED BY THE EMPLOYEES AND CANNOT BE ATTRIBUTED TO ANY INDIVIDUAL EMPLOYEE. THE ASSESSEE HAS ARGUED T HAT EVEN IF THE BENEFITS WERE ENJOYED BY ITS EMPLOYEES, IF THE EXPE NDITURE WAS INCURRED FOR THE PURPOSES OF THE BUSINESS, IT WOULD ESCAPE THE LEVY OF FBT. THERE WAS NO EVIDENCE TO SUBSTANTIATE THIS VIEW. ON THE CONTRARY, IF EXPENDITURE WAS INCURRED ON ITEMS ENUM ERATED AT (A) AND (B) OF SUBSECTION 2 OF SECTION 115WB, THE SAME WOULD BE DEEMED TO BE FRINGE BENEFITS PROVIDED TO ITS EMPLOY EES. THE LD. CIT(A) FURTHER OBSERVED THAT IT WAS SEEN THAT THE S TATUTORY AUDITORS OF THE ASSESSEE IN THE TAX AUDIT REPORT FILED U/S 4 4AB HAS QUANTIFIED THE VALUE OF THE FRINGE BENEFIT TAKING I NTO ACCOUNT THE ITEMS ON (A) IN SECTION 115WB(2). FURTHER, THE EXP ENDITURE WAS INCURRED ON THE EMPLOYEES OF THE ASSESSEE. NO PART OF EXPENDITURE WAS INCURRED ON NON-EMPLOYEES. THE ASSESSEE HAD DE POSITED THE FBT INTO GOVERNMENT TREASURY AND NOT IN AN ESCROW A CCOUNT WITH A SCHEDULED BANK. THEREFORE, IT APPEARS THAT THE ASS ESSEE CONSIDERED ITSELF TO BE PART OF CATEGORY (I) AS HELD BY THE HO NBLE GUJARAT HIGH ITA NO.2335/AHD/2010 & 2336/AHD/2011 GUJ. STATE ELEC. CORP. LTD. VS. ACIT, CIR-1(1), BAR ODA. FOR A.Y. 2006-07 & 2007-08 - 4 - COURT, I.E. AN ASSESSEE WHO WAS FULLY COVERED BY TH E PROVISIONS. HENCE, HE CONFIRMED THE ACTION OF THE ASSESSING OFF ICER. 5. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESS EE VERY FAIRLY CONCEDED THAT THE ISSUE WAS NOW DECIDED AGAINST THE ASSESSEE BY THE ORDER OF THIS TRIBUNAL IN THE CASE OF GUJARAT E NERGY TRANSMISSION CORPORATION LTD. VS. ACIT, CIRCLE-1(1) , BARODA IN ITA NO. 2264 AND ITA NO. 2402/AHD/2010 IN AY 2006-0 7 AND 2007-08 VIDE CONSOLIDATED ORDER DATED 13.09.2013. THEREFORE, FOLLOWING THE SAME, THE APPEAL OF THE ASSESSEE WAS TO BE DISMISSED. 6. WE FIND THAT THE TRIBUNAL IN THE CASE OF GUJARAT ENERGY TRANSMISSION CORPORATION LTD. (SUPRA) ON THE SIMILA R FACTS AND CIRCUMSTANCES OF THE CASE, HELD AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS CONSIDERED THE VALUE OF FRINGE BENEFIT AT RS NIL BU T HOWEVER IN THE TAX AUDIT REPORT FILED UNDER SECTION 44AB THE STATU TORY AUDITORS HAVE QUANTIFIED THE VALUE OF FRINGE BENEFIT AND BAS ED ON THE AFORESAID QUANTIFICATION, THE ASSESSEE HAS ALSO DEP OSITED THE FBT INTO GOVERNMENT TREASURY AND NOT IN AN ESCROW ACCOU NT WITH THE SCHEDULED BANK. WE FURTHER FIND THAT THE ASSESSING OFFICER HAS CONSIDERED THE ASSESSEE TO BE COVERED IN THE CATEGO RY 1 OF THE ASSESSEES WHO WERE COVERED BY THE PROVISIONS OF FBT IN TERMS OF THE DECISION OF HON. GUJARAT HIGH COURT (SUPRA.). BEFORE US, THE LEARNED A.R. COULD NOT CONTROVERT THE FINDINGS OF T HE ASSESSING OFFICER AND CIT(A) BY BRINGING ANY CONTRARY MATERIA L ON RECORD. ITA NO.2335/AHD/2010 & 2336/AHD/2011 GUJ. STATE ELEC. CORP. LTD. VS. ACIT, CIR-1(1), BAR ODA. FOR A.Y. 2006-07 & 2007-08 - 5 - IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON T O INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF THE ASS ESSEE IS DISMISSED. IN VIEW OF THE ABOVE SUBMISSION OF THE LD. AR OF T HE ASSESSEE, APPEALS OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE D ISMISSED. ORDER PRONOUNCED IN THE COURT ON TUESDAY, THE 31 ST OF DECEMBER, 2013 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 31/12/2013 GHANSHYAM MAURYA, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD