KANGA & CO., MUMBAI V. A.C.I.T. (11)(2), MUMBAI

ITA 7293/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3481 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 12-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 31-10-2011
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: B D DAMODAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ./ ITA NO. 7293 / MUM/20 1 1 ( / ASSESSMENT YEAR : 20 07 - 08 ) M/S KANGA & CO., READYMONEY MANSION , 1 ST FLOOR, 43, VEER NARIMAN ROAD, MUMBAI - 400001 VS. ACIT - 11(2), MUMBAI ./ ./ PAN/GIR NO. : A AAFK 9525 E ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI MADHU R AGARWAL & SHRI B.D.DAMODAR /REVENUE BY : MS. ARJU GARODIA / DATE OF HEARING : 12 /0 5 /2016 / DATE OF PRONOUNCEMENT 25/05 /201 6 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN AP PEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 20 07 - 08 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT. 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED IN ASSESSING FRINGE BENEFITS AT RS.9,23,473/ - AS AGAINST TH E FRINGE BENEFITS OF RS.7,14,263/ - RETURNED BY THE ASSESSEE. THE ASSESSEE IS ALSO AGGRIEVED FOR CONSIDERING 20% OF THE CONVEYANCE EXPENSES PAID TO PARTNERS AS FRINGE BENEFITS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THA T ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE PROFESSION OF ADVOCATES, SOLICITORS AND NOTARIES. THE ASSESSEE HAS PAID ITA NO. 7 293/11 2 RS.10,46,050/ - AS CONVEYANCE EXPENSES REIMBURSEMENT TO PARTNERS, OF WHICH 20% WAS TREATED AS FRINGE BENEFIT. IT WAS THE CONTENTION OF LD . AR THAT ADDITION ON ACCOUNT OF FRINGE BENEFIT CAN BE MADE ONLY WHEN THERE IS EMPLOYER AND EMPLOYEE RELATIONSHIP. SINCE THE PARTNER IS NOT AN EMPLOYEE OF THE FIRM, THEREFORE, NO DISALLOWANCE ON ACCOUNT OF FRINGE BENEFIT CAN BE MADE WITHIN THE PROVISIONS O F SECTION 115WB . 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE IS COVERED BY THE DECISION OF HO NBLE BOMBAY HIGH COURT IN THE CASE OF TATA CONSULTANCY SERVICES LTD.,374 ITR 112 , WHEREIN IT WAS HELD THAT EMPLOYER AND EMPLOYEE RELATIONSHIP IS A PRE - REQUISITE FOR LEVY OF FRINGE BENEFIT TAX. RESPECTFULLY FOLLOWING THE ORDER OF HONBLE BOMBAY HIGH COURT (SUPRA), WE DO NOT FIND ANY MERIT IN THE ACTION OF LOWER AUTHORITIES FOR MAKING THE ASSESSEE LIABLE TO PAY FRINGE BENEFIT TAX IN RESPECT OF PA YMENT MADE TO THE PARTNERS, WHO IS NOT AN EMPLOYEE OF THE FIRM. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 25/05 / 201 6 . S D/ - ( AMARJIT SINGH ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 25/05 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//