DCIT CEN CIR 1(4), MUMBAI V. GRASIM INDUSTRIES LTD, MUMBAI

ITA 5057/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9678 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDYADHAR
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Capital asset; Gift; Depreciation; Question of law; Revised return; Capital expenditure
• Section: 32

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./5057/MUM/2015, /ASSESSMENT YEAR: 2009-10 DCITCENT. CIRCLE-1(4), ROOM NO.902, 9TH FLOOR,OLD CGO BUILDING. M.K. ROAD CHURCH GATE,MUMBAI-400 020. VS. M/S. GRASIM INDUSTRIES LIMITED CORPORATE FINANCE DIVISION, ADITYA BIRLA CENTRE, A-WING, 2ND FLOOR, SK AHIRE MARG, WORLI MUMBAI-400 030 PAN:AAACG 4464 B ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI VIDYADHAR- DR /ASSESSEE BY: SHRI RONAK G. DOSHI / DATE OF HEARING: 13/07/2017 / DATE OF PRONOUNCEMENT: 08/09/2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DTD.30.07.2015 OF THE CIT(A)- 13,MUMBAI,THE ASSESSEE HAD FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN THE BUSI NESS OF MANUFACTURING AND TRADING FILED THE FRINGE BENEFIT TAX(FBT) ON 29/09/2009,SHOWING V ALUE OF CHARGEABLE FRINGE BENEFIT (FB) AT RS.36.80 CRORES.IN THE RETURN IT HAD OFFERED VAR IOUS EXPENSES AS CHARGEABLE TO FBT.BUT,BY WAY OF A NOTE IT CLAIMED THAT FBT WAS PAYABLE ON S UCH EXPENDITURE.THE AO COMPLETED THE ASSESSMENT U/S.115WE(3)OF THE ACT,ON 17.10.2011,DET ERMINING THE VALUE OF THE CHARGEABLE FB AT RS. 36,80,51,213/-. 2. FIRST EFFECTIVE GROUND OF APPEAL (GOA-1-2)IS ABOUT DIRECTION OF THE FIRST APPELLATE AUTHORITY(FAA)TO EXCLUDE FB DECLARED BY THE ASSESSE E ITSELF IN THE ORIGINAL AND REVISED RETURN OF FBT, FILED U/S.115W OF THE ACT. DURING THE COURSE OF HEARING IT WAS BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUE WAS DEALT BY THE TRIBUNAL, WHILE DECIDING THE APPEALS FOR THE EARLIE R YEARS.WE FIND THAT WHILE ADJUDICATING THE APPEALS FOR THE EARLIER AY.S.(ITA.S.4910 & 4911 & 5 632/MUM/2011 AY.S. 2006-07 TO 2008- 09,DTD.19.06.2013),THE TRIBUNAL HAS DEALT THE IDENT ICAL ISSUE AS UNDER: 2.BEFORE PROCEEDING WITH THE GROUNDS OF APPEAL, IT WOULD BE PERTINENT TO DISCUSS THE ISSUES RAISED BY THE LD. DEPARTMENTAL REPRESENTATIV E. IT IS THE SAY OF THE LD. DR THAT THE ASSESSEE ITSELF HAS FILED FRINGE BENEFIT TAX RE TURN AND HAS OFFERED THE VALUE TAXABLE AS FBT, THEREFORE, THE ASSESSEE CANNOT RETR ACT NOW RAISING THE ISSUES RELATING TO THE TAXABILITY OF FBT. IT IS THE CONTENTION OF THE LD. DR THAT IF THE ASSESSEE WAS NOT CONVINCED WITH ITS RETURN OF FRINGE BENEFIT, IT SHO ULD HAVE FILED A REVISED RETURN FAILING 5057/M/15 M/S. GRASIM INDUSTRIES LTD. 2 WHICH THE ASSESSEE SHOULD BE PRECLUDED FROM RAISING SUCH GROUNDS OF APPEAL. IN SUPPORT OF HIS SUBMISSIONS, THE LD. DR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ITO VS MURLIDHAR BHAGW AN DAS 52 ITR 335. IT IS THE SAY OF THE LD. DR THAT JURISDICTION OF THE TRIBUNAL IN THE HIERARCHY CREATED BY THE ACT IS NOT HIGHER THAN THAT OF THE ITO. THE TRIBUNAL CA NNOT DO WHAT THE ITO CANNOT. 3. PER CONTRA, THE LD. SENIOR COUNSEL RELIED UPON T HE DECISION OF CIT VS PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD., 349 ITR 336 AND CONTENDED THAT THE ASSESSEE CAN TAKE A PLEA NOT TAKEN BEFORE THE ASSESSING AUTHORIT IES. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE DECISIONS RELIED UPON BY THE RIVAL PARTIES. IN OUR CONSIDERAT E VIEW, THE DECISION RELIED UPON BY THE LD. DR RELATES TO THE POWER OF THE APPELLATE AU THORITIES WHEREIN IT HAS BEEN HELD THAT NO POWER IS CONFERRED TO MAKE AN ORDER OR ISSU E DIRECTIONS IN RESPECT OF AN ASSESSMENT YEAR WHICH IS NOT THE SUBJECT MATTER OF APPEAL WHICH MEANS THAT THE JURISDICTION OF THE APPELLATE AUTHORITIES IN THE HI ERARCHY CREATED BY THE ACT IS CONFINED TO THE YEAR OF ASSESSMENT. 5. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF PRUTHVI BROKERS & SHAREHOLDERS (SUPRA) HAS HELD THAT APPELLATE AUTHOR ITIES HAVE POWER TO CONSIDER CLAIM NOT MAKE IN THE RETURN. THE QUESTION BEFORE THE HON BLE JURISDICTIONAL HIGH COURT WAS WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE HONBLE INCOME TAX APPELLATE TRIBUNAL, IN LAW, WAS RIGHT IN HOLDING TH AT CLAIM OF DEDUCTION NOT MADE IN THE ORIGINAL RETURN AND SUPPORTED BY REVISED RETURN IS ADMISSIBLE. THE QUESTION IS ANSWERED IN THE AFFIRMATIVE AND WHILE ANSWERING THI S QUESTION, THE HONBLE JURISDICTIONAL HIGH COURT HAS CONSIDERED VARIOUS DE CISIONS OF THE SUPREME COURT. RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDIC TIO9NAL HIGH COURT, WE PROCEED WITH THE GROUNDS OF APPEAL ONE BY ONE. MOREOVER , W E FIND THAT THE ASSESSEE HAS RETURNED FRINGE BENEFITS WITH A RIDER THAT TAKING ABUNDANT PRECAUTION THE VALUE IS OFFERED FOR FRINGE BENEFIT TAX AND THIS FACT HAS AL SO BEEN ACKNOWLEDGE BY THE AO WHILE DEALING WITH EVERY ITEM OF FRINGE BENEFITS IN HIS A SSESSMENT ORDER. WE FIND THAT THE DEPARTMENT HAD FILED APPEALS BEFOR E THE HONORABLE BOMBAY HIGH COURT AGAINST THE ABOVE ORDER OF THE TRIBUNAL (ITA NO.S 2 325 OF 2013, 2399 OF 2013 AND 464 OF 2014).DISMISSING THE APPEALS, THE HONORABLE HIGH CO URT HAD HELD AS UNDER: 3REGARDING QUESTION 1:- (A)WE NOTE THAT THE APPELLANT HAD VOLUNTARILY FILE D ITS RETURN OF FRINGE BENEFIT UNDER SECTION 115(WD) OF THE ACT. IN ITS RETURN OF FRINGE BENEFI T, THE APPELLANT HAD VALUED THE FRINGE BEN EFIT AND OFFERED TAX ON THE EXPENSES INCURRED. HOWE VER, IN ITS RETURN OFFRINGE BENEFIT, THE APPELLANT HAD APPENDED A NOTE , INDICATING THATACCORDING TO IT, NO FRING E BENEFIT TAX ON THE AMOUNTS OFFERED ISPAYABLE. HOW EVER, THE SAME IS BEING FILED BY WAY OF AB UNDANTCAUTION. THE ASSESSING OFFICER AFTER RECORDI NG THE FACT OF IMPLIED PROTEST DEALT WITH THE VARIOUS AMOUNTS RETURNED BY THE APPELLANT IN ITS FRINGE BENEFIT RETURNS.HOWEVER, BY ORDER DATED 26 TH DECEMBER, 2008, ON MERITS, HELD THAT THE TAX IS PAYABLE; (B)IN APPEAL, THE CIT(A) DID NOT ALLOW THE RESPONDE NT-ASSESSEE TOURGE THAT NO FRINGE BENEFIT TAX IN FACT IS PAYABLE. THIS ON THEGROUND THAT AS THE RESPONDENT-ASSESSEE HAD NOT CLAIMED T HE BENEFITIN ITS RETURN, IT CANNOT RAISE THE ISSUE IN APPEAL. THIS BY RELYING ONDECISION OF THE A PEX COURT INGOETZE (INDIA) LTD. V/S. CIT 284ITR 323 . THEREAFTER, THE CIT(A) IN HIS ORDER DATE D 28TH MARCH, 2011DEALT WITH EACH OF THE SUBMISSION S ON MERITS AND NEGATED THE SAME; C)ON FURTHER APPEAL BY THE RESPONDENT-ASSESSEE TO T HE TRIBUNAL, THE RESPONDENT-ASSE SSEE DEFENDED THE ORDER OF THE CIT(A) INTER ALIA ON THE GROUND THAT IT IS NOT OPEN TO THE RESPONDENT-ASSESSEE TO URGE ISSUE OF NON CHARGEABL ILITY TO FRINGE BENEFIT TAX IN APP 5057/M/15 M/S. GRASIM INDUSTRIES LTD. 3 EAL. THIS IS SO, AS IT HAD ITSELF VOLUNTARILY FILED ITS RETURN OF FRINGE BENEFITBEFORE THE A SSESSING OFFICER. THE TRIBUNAL BY THE IMPUGNED ORDE RDATED 19TH JUNE, 2013, DID NOT A CCEPT THE REVENUE'S CONTENTION BYPLACING RELIANCE U PON THE ORDER OF THIS COURT IN CIT V/S. PRUTHVI BROKERS AND SHAREHOLDERS P. LTD. 336 ITR 349TO HOLD THAT EVEN IF A CLAIM OF DEDUCTION/ EXPENDITURE IS NOT RAISED BEFORE THE ASSESSING OFFICER, IT CAN BE RAISED I N APPEAL. THIS BY RECORDING THAT IN GOETZE (SUPRA) HAS ITSELF NOTED THAT IT DOES NOT IN ANY MANNER, RESTRICT THE POWER OF THE TRIBUNAL TO D EAL WITH CLAIMS NOT MADE BEFORE TH E ASSESSING OFFICER; (D)MR. SURESH KUMAR, LEARNED COUNSEL APPEARING FOR THE REVENUEURGES THAT THE DECIS ION OF THIS COURT IN PRUTHVI BROKERS (SUPRA) IS NO T APPLICABLE IN THIS CASE. THIS FOR THE REASON THAT THE CLAIM OF FRINGE BENEFIT TAX BEING PAYABLE IS GIVEN UP IN HAVING FILED ITS RETURN; (E)IN OUR VIEW IN ALL CASES WHERE A DEDUCTIO N/ EXEMPTION IS NOT CLAIMED BY AN ASSESSEE BEFORE THE ASSESSING OFFICER WOUL D NORMALLY AMOUNT TO GIVING UP T HE CLAIM WITH REGARD TO IT. NEVERTHELESS, T HIS COURT HAS HELD IN PRUTHVI BUILDE RS (SUPRA) IT COULD BE RAISED IN APPEAL. MORE OVER, IN THE PRESENT FACTS, THE CLAI M HAD ALREADY BEEN MADE BY THE RESPONDENT IN ITS RETURN OF FRINGE BENEFIT BY WAY OF NOTE THEREIN. THUS, IT IS NOT A NEW CLAIM. IN ANY CASE, ON ACCOUNT OF THE DECIS ION OF THIS COURT IN PRUTHVI BROKERS AND SH AREHOLDERS (SUPRA), THE RESPONDENT ASSESSEEIS WELL ENTITLED TO RAISE THE CLAIM BEFO RE THE APPELLATE AUTHORITY EVEN IT NOT RAISED BEFORE THE ASSESSING OFFICER; (F)IN THE ABOVE CIRCUMSTANCES, THE QUESTION 1 DOES NOT GIVE RISE TO ANYSUBSTANTIAL QUE STION OF LAW. HENCE NOT ENTERTAINED. 4 REGARDING QUESTION (2):- THE IMPUGNED ORDER OF THE TRIBUNAL ALLOWED RELIEF O F FRINGEBENEFIT TAX LEVIED ON EXP ENSES INCURRED AS NON-EMPLOYEES AND GIFTS GIVENTO N ON-EMPLOYEES BY FOLLOWING ITS ORD ER IN CIT V/S. TATA CONSULTANCYSERVICES LTD. (ITA/3 457/MUM/2011 RENDERED ON 26TH SEPTEMBER, 2012)TO HOLD THAT THE RELATIONSHIP OF EM PLOYER AND EMPLOYEE IS A SINE-QUA -NONOF LEVY OF FRINGE BENEFIT TAX. THE DECISION OF THE TRIBUNAL IN TATACONSULTANCY SERVICES (SUPRA) WAS CARRIED IN APP EAL TO THIS COURT BY THEREVENUE BEING INCOME TAX APPEAL NO.1132 OF 2013. THE AFORES AID APPEALOF THE REVENUE IN THE CASE OF TATA CONSEQUENTLY SERVICES WAS DISMISSEDON 24TH MARCH, 2015. THUS, CONFIR MING THE DECISION OF THE TRIBUNAL IN THECASE OF TAT A CONSULTANCY SERVICES (SUPRA). NO DISTINCTION HAS BEEN SHOWNTO US WHICH WOULD WARRAN T A DIFFERENT VIEW. IN THE ABOVE V IEW, QUESTION(2) AS FRAMED DOES NOT GIVE RISE TO AN Y SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. 5 REGARDING QUESTION (3):- (A) THE IMPUGNED ORDER OF THE TRIBUNAL HAS HELD THA T IN RESPECT OF MEDICAL REIMBURSE- MENT, MEDICAL FACILITIES AND EDUCATION FACILITIES MADE AVAILABLE TO ITS EMPLOYEES,IS TAXABLE IN THE HANDS OF ITS EMPLOYEES. THEREFORE, OUT SIDE THE SCOPE OF FRINGE BENEFIT TAX; 5057/M/15 M/S. GRASIM INDUSTRIES LTD. 4 (B) AT THE HEARING BEFORE THE TRIBUNAL, THE LEARNED COUNSEL APPEARING FOR THE RESPONDENT -ASSESSEE HAD SPECIFICALLY STATED THAT THE AFORESAID FACILITIES ARE LIABLE TO TAX AS PERQUISI TES IN THE HANDS OF EMPLOYEES/INDIVIDU ALS. THIS IS NOT DISPUTED. EVEN TODAY, NOTHINGHAS B EEN SHOWN TO US FROM THE RECORD THA T THE STATEMENT MADE BY COUNSEL FOR THE RESPONDENT- ASSESSEE BEFORE THE TRIBUNAL IS N OT CORRECT. IN CASE, THE STATEMENT MADE BY THE CO UNSEL APPEARING ONBEHALF OF THE RESPONDENT-ASSESSEE BEFORE THE TRIBUNAL IS NOT CORRECT AND IS SO FOUND BY THE REVENUE, THE REMEDY , IF ANY, IS TO MOVE THE TRIBUNAL . ACCORDINGLY, THE QUESTION AS FRAMED DOES NOT GIVE R ISE TO ANYSUBSTANTIAL QUESTION OF LA W. HENCE, DISMISSED. CONSIDERING THE ABOVE, WE DECIDE THE FIRST EFFECTIV E GROUND OF APPEAL AGAINST THE AO. 3. REST OF THE GROUNDS ARE AGAINST THE RELIEF GRANTED BY THE FAA ON EXPENDITURE INCURRED UNDER THE HEADS NON-EMPLOYEES,GIFT TO NON-EMPLOYEES(GOA-3 ),MEDICAL REIMBURSEMENT/EXPENSES OF EMPLOYEES AND THEIR FAMILIES, EDUCATION FACILITIES (GOA-4),SALARY OF DRIVERS/PILOTS (G.S OA-5- 6), INSURANCE PREMIUM FOR MOTOR CAR/AIRCRAFT (GOA-7 ),PREOPERATIVE EXPENSES(GOA-8)AND MAIN-TENANCE OF RESIDENTIAL ACCOMMODATION IN THE NA TURE OF GUESTHOUSE (GOA-9). IT WAS BROUGHT OVER NOTICE THAT,THE TRIBUNAL HAD DECIDED A LL THE ISSUES AGAINST THE AO AND IN FAVOUR OF THE ASSESSEE, WHILE DECIDING THE APPEALS FOR THE EARLIER YEARS AND THE HONORABLE JURISDICTIONAL HIGH COURT HAD ENDORSED THE VIEWS OF THE TRIBUNAL. WE ARE REPRODUCING THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL, DATE D 19/06/2013 FOR THE AY.S 2006-07 TO 2008- 09(SUPRA) AND IT READS AS UNDER: 6. GROUND NO. 1 RELATES TO LEVY OF FBT ON EXPENSES INCURRED ON NONEMPLOYEES. 7. THE AO AT PAGE-2 PARA 3.1 OF HIS ORDER STATES TH AT AS A MATTER OF ABUNDANT CAUTION, THE ASSESSEE COMPANY HAD OFFERED FOR TAX EXPENSES OF RS . 16,61,19,107/-, FRINGE BENEFIT VALUE AT RS. 3,91,08,627/-. IT WAS CONTENDED THAT THE EXPENS ES OF RS. 16,61,19,107/- DO NOT INVOLVE EMPLOYEES/NOR INCURRED ON EMPLOYEES AND ARE NOT LIA BLE TO FRINGE BENEFIT TAX. 78. THE ASSESSEE RELIED UPON THE SPEECH MADE BY THE FINANCE MINISTER WHILE PRESENTING THE BUDGET ON 28.2.2005 AND THE EXPLANATION GIVEN IN EX PLANATORY MEMORANDUM. THE AO DID NOT ACCEPT THE CONTENTIONS MADE BY THE ASSESSEE. THE AO WAS OF THE FIRM BELIEF THAT EXPENSES INCURRED BY THE ASSESSEE ON ANY ITEM SPECIFIED UNDE R CLAUSE (A) TO( P) OF SEC. 115WB ARE CHARGEABLE TO FRINGE BENEFIT TAX IRRESPECTIVE OF TH E FACT THAT THE EXPENSES INVOLVE EMPLOYEES OR NOT. 9. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD . CIT(A) BUT WITHOUT ANY SUCCESS. 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REI TERATED THAT SINCE THE EXPENSES WERE INCURRED FOR NON-EMPLOYEES, THERE IS NO OCCASION FO R THE LEVY OF FRINGE BENEFIT TAX. A SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN THE CASE OF CIT VS TATA CONSULTANCY LTD. IN ITA NO. 3457/M/2011, WHEREIN ONE OF US (ACCOUNTANT MEMBER) IS THE AUTHOR OF THE SAID DECISION WHEREIN THE TRIBUNAL HAS HELD AS UNDER: WHILE DECIDING REVENUES APPEAL IN ITA NO. 6747/M/ 2011, THIS BENCH HAD THE OCCASION TO CONSIDER THE CIRCULAR ISSUED BY CBDT BE ING CIRCULAR NO. 8/2005 DT. 29.8.2005 WHEREIN THIS BENCH HAS HELD THAT EMPLOYER /EMPLOYEE RELATIONSHIP IS A PRE- REQUISITE FOR THE LEVY OF FBT. RATIONALE FOR INTROD UCTION OF FBT IS THAT IT IS DIFFICULT TO ISOLATE THE PERSONAL ELEMENT IF THE BENEFITS ARE COLLECTIVELY ENJOYED BY THE PEOPLE WHICH MEANS THAT THE PROVISIONS OF FBT WILL BE APPL ICABLE ONLY IN RESPECT OF THOSE 5057/M/15 M/S. GRASIM INDUSTRIES LTD. 5 EXPENSES WHICH CONTAIN OR AT LEAST ARE LIKELY TO CO NTAIN AN ELEMENT OF PERSONAL BENEFIT TO EMPLOYEES. WE DO NOT FIND ANY SUCH THING PRESENT ON THE FACTS OF THE PRESENT CASE. 11. FACTS OF THE PRESENT CASE ARE IDENTICAL, THEREF ORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL, WE DIRECT THE AO TO EXCLUDE FROM THE TAXA BLE VALUE OF FBT AMOUNT OF RS. 3,91,08,627/-. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 12. GROUND NO. 2 RELATES TO CHARGING OF FBT ON FRIN GE BENEFIT WHICH ARE TAXABLE IN THE HANDS OF EMPLOYEES. 13.THIS HEAD COMPRISES OF 5 EXPENSES: A) MEDICAL RE IMBURSEMENT - RS. 1,34,20,291/- B) MEDICAL FACILITIES - RS. 44,35,084/- FOR THESE TWO ITEMS, IT IS THE CLAIM OF THE ASSESSEE THAT THESE ARE TAXABLE IN THE HANDS OF THE EMPLOYEES AS PERQUISITES. THEREFORE, THE SAME SHOULD BE OUTSIDE THE PURVIEW OF FBT. ON SIMILAR ISSUE, THE C O-ORDINATE BENCH OF THE TRIBUNAL AT BANAGLORE IN ITA NO. 1066/BANG/2010 IN THE CASE OF VIJAYA BANK HAS HELD THAT WHERE PERQUISITES/BENEFITS WHICH ARE FULLY ATTRIBUTABLE T O THE EMPLOYEE AND ARE TAXED IN THEIR HANDS, WOULD BE CONTINUED TO BE TAXED UNDER THE EXISTING P ROVISIONS OF SEC. 17(2) OF THE ACT. ONLY IN CASE WHERE THE BENEFITS ARE USUALLY ENJOYED COLLECT IVELY BY THE EMPLOYEES AND CANNOT BE ATTRIBUTED TO AN INDIVIDUAL EMPLOYEE, THEY SHALL BE TAXED IN THE HANDS OF THE EMPLOYER. 14. WE FIND THAT IN THE PRESENT CASE, THESE TWO ITE MS ARE DIRECTLY ATTRIBUTED TO THE PERSONAL BENEFIT OF THE EMPLOYEES THEREFORE DESERVES TO BE K EPT OUTSIDE THE PURVIEW OF FRINGE BENEFIT TAX. THE AO IS ACCORDINGLY DIRECTED TO EXCLUDE THE VALUE OF SUCH FRINGE BENEFIT. THE OTHER THREE ITEMS IN GROUND NO. 2 RELATES TO ED UCATION FACILITIES RS. 77,97,961/- , MAINTENANCE OF RESIDENTIAL COLONY FOR EMPLOYEES RS. 93,78,107/- AND INSURANCE PREMIUM PAID BY EMPLOYER TO KEEP IN FORCE AN INSURANCE ON HEALTH OF EMPLOYEES RS. 8,64,967/-. 15. IT IS THE SAY OF THE LD. COUNSEL THAT THESE ARE ALL PERQUISITES LIABLE TO BE TAXED IN THE HANDS OF THE EMPLOYEES INDIVIDUALLY. AS WE HAVE HELD HERE INABOVE, THAT PERQUISITES WHICH ARE DIRECTLY ATTRIBUTABLE TO THE EMPLOYEES DESERVES TO BE KEPT OUTSIDE THE PURVIEW OF FBT. ACCORDINGLY, WE DIRECT THE AO TO EXCLUDE THESE ITEM S OF PERQUISITES OUTSIDE THE AMBIT OF TAXABLE VALUE OF FRINGE BENEFIT. THIS GROUND IS ACC ORDINGLY ALLOWED. 16.GROUND NO. 3 RELATES TO ADMINISTRATION EXPENSES INCURRED ON DRIVER/PILOT WHO ARE IN PAY ROLE OF THE COMPANY IS CHARGEABLE AS SALARY, THEREF ORE, SUCH SALARY SHOULD NOT BE TAXED AGAIN AS FRINGE BENEFIT IN THE HANDS OF THE EMPLOYER. 17.THE ASSESSEE FURTHER CONTENDED THAT EXPENSES ON REPAIR, RUNNING AND MAINTENANCE OF MOTOR CAR/AIRCRAFT DO NOT INCLUDE REMUNERATION PAID TO DRIVERS/PILOT. 18. WE FIND THAT THE CONTENTION RAISED BY THE ASSES SEE ARE SUPPORTED BY THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS SHO LINGER TEXTILES LTD. 240 ITR 908. RESPECTFULLY FOLLOWING THE DECISION CITED HEREINABO VE, WE DIRECT THE AO TO EXCLUDE THE VALUE OF SUCH FRINGE BENEFIT AMOUNTING TO RS. 23,61, 629/ - FROM TAXABLE VALUE OF FRINGE BENEFIT. THIS GROUND OF THE ASSESSEE IS ALLOWED. 19. GROUND NO. 4 RELATES TO INSURANCE PREMIUM FOR M OTOR CAR AND AIRCRAFT. IT IS THE SAY OF THE COUNSEL THAT THE INSURANCE PREMIUM IS NOT THE EXPEN SE ON REPAIR, RUNNING AND MAINTENANCE OF MOTOR CAR/AIRCRAFT AND THEREFORE NOT LIABLE FOR FRI NGE BENEFIT. 20. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS TUNGABHADRA INDUSTRIES LTD. 207 ITR 553 HAS HELD THAT THE EXPEN DITURE INCURRED ON REPAIRS AND INSURANCE OF CAR CANNOT BE CONSIDERED FOR DISALLOWANCE U/S. 3 7(3A) OF THE ACT. TAKING A LEAF OUT OF THE AFOREMENTIONED DECISION, WE DIRECT THE AO TO EXCLUD E VALUE OF SUCH FRINGE BENEFIT OF RS. 4,70,334/- FROM THE TAXABLE VALUE OF FRINGE BENEFIT . GROUND NO. 4 IS ACCORDINGLY ALLOWED. 21. GROUND NO. 5 RELATES TO PRE-OPERATIVE EXPENSES. WE FIND THAT THE PRE-OPERATIVE EXPENSES HAVE BEEN INCURRED ON UNITS NOT YET SET UP AND THE EXPENSES HAVE BEEN CLAIMED AS CAPITAL EXPENDITURE. THE CBDT IN ITS EXPLANATORY NOTE ON TH E PROVISIONS RELATING TO FBT WHETHER CAPITAL EXPENDITURE FALLING WITHIN THE CATEGORY SPE CIFIED IN SEC. 115WB(2) WOULD BE COVERED IN THE SCOPE OF FRINGE BENEFIT. THE CBDT ANSWERED EXPENDITURE ON ANY CAPITAL ASSET IN RESPECT OF WHICH DEPRECIATION IS ALLOWABLE U/S. 32 OF THE ACT DOES NOT FALL WITHIN THE SCOPE OF SUB-SEC. (2) OF SEC. 115WB OF THE ACT. SINCE THE AP PROXIMATE OBJECTIVE OF INCURRING SUCH EXPENDITURE IS THE ACQUISITION OF A CAPITAL ASSET T HEREFORE, SUCH EXPENDITURE IS NOT INCLUDED IN RECKONING THE VALUE OF FRINGE BENEFIT. DRAWING SUPP ORT FROM THE ANSWER OF THE CBDT, WE 5057/M/15 M/S. GRASIM INDUSTRIES LTD. 6 DIRECT THE AO TO EXCLUDE VALUE OF SUCH FRINGE BENEF IT OF RS. 6,68,332/- FROM THE TAXABLE VALUE OF FRINGE BENEFIT. GROUND NO. 5 IS ACCORDINGLY ALLO WED. 22. GROUND NO. 6 RELATES TO EXPENSES ON MAINTENANCE OF RESIDENTIAL ACCOMMODATION NOT IN THE NATURE OF GUEST HOUSE. 23.THE TRIBUNAL HAD THE OCCASION TO DECIDE THE ISS UE OF ACCOMMODATION NOT IN THE NATURE OF GUEST HOUSE WHILE DISPOSING OF WTA NOS. 41/MUM/1998 AND 242 TO 244/M/199 IN THE CASE OF M/S. GRASIM INDUSTRIES LTD., AND IN THAT WEALTH TAX APPEAL ORDER, THE TRIBUNAL HAS HELD THAT WHERE THE BUILDINGS HAVE BEEN USED BY THE EMPLOYEES AND OTHER RELATED VISITORS SUCH AS CUSTOMERS, SURVEYORS, CONTRACTORS, GOVERNMENT OFFIC IALS, AUDITORS ETC., CANNOT BE CONSIDERED AS GUEST HOUSE AS THEY ARE CONNECTED WITH ASSESSEE S BUSINESS. TAKING A LEAF OUT OF THE SAID DECISION RELATING TO WEALTH TAX PROCEEDINGS, WE DIR ECT THE AO TO EXCLUDE VALUE OF SUCH FRINGE BENEFIT AT RS. 30, 08, 558/- FROM THE TAXABLE VALUE OF FRINGE BENEFIT. GROUND NO. 6 IS ACCORDINGLY ALLOWED. XXXXX 28. GROUND NO. 7 RELATES TO EXPENSES ON PRESENTATIO N ARTICLES DISTRIBUTED TO BUSINESS RELATED PERSONS. 29. WE HAVE ALREADY HELD THAT EXPENSES INCURRED ON NON EMPLOYEES ARE OUTSIDE THE PURVIEW OF FBT. AS THESE EXPENSES ARE INCURRED ON PERSONS RELA TED TO OR CONNECTED WITH THE BUSINESS BUT ARE NOT EMPLOYEES. WE ACCORDINGLY DIRECT THE AO TO EXCLUDE VALUE OF SU CH FRINGE BENEFIT FROM THE TAXABLE VALUE OF FRINGE BENEFIT. GROUND NO. 7 IS ACCORDINGLY ALLOWED . RESPECTFULLY, FOLLOWING THE ABOVE WE DECIDE GROUNDS OF APPEAL 3-9 AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH SEPTEMBER , 2017. 08 , 2017 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 08.09.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.