PIRAMAL GLASS LTD, MUMBAI V. ASST CIT CEN CIR 6(3), MUMBAI

ITA 6992/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1364 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2014
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Keywords: Rectification of order
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 6992 /MUM/20 14 (ASSESSMENT YEAR 20 08 - 09 ) PIRAMAL GLASS LIMITED (FORMERLY KNOWN AS GUJARAT GLASS LIMITED) PIRAMAL TOWER ANNEXE GANPATRAO KA DAM MARG LOWER PAREL WEST MUMBAI - 400 013. VS. ACIT CIRCLE 6(3) ROOM NO. 522 AAYAKAR BHAVAN M.K. ROAD NEW MARINE LINES MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABCG0093R ASSESSEE BY SHRI RONAK DOSHI DEPARTMENT BY S HRI CHANDRAVIJAY DA TE OF HEARING 7 .4 . 201 7 DATE OF PRONOUNCEMENT 7 . 4 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 14.8.2014 PASSED BY THE LEARNED CIT(A) - 12, MUMBAI AND IT RELATES TO A.Y. 2008 - 09. 2 . THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION OF ` 26.90 LAKHS TO THE CHARGEABLE FRINGE BENEFIT COMPUTED BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS MADE THE ABOVE SAID ADDITION IN THE RECTIFICATION ORDER PASSED U/S. 154 OF THE ACT. 3. THE ASSESSEE COMPANY FILED ITS RETURN OF FRINGE BENEFIT DECLARING TOTAL CHARGEABLE FRINGE BENEFIT AT ` 1,17,23,764/ - . THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S. 115W(3) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER PASSED A RECTIFICATION ORDER DATED 8.3.3013 U/S. 154 OF PIRAMAL GLASS LIMITED 2 THE ACT ON NOTICING THAT THE ASSESSEE HAS INCURRED TRAVELLING EXPENSES OF ` 29,74,970/ - ON PERSON S OTHER THAN THE EMPLOYEE S AND THE SAME WAS NOT CONSI DERED FOR COMPUTING FRINGE BENEFIT. SIMILARLY, THE ASSESSEE HAD INCURRED A SUM OF ` 1,27,09,369/ - ON MEDICAL REIMBURSEMENT EXPENSES AND THE SAME WAS ALSO NOT CONSIDERED. THE AO TOOK THE VIEW THAT BOTH THE ITEMS REFERRED ABOVE ARE CHARGEABLE TO FRINGE BEN EFIT TAX. HENCE T HE ASSESSING OFFICER CONSIDERED OMI SSION OF BOTH THE ITEMS AS MISTAKE S APPARENT FROM RECORD AND ACCORDINGLY REVISED THE TOTAL CHARGEABLE FRINGE BENEFIT TO ` 1,44,14,387 BY INCLUDING CHARGEABLE PORTION OF BOTH THE EXPENDITURE REFERRED ABOV E . THE ASSESSEE CHALLENGED THE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER BY FILING THE APPEAL BEFORE THE LEARNED CIT(A) , BUT COULD NOT SUCCEED . H ENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RE CORD. THE FIRST ISSUE IS WHETHER TRAVELLING EXPENSES INCURRED BY THE ASSESSEE ON P ERSONS WHO ARE NOT THE EMPLOYEES ARE LIABLE TO FRINGE BENEFIT TAX OR NOT. IT WAS BROUGHT TO OUR NOTICE THAT THIS ISSUE HAS BEEN D ECIDED IN FAVOUR OF THE ASSESSEE BY THE DECIS ION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TATA CONSULTANCY SERVICES LTD. (2015) 374 ITR 112, WHEREIN HON'BLE BOMBAY HIGH COURT HELD THAT THE BASIS OF FRINGE BENEFIT TAX EMANAT E OUT OF EMPLOYER AND EMPLOYEE RELATIONSHIP AND HENCE THE PAYMENT MADE TO A PERSON OUT OF CONTRACTUAL AGREEMENT WOULD NOT BE LIABLE TO FRINGE BENEFIT TAX. BY FOLLOWING BINDING DECISION OF HON'BLE BOMBAY HIGH COURT REFERRED ABOVE, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASS ESSING OFFICER TO EXCLUDE TRAVELLING EXPENDITURE INCURRED ON PERSON S OTHER THAN THE EMPLOYEE S WHILE COMPUTING CHARGEABLE FRINGE BENEFIT. 5. NEXT ISSUE RELATES TO LIABILIT Y TO PAY FRINGE BENEFIT TAX ON MEDICAL REI MBURSEMENT MADE TO THE EMPLOYEES AT A FIGU RE OF LESS THAN ` 15,000/ - FOR EACH EMPLOYEE IN A YEAR . LEARNED AR SUBMITTED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE COORDINATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF GODREJ PROPERTIES VS. ADDL. CIT (2011) 16 TAXMANN.COM 298, WHEREIN THE PIRAMAL GLASS LIMITED 3 TRIBUNA L HELD THAT THE MEDICAL REIMBURSEMENT COVERED BY THE BENEFIT OF THE PROVISO (V) TO SECTION 17(2) OF THE ACT WOULD NOT CONSTITUTE FRINGE BENEFIT AS DEFINED U/S. 115WB OF THE ACT. IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE IS MEDICAL REIMBURSEMENT OF ` 1 ,27,09,369/ - CONSTITUTE MEDICAL REIMBURSEMENT MADE TO VARIOUS EMPLOYEES AT THE RATE OF LESS THAN ` 15,000/ - PER EMPLOYEE AND HENCE THE SAME IS COVERED BY PROVISO (V) TO SECTION 17(2) OF THE ACT. ACCORDINGLY , BY FOLLOWING THE DECISION RENDERED BY THE COORDI NATE BENCH IN THE ABOVE SAID CASE, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO EXCLUDE MEDICAL REIMBURSEMENT OF LESS THAN ` 15,000/ - PER EMPLOYEE MADE TO THEM FROM THE VALUE OF CHARGEABLE FRINGE BE NEFIT AFTER CARRYING NECESSARY VERIFICATION, IF REQUIRED , IN ORDER TO SATISFY HIMSELF THAT THE ENTIRE AMOUNT OF MEDICAL REIMBURSEMENT EXPENDITURE REFERRED ABOVE RELATES TO EMPLOYEES CLAIM OF LESS THAN RS.15,000/ - PER PERSON . 6. THE ASSE SSEE HAS ALSO CHALLENGED THE VALIDITY OF ORDER PASSED U/S. 154 OF THE ACT ON THE GROUND THAT THE ABOVE SAID ISSUES CONSIDERED BY THE ASSESSING OFFICER ARE DEBATABLE IN NATURE. SINCE, WE HAVE DECIDED BOTH THE ISSUES IN FAVOUR OF THE ASSESSEE ON MERIT S , WE D O NOT FIND IT NECESSARY TO DISPOSE OF THE LEGAL GROUND URGED BY THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 7 .4 .201 7. SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMB ER ACCOUNTANT MEMBER MUMBAI ; DATED : 7 / 4 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FI LE. PIRAMAL GLASS LIMITED 4 BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI