Appollo Tyres Ltd, Ernakulam V. DCIT, Ernakulam

ITA 649/COCH/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96697 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 03-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-10-2013
• Court: TRIBUNAL
• Department Lawyers: SHNTAM BOSE
• Assessee Lawyers: VIVEK C GOVIND

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI B.P. JAIN, AM AND GEORGE GEOR GE K., JM I.T.A. NO.648&649/COCH/2013 ASSESSMENT YEARS : 2006-07 & 2007-08 APOLLO TYRES LTD.. 6 TH FLOOR, CHERUPUSHPAM BUILDING, SHANMUGHAM ROAD, ERNAKULAM, KOCHI-682 031. [PAN:AAACA 6990Q] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), RANGE-1, KOCHI. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI VIVEK C.GOVIND, CA REVENUE BY SHRI SHNTAM BOSE, CIT(DR) DATE OF HEARING 03/09/2015 DATE OF PRONOUNCEMENT 04/09/2015 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THESE TWO APPEALS OF THE ASSESSEE ARE ARISING FROM TWO DIFFERENT ORDERS OF THE CIT(A)-II, KOCHI DATED 26/07/2013 FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. 2. SINCE THE ISSUES IN BOTH THE APPEALS ARE CO MMON, THEREFORE, BOTH THE APPEALS ARE BEING TAKEN UP BY THIS CONSOLIDATED ORD ER. I.T.A. NOS./648&649/COCH/2013 2 3. THE GROUNDS OF APPEAL ARE IDENTICAL IN BOTH THE APPEALS EXCEPT THE AMOUNT OF DISALLOWANCE. HOWEVER, WE REPRODUCE HERE INBELOW THE GROUNDS IN BOTH THE APPEALS AS UNDER: I.T.A. NO. 648/COCH/2013 FOR THE ASSESSMENT YEAR 20 06-07 THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) IS BAD IN LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.74,03,000/- (BEING 2 0% OF THE EXPENDITURE OF RS.3,70,15,000/- INCURRED ON MEDICA L REIMBURSEMENT OF UPTO RS.15,000/-) TO THE RETURNED FRINGE BENEFI T VALUE, MADE BY THE ASSESSING OFFICER. I.T.A. NO.649/COCH/2013 FOR THE ASSESSMENT YEAR 200 7-08 1. THAT THE ORDER PASSED BY THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) IS BAD IN LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.76,59,600/- (BEING 2 0% OF THE EXPENDITURE OF RS.3,82,98,000/- INCURRED ON MEDICA L REIMBURSEMENT OF UPTO RS.15,000/-) TO THE RETURNED FRINGE BENEFI T VALUE, MADE BY THE ASSESSING OFFICER. 4. AS MENTIONED HEREINABOVE, WE SHALL TAKE UP T HE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 IN I.T.A. NO. 648/COCH/2015 AND SINCE THE MATTER IS IDENTICAL IN OTHER APPEAL , OUR ORDER HEREINBELOW IN I.T.A. NO. 648/COCH/2013 SHALL BE IDENTICALLY APPLICABLE T O THE ORDER IN I.T.A. NO. 649/COCH/2013. I.T.A. NOS./648&649/COCH/2013 3 5. THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE IS A PUBLIC LIMITED COMPANY AND IS ENGAGED IN THE MANUFACTURING AND SAL E OF TYRES AND TUBES AND DEALING IN FLAPS. THE RETURN FOR THE FRINGE BE NEFIT TAX WAS FILED AT TOTAL VALUE OF FRINGE BENEFIT OF RS.13,11,20,000/-. THE ASSESSING OFFICER HAS MADE ADDITION OF A SUM OF RS.74,03,000/- (BEING 20% OF THE EXPENDITURE OF R.3,70,15,000/- INCURRED ON MEDICAL REIMBURSEMENT U PTO RS.15,000/-) TO THE RETURNED FRINGE BENEFIT VALUE BY HOLDING THAT I N VIEW OF CBDT CIRCULAR NO. 8/2005 DATED 29/08/2005 (ANSWER TO QUERY NO.69) EXPENDITURE INCURRED ON MEDICAL REIMBURSEMENT UPTO RS.15,000/- IS LIABLE TO FBT AS IT DOES NOT FALL WITHIN THE MEANING OF SALARY AS DEFIN ED IN CLAUSE (1) OF SEC. 17 OF THE INCOME TAX ACT. 6. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSI NG OFFICER AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE. 7. THE LD. COUNSEL FOR THE ASSESSEE, SHRI VIV EK C. GOVIND ARGUED THAT THE AMOUNT HAS ACTUALLY BEEN INCURRED ON MEDICAL RE IMBURSEMENT AND THEREFORE, NO FRINGE BENEFIT TAX (FBT) SHOULD BE LE VIED. 8. ON THE OTHER HAND, THE LD. CIT(DR), SHRI SHANTAM BOSE RELIED ON THE ORDER OF BOTH THE AUTHORITIES BELOW. I.T.A. NOS./648&649/COCH/2013 4 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. THE ASSESSING OFFICER AND THE CIT(A) IN THE PRESENT CASE HAVE RELIED UPON CIRCULAR NO. 8/2005 ISSUED BY CBDT AND THE REL EVANT ANSWER TO QUERY NO. 69 IS REPRODUCED HERINBELOW: HOWEVER, IF ANY SUM IS PAID BY THE EMPLOYER FOR E XPENDITURE ACTUALLY INCURRED BY THE EMPLOYEE FOR MEDICAL TREA TMENT IN AN UNAPPROVED HOSPITAL AND IT DOES NOT EXCEED RS.15,0 00/- DURING THE YEAR, SUCH SUM DOES NOT FALL WITHIN THE MEANING OF SALARY AS DEFINED IN CLAUSE (1) OF SECTION 17 OF THE INCOME-TAX ACT AND NOT LIABLE TO INCOME-TAX IN THE HANDS OF THE EMPLOYEE. THERE IS NO CHANGE IN THE POSITION. SINCE SUCH SUM IS NOT TAXABLE IN THE HA NDS OF THE EMPLOYEE, THE SAME IS LIABLE TO FBT. 10. IN VIEW OF THE ABOVE SAID CIRCULAR WHICH IS DATED 29/08/2005 AND ANSWER TO QUERY NO. 69, IF ANY EXPENDITURE INCURRED BY THE EMPLOYEE FOR MEDICAL TREATMENT IN AN UNAPPROVED HOSPITAL DOES NO T EXCEED RS.15,000/- DURING THE YEAR, SUCH SUM DOES NOT FALL WITHIN THE MEANING OF SALARY AS DEFINED IN SECTION 17(1) OF THE ACT . THEREFORE, T HE SAME IS NOT LIABLE TO BE INCLUDED AS INCOME IN THE HANDS OF THE EMPLOYEE. I F IT IS SO, THE SAME IS LIABLE TO FBT. IN OUR VIEW, THE ASSESSEE IS VERY MUCH LIABLE TO FRINGE BENEFIT TAX. ACCORDINGLY, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THUS ALL THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSE D. I.T.A. NO. 649/COCH/2013 FOR THE ASSESSMENT YEAR 20 07-08 I.T.A. NOS./648&649/COCH/2013 5 11. THE FACTS IN THE PRESENT CASE ARE IDENTICAL T O THE FACTS IN THE ASSESSEES OWN CASE IN I.T.A. NO. 648/COPCH/2013 F OR THE ASSESSMENT YEAR 2006-07 WHICH HAS BEEN DECIDED BY US HEREINABOVE. AS MENTIONED HEREINABOVE, SINCE THE FACTS ARE IDENTICAL IN THE P RECEDING YEAR, A.Y. 2006- 07 OF THE ASSESSEE, OUR ORDER HEREINABOVE FOR THE A SSESSMENT YEAR 2006-07 IN I.T.A. 648/COCH/2013 SHALL BE IDENTICALLY APPLIC ABLE IN THE PRESENT CASE. ACCORDINGLY ALL THE GROUNDS OF THE ASSESSEE ARE DIS MISSED. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IN I.T.A. NOS. 648/COCH/2013 AND 649/COCH/2013 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 04-09-2015. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 04TH SEPTEMBER, 2015 GJ COPY TO: 1. APOLLO TYRES LTD.. 6 TH FLOOR, CHERUPUSHPAM BUILDING, SHANMUGHAM ROAD, ERNAKULAM, KOCHI-682 031. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1( 1), RANGE-1, KOCHI. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN I.T.A. NOS./648&649/COCH/2013 6