DAUSA SAHKARI BHOOMI VIKAS BANK LTD., Dausa V. ITO, Dausa

ITA 912/JPR/2012

• Counselvise Citation: 91223114 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH OJHA JCIT DHK
• Assessee Lawyers: ANIL KAUSHIK
• Keywords: Business expenditure

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 912/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 DAUSA SAHKARI BHOOM VIKAS BANK LTD. DAUSA CUKE VS. THE ITO WARD- DAUSA DAUSA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAABD 0182 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ANIL KAUSHIK (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJESH OJHA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/02/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04 /03/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 25-09-2012 FOR THE ASSESSMENT Y EAR 2006-07 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. 1. THAT THE ORDER OF THE LD. CIT(A) DATED 25-09- 2012 IS UNJUSTIFIED, ARBITRARY, PRE-JUDGED, AGAINST THE WEIGHT OF EVIDENCE ON RECORD AND BAD IN LAW. ITA NO. 912/JP/2012 DAUSA SAHAKARI BHOOMI VIKAS BANK LTD. VS. ITO , WAR D- DAUSA . 2 2. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THE EXPENSES INCURRED BY THE ASSESSEE TOWARDS HIRE CHARGES FOR JEEPS HIRED (RS. 2,95,200) AND DIESEL FOR HIRED JEEPS ( RS. 3,67,869/-) PAID / REIMBURSED TO VARIOUS JEEP O WNERS UNDER PROVISIONS OF SECTION 115WB(2)(F) OF THE I.T. ACT, 1961 WHILE THE CROSS EXAMINATION BEFORE HIM WAS TO DECIDE WHETHER THESE EXPENSES WERE COVERED BY THE PROVISIO NS OF THE SECTION 115WB(2)(H) OR NOT, AS THESE EXPENSES W ERE ASSESSED AS FRINGE BENEFIT BY THE AO UNDER PROVISIO NS OF SECTION 115WB(2)(F) AS HELD BY THE LD. CIT(A) ALWAR , AS SUCH THE ORDER OF THE LD. CIT(A) ALWAR IS CONTRARY TO THE FACTS AND LAW OF THE CASE AND REQUIRES TO BE QUASHE D. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CO OPERATIVE LAND DEVELOPMENT BANK; IT HAS TO ADVANCE LOANS TO MEMBER S FOR PROMOTION OF ITS OBJECTIVES AND RELATED BANKING ACTIVITIES; RECO VERY OF SUCH LOANS IS A VERY IMPORTANT PART OF ITS BANKING ACTIVITIES. IT H AS TO INCUR EXPENDITURE ON RECOVERY CAMPAIGNS, FOR WHICH ASSESSEE BANK HAS TO HIRE JEEPS ON DRY LEASE BASIS I.E. PETROL AND DIESEL EXPENSES ARE BOR NE BY THE ASSESSEE BANK. THE ASSESSEE DOES NOT OWN ITS TRANSPORT VEHICLES, THEREFORE, THE JEEPS ARE HIRED. THE EXPENSES TOWARDS HIRING OF JEEPS AND PET ROL/ DIESEL ARE INCURRED BY THE ASSESSEE ARE TREATED BY THE AO AS FRINGE BEN EFITS EXTENDED TO THE EMPLOYEES FOR THEIR PERSONAL USE AND WERE BROUGHT T O TAX U/S 115WB(2)(F). ITA NO. 912/JP/2012 DAUSA SAHAKARI BHOOMI VIKAS BANK LTD. VS. ITO , WAR D- DAUSA . 3 2.2 IN FIRST APPEAL, THE LD. CIT(A) CONFIRMED THE A DDITION MADE BY THE AO UNDER THIS HEAD BY FOLLOWING OBSERVATION. IT IS AN ADMITTED FACT THAT THE APPELLANT HAS INC URRED EXPENSES ON HIRING OF VEHICLES AND REIMBURSEMENT OF FUEL CHARGES THEREON. THESE CARS WERE USED BY THE BRANCH MANAGER, LOAN OFFICERS, SECRETARY AND OTHER STAFF F OR THE PURPOSE OF RECOVERY FROM BORROWERS. THESE EXPENSES ARE IN THE NATURE OF CONVEYANCE EXPENSES. THE BENEFITS ARE ENJOYED COLLECTIVELY AND CANNOT BE ATTRIBUTED TO AN INDIVID UAL EMPLOYEE. THE EXPENSES ON CONVEYANCE, USED OF TELEP HONE, TOUR AND TRAVEL ETC. HAS BEEN DEEMED TO BE FRINGE B ENEFITS SINCE THESE INVOLVE SOME ELEMENT OF PROVISION OF FA CILITY OR AMENITY TO THE EMPLOYEES AND ARE ENJOYED COLLECTIVE LY, ALTHOUGH THESE ARE INCURRED FOR THE PURPOSE OF BUSI NESS. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THES E EXPENSES, BEING IN THE NATURE OF CONVEYANCE EXPENSE S WOULD BE COVERED BY THE PROVISION OF SECTION 115WB(2)(F) OF THE ACT. ACCORDINGLY, THE ACTION OF THE AO TREATING THE EXPENSES ON JEEP HIRE CHARGES (RS. 2,92,500) AND DIESEL EXPE NSES RS. 3,76,869/- AS FRINGE BENEFITS IS CONFIRMED. THE GRO UND NO. 3 IS DISMISSED ON THIS APPEAL. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY CONTEND S THAT THE FACTS ABOUT THE ASSESSEE'S ACTIVITIES FOR ADVANCING LOANS TO ME MBERS FOR LAND DEVELOPMENT AND ITS RECOVERY CAMPAIGNS IN THIS BEHA LF ARE NOT DISPUTED. THIS TYPE OF EXPENDITURE WAS INCURRED IN EARLIER YE ARS ALSO AND IT IS AN INTEGRAL PART OF THE ASSESSEE'S BANKING BUSINESS AC TIVITIES. THE ADVANCES ARE GIVEN TO THE MEMBERS WHO ARE SITUATED IN VARIOU S VILLAGES; FOR ITA NO. 912/JP/2012 DAUSA SAHAKARI BHOOMI VIKAS BANK LTD. VS. ITO , WAR D- DAUSA . 4 EFFECTING THE RECOVERIES THE ASSESSEE BANK STAFF HAS TO TRAVEL TO VARIOUS VILLAGES FOR DISCHARGING THEIR DUTIES TO HAVE NECES SARY PAPER WORK, THEY ESCORT CAMPAIGNS TO RECOVER THE LOANS FROM THE BORR OWERS. THIS IS WHOLLY AND EXCLUSIVE BANKS BUSINESS EXPENDITURE AND CANNOT BE TREATED AS CONVEYANCE EXPENSES EXTENDED FOR THE BENEFIT OF THE EMPLOYEES. THE NATURE OF SUCH EXPENDITURE NOT BEING LIABLE FOR FBT , IS FURTHER CLARIFIED BY THE HON'BLE FINANCE MINISTER WHILE INTRODUCING THE FRINGE BENEFIT TAX PROPOSAL BEFORE PARLIAMENT FOR ITS ENACTMENT (FOR SHORT FBT) AS UNDER:- I HAVE LOOKED INTO THE PRESENT SYSTEM OF TAXING PERQUISITES AND I HAVE FOUND THAT MANY PERQUISITES ARE DISGUISED AS FRINGE BENEFITS AND ESCAPE TAX. NEITHE R THE EMPLOYER NOR THE EMPLOYEE PAYS TAX ON THIS BENEFITS WHICH ARE CERTAINLY FOR CONSIDERABLE MATERIAL VALUE. AT P RESENT, WHERE THE BENEFITS ARE FULLY ATTRIBUTABLE TO THE EM PLOYEE THEY ARE TAXED IN THE HANDS OF THE EMPLOYEE; THAT POSITI ON WILL CONTINUE. IN ADDITION, I NOW PROPOSE THAT WHERE THE BENEFITS ARE USUALLY ENJOYED COLLECTIVELY BY THE EMPLOYEE AN D CANNOT BE ATTRIBUTED TO INDIVIDUAL EMPLOYEES, THEY SHALL B E TAXED IN THE HAND OF THE EMPLOYER. HOWEVER, TRANSPORT SERVIC ES FOR WORKERS AND STAFF AND CANTEEN SERVICES IN AN OFFICE OR FACTORY WILL BE OUTSIDE THE TAX NET. THE TAX IS NOT A NEW T AX, ALTHOUGH I AM OBLIGED TO CALL IT BY A NEW NAME, NAMELY, FRIN GE BENEFIT TAX (FBT). ITA NO. 912/JP/2012 DAUSA SAHAKARI BHOOMI VIKAS BANK LTD. VS. ITO , WAR D- DAUSA . 5 IT IS PLEADED THAT BY THIS EXPLANATION, THE EXPENDI TURE INCURRED IN QUESTION DOES NOT AMOUNT TO BEING IN THE NATURE OF FBT. THIS REGULAR EXPENDITURE INCURRED BY THE ASSESSEE IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS AND BY NO STRETCH OF IMAGINATION CAN BE TR EATED AS LIABLE FOR FBT. 2.3 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS NARRATED BY THE ASS ESSEE HAVE NOT BEEN DISPUTED BY THE LD. DR. THE OBJECTION RAISED BY THE LOWER AUTHORITIES AND THE LD. DR IS TO THE EFFECT THAT THERE ARE NO REGUL AR AGREEMENTS FOR HIRING OF JEEPS. IN OUR CONSIDERED VIEW, THIS QUESTION IS IMMATERIAL TO THE ISSUE INASMUCH AS THE RECOVERY OPERATIONS AND DEPLOYMENT OF RECOVERY PARTIES TO VARIOUS RURAL DESTINATIONS HAS NOT BEEN DISPUTED . SIMILARLY, IT HAS NOT BEEN ALLEGED THAT THE IMPUGNED EXPENDITURE INCURRED BY THE ASSESSEE BANK IS UNREASONABLE OR NON-GENUINE, CONSEQUENTLY, THESE OBJECTIONS HAVE NO RELEVANCE. AS REGARDS THE FBT, THE LEGISLATIVE INTE NT CAN BE GATHERED BY THE SPEECH OF THE HON'BLE FINANCE MINISTER WHO WHI LE INTRODUCING THE FBT PROVISIONS REFERRED ABOVE CLARIFICATION AND SPE CIFICALLY EXCLUDED THE TRANSPORT SERVICES FOR THE WORKERS AND STAFF OF THE ASSESSEE EMPLOYEES. ITA NO. 912/JP/2012 DAUSA SAHAKARI BHOOMI VIKAS BANK LTD. VS. ITO , WAR D- DAUSA . 6 BESIDES IN THIS CASE, IT IS NOT EVEN OFFERED FOR EV ERY EMPLOYEE BUT ONLY TO THOSE WHO ARE PART OF THE BANKS RECOVERY CAMPAIGN. THUS IN THESE CIRCUMSTANCES, WE HOLD THAT THE IMPUGNED AMOUNT IS NOT EXIGIBLE TO FBT AND THE SAME IS DELETED AND THE APPEAL OF THE ASSES SEE IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED ORDER PRONOUNCED IN THE OPEN COURT ON 04 /04/2 015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04 TH MARCH, 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DAUSA SAHKARI BHOOMI VIKAS BANK LTD. , DAUSA, 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- DAUSA 3. VK;DJ VK;QDRVIHY ) @ CIT(A), JAIPUR 4. VK;DJ VK;QDR@ CIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.912/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR