DIRECTION, MUMBAI V. DCIT 12(2), MUMBAI

ITA 2969/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3756 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 23-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2014
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: PRAKASH K JOTWANI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 2969 /MUM/ 2014 (ASSESSMENT YEAR 2006 - 07 ) M/S. DIRECTION 14, ST. JAMES COURT MARINE DRIVE MUMBAI - 400 020. VS. DCIT 12(2) 1 ST FLOOR AAYAKAR BHAVAN M.K.ROAD MUMBAI - 40 020. ( APPELLANT ) ( RESPONDENT ) PAN NO. AACFD1618D ASSESSEE BY SHRI PRAKASH K. JOTWANI DEPARTMENT BY SHRI B.S. BIST DATE OF HEARING 2 4.2 . 201 6 DATE OF PRONOUNCEMENT 11 . 5 . 201 6 O R D E R PER B.R. BASKARA N, A M : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17 - 01 - 2014 PASSED BY LD CIT(A) - 23, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN PARTIALLY CONFIRMING THE ADD ITION MADE TO VALUE OF FRINGE BENEFIT TAX (FBT). 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE FILED FBT RETURN DECLARING THE VALUE OF FRINGE BENEFITS AT RS.1,84,295/ - . THE AO REOPENED THE ASSESSMENT AND ADDED A SUM OF RS.39.23 L AKHS TO THE VALUE OF FRINGE BENEFIT. THE LD CIT(A), IN PRINCIPLE, CONFIRMED THE ADDITION; HOWEVER DIRECTED THE AO TO EXCLUDE DOUBLE ADDITIONS AND ALSO TO VERIFY THE PERCENTAGE OF EXPENSES THAT IS REQUIRED TO BE ASSESSED AS VALUE OF FRINGE BENEFIT. 3. BEFORE THE TAX AUTHORITIES, THE ASSESSEE CONTENDED THAT THESE EXPENSES HAVE BEEN INCURRED BY THE PARTNERS OF THE FIRM AND THE INCIDENCE OF FBT SHALL ARISE ONLY IN RESPECT OF EXPENSES INCURRED ON EMPLOYEES. THE ASSESSEE TOOK SUPPORT OF SEC. 115WA FOR M/S. DIRECTION 2 MAKIN G THIS CONTENTION. ACCORDINGLY THE ASSESSEE PLEADED THAT THE ADDITION MAY BE DELETED AS THEY HAVE BEEN INCURRED BY THE PARTNERS. THE AO TOOK THE VIEW THAT THE ASSESSEE HAS NOT PROVED ITS SUBMISSIONS THAT THESE EXPENSES HAVE BEEN INCURRED BY PARTNERS ONLY. THE LD CIT(A) HOWEVER EXPRESSED THE VIEW THAT THE PROVISIONS OF FBT ARE ATTRACTED THE MOMENT THE EXPENSES WERE INCURRED ON SPECIFIED HEADS. 4. A PERUSAL OF SEC. 115WA WOULD SHOW THAT THE FBT IS CHARGED IN RESPECT OF FRINGE BENEFITS PROVIDED OR DEE MED TO HAVE BEEN PROVIDED BY AN EMPLOYER TO HIS EMPLOYEES DURING THE PREVIOUS YEAR. AS PER SEC. 115WB(2), THE EXPENSES LISTED THEREIN SHALL BE DEEMED TO HAVE BEEN PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES. HENCE, THE EXPENSES SPECIFIED IN SEC. 115WB(2) S HALL BE LIABLE FOR FBT, EVEN IT HAS BEEN INCURRED BY THE PARTNERS OF THE FIRM, IN VIEW OF THE DEEMING PROVISIONS OF SEC. 115WB(2) OF THE ACT. THE LIST OF EXPENSES ASSESSED BY THE AO AND THEIR REFERENCE IN SEC. 115WB(2) ARE GIVEN BELOW: - (A) ENTERTAINMEN T - SEC. 115WB(2)(A) (B) STAFF WELFARE - SEC. 115WB(2)(E) (C) CONVEYANCE, TOUR AND TRAVELS - SEC. 115WB(2)(F & G) (D) REPAIRS AND MAINTENANCE OF CAR - SEC. 115WB(2)(H) (E) TELEPHONE - SEC. 115WB(2)(J) SINCE ALL THE EXPENSES ARE FALLING UNDER THE DEEMING PROVISION, THE CONTENTION OF THE ASSESSEE THAT THEY HAVE BEEN INCURRED BY THE PARTNERS WAS RIGHTLY REJECTED BY LD CIT(A). 5. THE LD A.R CONTENDED THAT THE ASSESSING OFFICER HAS DISALLOWED CERTAIN EXPENSES WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT. BUT FBT HAS BEEN LEVIED ON THE EXPENSES SO DISALLOWED ALSO. ACCORDINGLY HE PRAYED THAT THE EXPENSES NOT ALLOWED WHILE COMPUTING TOTAL INCOME SHOULD BE EXCLUDED FOR THE PURPOSE OF FBT. WE NOTICE THAT THE CONTENTION OF TH E ASSESSEE FINDS SUPPORT TO THE ANSWER GIVEN BY THE CBDT TO Q. NO.35 IN CIRCULAR NO.8 OF 2005 DATED 29 - 08 - 2005. ACCORDINGLY WE DIRECT THE AO TO FOLLOW THE CBDT CIRCULAR REFERRED ABOVE AND RE - EXAMINE THIS CLAIM OF THE ASSESSEE IN THE LIGHT OF THE CIRCULAR REFERRED ABOVE. M/S. DIRECTION 3 6. WE NOTICE THAT THE LD CIT(A) HAS ALREADY DIRECTED THE AO TO EXCLUDE THE VALUE OF FRINGE BENEFITS THAT HAS ALREADY BEEN INCLUDED IN THE FRINGE BENEFIT RETURN FILED BY THE ASSESSEE. SIMILARLY HE HAS ALREADY DIRECTED THE AO TO EXAMINE THE CLAIM RELATING TO COMPUTATION OF THE VALUE OF FRINGE BENEFIT, I.E., 5% OR 20% ETC. HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH THOSE DIRECTIONS. 7. THE ASSESSEE HAS ALSO QUESTIONED THE VALIDITY OF REOPENING OF THE ASSESSMENT OF FBT. HOWE VER, AS OBSERVED BY LD CIT(A), THE ASSESSEE HAS NOT FILED ANY MATERIAL TO SUPPORT ITS CONTENTIONS. ACCORDINGLY WE REJECT THE GROUNDS RELATING TO THE SAME. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER HAS BEEN PRONOU NCED IN THE OPEN COURT ON 11 .5 .2016 . SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 11 / 5 /20 1 6 COPY OF THE ORDER FO RWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS