Binaguri Tea Co Pvt Ltd, Kolkata V. D.C.I.T Cir - 4,kolkata, Kolkata

ITA 630/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9557 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 10-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2013
• Court: TRIBUNAL
• Assessee Lawyers: SANDEEP MUKHERJEE LLB LD

Judgement Text

ITA NO. 630/KOL/2013 M/S.BINGURI TEA CO.P.LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA D B ENCH, KOLKATA BEFORE : SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA R AVI, JUDICIAL MEMBER I.T.A NO. 630/KOL/2013 ASSESSMENT YEAR: 2008-09 M/S. BINAGURI TEA CO.PVT.LTD. PAN: AABCB1008P 238A, A.J.C BOSE ROAD 4 TH FLOOR, KOLKATA-20. APPELLANT -VS.- D.C.I.T., CIR-4, KOLKATA. RESPONDENT APPEARANCES BY: SHRI SANDEEP MUKHERJEE, LLB, LD.AR FOR THE ASSE SSEE SHRI DULAL CHANDRA MONDAL, JCIT, LD.DR FOR THE REVENUE DATE OF HEARING : 10-01- 2017 DATE OF PRONOUNCEMENT : 1 3-01-2017 ORDER SHRI. S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER D T: 04-01-2013 PASSED BY THE COMMISSIONER OF INCOME TAX-(APPEALS), IV, K OLKATA FOR THE ASSESSMENT YEAR 2008-09, WHEREIN THE CIT-A UPHELD THE ASSESSME NT ORDER IN TERMS OF APPLICABILITY OF RULE 8 INCOME TAX RULES FOR DETERM INING THE VALUE OF FRINGE BENEFITS UNDER THE I.T ACT, 1961. ITA NO. 630/KOL/2013 M/S.BINGURI TEA CO.P.LTD 2 2. DURING THE PENDENCY OF THE APPEAL THE ASSESSEE FILED AN APPLICATION DATED 30/11/2015 WITH THE PRAYER FOR WITHDRAWAL OF SAID APPEAL. ACCORDINGLY, THIS APPEAL WAS DISMISSED AS WITHDRAWN ON 03-12-201 5. THEREAFTER, THE ASSESSEE FILED AN MISC. APPLICATION IN MA NO. 07/KO L/2016 ARISING OUT OF ITA NO. 630/KOL/2013 FOR THE AY 2008-09 PRAYING TO RECA LL THE ORDER DATED 03-12- 2015, WHEREBY THIS TRIBUNAL DISMISSED THE MISC. APP LICATION VIDE ORDER DATED 01-06-2016. BEFORE THE HONBLE CALCUTTA HIGH COURT THE ASSESSEE QUESTIONED THE SAID DISMISSAL ORDER DATED 01-06-2016. THE HON BLE CALCUTTA HIGH COURT IN GA NO.2250 OF 2016/ITAT NO. 304 OF 2016 SET ASIDE T HE ORDER UNDER CHALLENGE AND PLEASED TO DIRECT THE TRIBUNAL TO CONSIDER THE APPEAL ON MERITS. ACCORDINGLY, THE PRESENT APPEAL FIXED FOR HEARING BEFORE US. 3. THE LD.AR SUBMITS THAT THE ISSUE RAISED IN THE A PPEAL IS SQUARELY COVERED BY THE DECISION OF THE HONBLE HIGH COURT OF CALCUT TA IN THE CASE OF APEEJAY TEA LTD VS. CIT REPORTED IN 370 ITR 775(CAL) REGARD ING APPLICABILITY OF RULE 8 FOR THE PURPOSE OF FRINGE BENEFITS TO TAX. HE ALSO RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M CLEOD RUSSEL INDIA LTD VS. ACIT, KOLKATA FOR THE A.YS 2008-09 & 2009-10 DATED 08-10-2015 IN ITA NOS. 262, 263/KOL/2013. 4. ON THE CONTRARY, THE LD.DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT DECIDE D THE ISSUE OF APPLICABILITY OF RULE 8 OF INCOME TAX RULES IN THE MATTER OF ARRI VING THE VALUE OF FRINGE BENEFITS TO TAX IN FAVOUR OF ASSESSEE BY RELYING ON THE ILLUSTRATION GIVEN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. DOOM D OOM (I) LTD REPORTED IN 310 ITR 392(SC), WHEREIN HELD THAT THE NET PROFIT A ND LOSS OF THE BUSINESS HAS TO BE ARRIVED AT AFTER DEDUCTING ALL THE EXPENSES, ONCE THAT IS DONE AT 40% OF ITA NO. 630/KOL/2013 M/S.BINGURI TEA CO.P.LTD 3 THE NET PROFIT AND LOSS AND FRINGE BENEFITS HAS TO BE WORKED OUT ON SUCH 40%, WHICH SHALL BE CHARGEABLE TO TAX. RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELOW:- ' .... WE SHALL TAKE ASSISTANCE OF THE ILLUSTRATION TO RESOLVE THE ISSUE. LET US ASSUME THAT THE OTHER EXPENSES IN ILLUSTRATION (A) AMOUNTING TO RS. 300/- INCLUDE RS.100/- SPENT BY THE EMPLOYER ON ACCOUNT OF FRINGE BENEFITS MADE AVAILABLE TO ITS EMPLOYEES. IN THAT CASE, 10% OF THE AFORESAID SUM OF RS.100/- WOULD ALSO BE INCLUDIBLE IN ILLUSTRATION (B). THEREFORE, THE QUESTION POSED BEFORE US HAS REALLY BEEN ANSWERED BY THE ILL USTRATION GIVEN BY THE APEX COURT IN THE AFORESAID JUDGMENT. IT CANNOT BE DISPUTED THAT THE AMOUNT OF EXPENDITURE INCURRED BY THE ASSESSEE IN EXTENDING FRINGE BENEFITS TO ITS EMPLOY EES WAS NOT SOLELY FOR THE PURPOSE OF BUSINESS. THE EXPENDITURE INCURRED IS BOTH FOR THE PURPOSE OF BUSINESS AND FOR THE PURPOSE OF AGRICULTURE. THE SUBMISSION MADE BY MRS. GULGUTIA T HAT THE EXPENDITURE ON ACCOUNT OF FRINGE BENEFITS HAS ALREADY BEEN TAKEN INTO ACCOUNT IS NOT CORRECT. THE NET PROFIT AND LOSS OF THE BUSINESS HAS TO BE ARRIVED AT AFTER DEDUCTING ALL T HE EXPENSES AS INDICATED IN ILLUSTRATION 'A IN THE CASE OF DOM DOOMA (SUPRA). ONCE THAT IS DONE 40 % OF THE NET PROFIT AND LOSS HAS TO BE WORKED OUT WHICH SHALL BE CHARGEABLE TO TAX. ONCE T HIS IS DONE THE EXPENDITURE ON ACCOUNT OF FRINGE ITA NOS.262&263/KOLF2013 MCLEOD RUSSEL INDIA LTD. RESPECTFULLY FOLLOWING THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE VALUE OF FRINGE BENEFITS AT 40% AS AGAINS T 100% AS DETERMINED BY THE AO. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 -01-2017. SD/- SD/- WASEEM AHMED S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 1 3-01-2017 COPIES TO :**PP/SPS (1) APPELLANT/ASSESSEE : M/S.BINAGURI TEA CO. PVT. LTD 238A, AJC BOSE ROAD, 4 TH FLOOR, KOLKATA-700 020. (2) RESPONDENT/DEPARTMENT: DEPUTY COMMISSIONER OF I NCOME TAX, CIR-4, KOLKATA, AAYKAR BHAWAN, 8 TH FLOOR, P-7 CHOWRINGHEE SQUARE, KOLKATA 700 069. (3)COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT KOLKATA ITA NO. 630/KOL/2013 M/S.BINGURI TEA CO.P.LTD 4