DCIT RG 1(2), MUMBAI V. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD, MUMBAI

ITA 7934/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2760 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Section: 11

Judgement Text

, THE INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMB AI , , BEFORE SH.RAJENDRA,ACCOUNTANT MEMBER AND S MT.BEENA PILLAI,JUDICIAL MEMBER /ITA NO.7934/MUM/2011, /ASSESSMENT YEAR 2008-09) ACIT-1(2) ROOM NO.535, 5 TH FLOOR AAYAKAR BHAVAN, MK ROAD MUMBAI-20. VS. M/S. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD. GODREJ COLISEUM, 9 TH FLOOR BEHIND EVERARD NAGAR, SION MUMBAI-22. PAN: AAACO 3983 B ( / APPELLANT ) ( / RESPONDENT ) / ASSESSEE BY : SHRI MADHUR AGARWAL / REVENUE BY : SHRI SANJAY SINGH / DATE OF HEARING :29.10. 2015 / DATE OF PRONOUNCEMENT : 29 .10 . 2015 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 09.9.2011 OF THE CIT(A) -2 MUMBAI,THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF LIFE IN SURANCE AND ANNUITY FILED ITS FRINGE BENEFIT (FBT)RETURN ON 28.09.2008,DECLARING THE VAL UE OF FRINGE BENEFITS(FB)AT RS.4.14 CRORES.VIDE HIS ORDER,DT.30.11.2010,THE AO DETERMIN ED THE VALUE OF THE FB AT RS.7.62 CRORES,U/S.115WE(3)OF THE ACT,.WHILE COMPLETING THE ASSESSMENT,HE INCLUDED THE VALUE OF TELEPHONE/FAX/TELEX-EXPENSES(RS.67.08LACS)AND CONVE YANCE EXPENSES(RS.1.88 CRORES)FOR CALCULATING THE TOTAL VALUE OF FB. 2. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY.(FAA).BEFORE HIM,IT WAS ARGUED THAT IDENTICAL ISSUES WERE DECIDED IN FAVOUR OF THE ASSESSEE BY THE FAA IN THE EARLIER AY .S.,THAT BOTH THE EXPENDITURE WERE OUTSIDE THE AMBIT OF FBT.AFTER CONSIDERING THE SUBM ISSION OF THE ASSESSEE AND THE ORDERS OF HIS PREDECESSORS FOR THE AY.S.2006-07 AND 07-08,HE HELD THAT THE EXPENDITURE ON OFFICE TELEPHONE AND CONVEYANCE COULD NOT BE TREATED AS FB .FINALLY,HE ALLOWED THE APPEAL FILED BY THE ASSESSEE. 3. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR) STATE D THAT THE MATTER COULD BE DECIDED ON MERITS. AUTHORISED REPRESENTATIVE (AR) RELIED UPON THE ORDER OF THE TRIBUNAL FOR AY 2006- 07(ITA NO.63/MUM/2010 & 491/MUM/2010 DT.25.11.2011) . WE FIND THAT IN THE ASSESSEES OWN CASE THE TRIBUN AL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WHILE ADJUDICATING THE APPEAL FOR THE AY 2 006-07(SUPRA).WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE ORDER AND SAM E READS AS UNDER : 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. REVENUES APPEAL IN ITA NO.63/MUM./2010 GROUND NO.1, READS AS FOLLOWS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE FRINGE BENEFIT TAX LEVIED ON TELEPHONE / FAX EXPENSES IN RESPECT OF TELEPHONES INSTALLED IN THE OFFICE PREMISES IGNORING THE PROVI SIONS OF SECTION 115WC(C) OF THE ACT. ITA NO.7934/M/11 KOTAK M 2 2 12. THE COMMISSIONER (APPEALS) HELD THAT THE EXPEND ITURE INCURRED ON OFFICE TELEPHONES IS NOT CONSIDERED FOR EMPLOYMENT. WE UPHOLD THE CONCLUSION OF THE COMMISSIONER (APPEALS), VIDE PARA-13 OF HIS ORDER WHICH IS REPRODUCED BELOW, HOL DING THAT NO BENEFIT FLOWS TO THE EMPLOYEE BY REASON OF HIS EMPLOYMENT AS FAR AS EXPENDITURE ON O FFICE TELEPHONE IS CONCERNED. 13. IN THE LIGHT OF THE ABOVE BACKGROUND I AM CONS TRAINED TO CONCLUDE, EVEN WITHIN THE FRAMEWORK OF DEEMING PROVISIONS, THAT: 1. THE PHRASE CONSIDERATION FOR EMPLOYMENT OCCURR ING IN SUBSECTION 1 OF SECTION 11 5WB HAS NOT BEEN SUPERSEDED BY THE DEEMING PROVISIO N CONTAINED IN SUB-SECTION 2 OF THE SAID SECTION (EXCEPT WHERE SPECIFICALLY PROVIDED AS IN CLAUSE B OF SUB-SECTION 2). 2. A BENEFIT TO EMPLOYEES, COLLECTIVE OR MAY BE IND IVIDUAL, MUST NECESSARILY BE ASSOCIATED OR BE INHERENT FOR THE EXPENDITURE TO BE TREATED AS FRINGE BENEFIT. IN THE ABSENCE OF ANY INHERENT BENEFIT TO EMPLOYEES, EVEN UNDER THE DEEMI NG PROVISIONS, FRINGE BENEFIT CANNOT BE ASSUMED. 3. DEEMING PROVISIONS CONTAINED IN SUB-SECTION 2 OF SECTION 115 WB CANNOT BE INVOKED MECHANICALLY AND, IN RESPECT OF EVERY ITEM OF EXPEN DITURE, IT IS NECESSARY FIRST TO ASSOCIATE THE BENEFIT TO EMPLOYEES ARISING OUT OF THEIR EMPLO YMENT BEFORE THE EXPENDITURE CAN BE CATEGORIZED TO BE RESULTING INTO FRINGE BENEFIT, TH E EXCEPTION OF CLAUSE B OF SUB-SECTION 2 OF SECTION 115 WB NOTWITHSTANDING. ONE CAN NOT., BY THE NOMENCLATURE ALONE, CLASSIFY AN EXPENDITURE TO RESULT INTO FRINGE BENEFIT. CONSEQUENTLY, WE DISMISS GROUND NO.1, RAISED BY THE REVENUE. 13. GROUND NO.2, READS AS FOLLOWS:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE FRINGE BENEFIT TAX LEVIED ON THE CONVE YANCE INCLUDING CAR HIRE CHARGES IGNORING THE PROVISIONS OF SECTION 115WC(C) OF THE ACT. 14. THE COMMISSIONER (APPEALS) HELD THAT THE EXPEND ITURE UNDER CONSIDERATION ARE DAY-TO-DAY LOCAL TRAVELLING EXPENDITURE AND TAXI HIRE CHARGES FOR MOVEMENT OF EMPLOYEES DURING THEIR WORKING HOURS. IT IS NOT CONVEYANCE EXPENSES PAID T O THE EMPLOYEE FOR TRAVEL BETWEEN HIS RESIDENCE AND OFFICE. UNDER THESE CIRCUMSTANCES, WE UPHOLD THE FINDINGS OF THE COMMISSIONER (APPEALS) THAT THE PAYMENT IS NOT CONSIDERED FOR EM PLOYMENT. THUS, WE DISMISS GROUND NO.2, RAISED BY THE REVENUE. 15. IN THE RESULT, REVENUES APPEAL IS DISMISSED. RESPECTFULLY,FOLLOWING THE ABOVE EFFECTIVE GROUNDS OF APPEAL FILED BY THE AO ARE DECIDED AGAINST HIM. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . ! '#$ %& ORDER PRONOUNCED IN THE OPEN COURT ON 29TH OCTOBER, 2015. 29 ,2015 SD/- SD/ - ( '(! / BEENA PILLAI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, )# DATE:29.10.2015 . . . JV.SR.PS. ITA NO.7934/M/11 KOTAK M 3 3 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.