Birla Tea Ltd., Kolkata V. DCIT, Circle-4, Kolkata, Kolkata

ITA 6/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1503 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: ASIT KR UPADHYAY

Judgement Text

1 ITA NO.06/KOL/2015 BIRLA TEA LTD., AY 2008-09 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE .., /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2008-09 NORTH TUKVAR TEA CO. LTD. (FORMERLY BIRLA TEA LTD.) (PAN:AAACN8951E) VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-4, KOLKATA APPELLANT RESPONDENT DATE OF HEARING 23.08.2017 DATE OF PRONOUNCEMENT 06.09.2017 FOR THE APPELLANT SHRI ASIT KR. UPADHYAY, AR FOR THE RESPONDENT N O N E ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-IV, KOLKATA DATED 11.11.2014 FOR AY 2008-09. NONE APPEARED ON BEHALF OF THE REVENUE. AFTER HEARING THE LD. AR AND CONSIDERING THE MATERIAL AVAILABLE O N RECORD, WE DISPOSE OF THE APPEAL EX PARTE QUA THE REVENUE. 2. THE SOLE GROUND OF APPEAL OF THE ASSESSEE IS AGA INST THE ACTION OF LD. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE AO BY NOT A PPLYING RULE 8 OF THE INCOME-TAX RULES, 1962 TO COMPUTE THE FRINGE BENEFITS. BRIEFL Y STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINES S OF GROWING AND MANUFACTURING TEA. THE ASSESSEE FILED ITS RETURN OF INCOME THROUGH E-F ILING ON 26.09.2008 SHOWING TOTAL FRINGE BENEFIT OF RS.74,663/-. ACCORDING TO ASSESSEE, IN ACCORDANCE WITH RULE 8 OF THE INCOME-TAX RULES, 1962, 40% OF THE FRINGE BENEFIT SHOULD ONLY BE TAXABLE. HOWEVER, THE AO DID NOT AGREE AND IN THE ORDER PASSED U/S. 115WE(3) 100% FR INGE BENEFIT WAS TAXED. AGGRIEVED BY THE SAID DECISION OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO 2 ITA NO.06/KOL/2015 BIRLA TEA LTD., AY 2008-09 BRUSHED ASIDE THE CLAIM OF THE ASSESSEE AND HELD TH AT RULE 8D OF THE I. T. RULES, 1962 IS NOT APPLICABLE TO THE CALCULATION OF FRINGE BENEFIT TAX . AGGRIEVED, THE ASSESSEE IS BEFORE US. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSES SEE DREW OUR ATTENTION TO THE FACT THAT IN AY 2009-10, THE TRIBUNAL IN ASSESSEES OWN CASE WAS PL EASED TO ALLOW ASSESSEES APPEAL BY ORDER DATED 01.06.2016 IN ITA NO. 1589/KOL/2013. H ENCE, HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE A FORESAID ORDER OF THE TRIBUNAL. WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL WHILE AL LOWING THE ASSESSEES APPEAL HAS HELD AS UNDER: 7. AT THE TIME OF HEARING BEFORE US IT WAS BROUG HT TO OUR NOTICE ON BEHALF OF THE ASSESSEE THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF APEEJAY TEA LTD. VS CIT AND ANOTHER 370 ITR 775 (CAL) HAD RECENTLY GONE IN TO THE ISSUE OF VALUATION OF T AXABLE FRINGE BENEFITS IN THE CASE OF A COMPANY ENGAGED IN THE MANUFACTURE AND SALE OF TEA. THE HON BLE CALCUTTA HIGH COURT HAD TO DEAL WITH THE FOLLOWING QUESTIONS :- WHETHER RULE 8 IS APPLICABLE FOR THE PURPOSE OF CO MPUTING VALUATION OF THE FRINGE BENEFITS FOR THE PURPOSE OF CHAPTER XII-H OF THE IN COME TAX ACT ? 8. THE HONBLE CALCUTTA HIGH COURT HELD AS FOLLOWS :- IT COULD NOT BE DISPUTED THAT THE AMOUNT OF EXPEND ITURE INCURRED BY THE ASSESSEE- EMPLOYER IN EXTENDING FRINGE BENEFITS TO ITS EMPLOY EES WAS NOT SOLELY FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE INCURRED WAS BOTH FOR THE PURPOSE OF BUSINESS AND FOR THE PURPOSE OF AGRICULTURE. THE SUBMISSION THAT THE EXPENDITURE ON ACCOUNT OF FRINGE BENEFITS HAD ALREADY BEEN TAKEN INTO ACCOUNT WAS NOT CORRECT. TH E NET PROFIT AND LOSS OF THE BUSINESS HAD TO BE ARRIVED AT AFTER DEDUCTING ALL THE EXPENSES. ONCE THAT WAS DONE 40 PER CENT. OF THE NET PROFIT AND LOSS HAD TO BE WORKED OUT WHICH SHALL BE CHARGEABLE TO TAX. ONCE THIS WAS DONE THE EXPENDITURE ON ACCOUNT OF FRINGE BENEFITS WOULD AUTOMATICALLY STAND REDUCED TO 40 PER CENT. 9. IN COMING TO THE ABOVE CONCLUSION THE HONBLE CALCUTTA HIGH COURT PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS., DOOM DOOM INDIA LTD. 310 ITR 392 (SC). IN VIEW OF THE AFORESAID DECISION OF THE HON BLE CALCUTTA HIGH COURT WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE FOR COMPUTING THE TAXABLE FRINGE BENEFIT AT RS.79,154/- IS DIRECTED TO BE ACCEPTED. WE ARE ALSO OF THE VIEW THAT ANY VIEW CO NTRARY TO THE VIEW TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT (ASSUMING THERE IS NO DEC ISION OF HONBLE SUPREME COURT CONTRARY TO THE HONBLE HIGH COURTS DECISION), IS A MISTAKE APPARE NT ON THE FACE OF THE RECORD AND PROCEEDINGS FOR RECTIFICATION OF SUCH MISTAKES WOULD BE MAINTAINABL E U/S.154 OF THE ACT. 3 ITA NO.06/KOL/2015 BIRLA TEA LTD., AY 2008-09 4. AS THE ISSUE INVOLVED IN THE PRESENT APPEAL AS W ELL AS THE MATERIAL FACTS ARE SIMILAR TO THE CASE CITED SUPRA AND IN VIEW OF NO C ONTROVERTING MATERIAL HAS BEEN BROUGHT ON RECORD, WE RESPECTFULLY FOLLOWING THE DE CISION OF THE TRIBUNAL CITED SUPRA DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRME D BY THE LD. CIT(A). THEREFORE, APPEAL OF ASSESSEE IS ALLOWED. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.09.201 7 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6TH`SEPTEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT NORTH TUKVAR TEA CO. LTD. (FORMERLY BIR LA TEA LTD.), 10, CAMAC STREET, KOLKATA-700 017 2 RESPONDENT DCIT, CIRCLE-4, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY