Karnataka Power Transmission Corporation Ltd, Bangalore V. DCIT, Bangalore

ITA 983/BANG/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5587 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHA PRAKASH CITIIDR
• Assessee Lawyers: A C RAJU F
• Keywords: Depreciation; Revenue expenditure; Set aside
• Section: 192; 115WB(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 983/BANG/2010 ASSESSMENT YEAR : 2007-08 KARNTAKA POWER TRANSMISSION CORPORATION LTD., 7 TH FLOOR, CAUVERY BHAVAN, K.G. ROAD, BANGALORE 560 009. : APPELLANT VS. THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BANGALORE. : RESPONDENT APPELLANT BY : SHRI A.C. RAJU, F.C.A. RESPONDENT BY : SHRI HARSHA PRAKASH, CIT-II(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL INSTITUTED BY THE ASSESSEE COMPANY K PTCL - IS DIRECTED AGAINST THE ORDER OF THE LD. CIT (A)-LTU, BANGALORE IN ITA NO: 43/CIT(A)-LTU/09-10 DATED: 18.5.2010 FOR THE ASSESS MENT YEAR 2007-08. 2. THE ASSESSEE COMPANY HAS RAISED FIVE GROUNDS IN ITS GROUNDS OF APPEAL, OUT OF WHICH GROUND NOS. 1 & 5 DO NOT SURVIVE FOR ADJUDICATION AS THEY ARE GENERAL IN NATURE AND NO SPECIFIC ISSUE S INVOLVED. IN THE ITA NO.983/BANG/10 PAGE 2 OF 10 REMAINING GROUNDS, THE SUBSTANCE OF THE ISSUE IS CO NFINED TO A LONE GROUND THAT THE LD. CIT (A)-LTU WAS NOT JUSTIFIED IN HOLDING T HAT THE EXPENDITURE OF RS.2.76 CRORES ON REPAIRS AND MAINTE NANCE OF RESIDENTIAL QUARTERS OWNED BY THE APPELLANT WAS LIA BLE FOR FRINGE BENEFIT TAX (FBT). 3. BRIEFLY STATED, THE ASSESSEE COMPANY [HENCEFORTH THE ASSESSEE] STATE GOVERNMENT UNDER-TAKING ENGAGED IN THE BU SINESS OF TRANSMISSION OF ELECTRIC ENERGY, FURNISHED ITS RETU RN OF FRINGE BENEFITS FOR THE ASSESSMENT YEAR UNDER DISPUTE, ADMITTING A TOT AL VALUE OF FRINGE BENEFIT OF RS.3.93 CRORES. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE AO HAD NOTICED, AMONG OTHERS, THAT THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.2.76 CRORES BEING REPAIRS AND MAI NTENANCE OF RESIDENTIAL QUARTERS. AFTER EXAMINING THE ASSESSEES CONTENTIO NS, THE AO WAS OF THE VIEW THAT S.115WB (1)(A) SAYS THAT FRINGE BENEFITS, MEANS ANY PRIVILEGE, SERVICE, FACILITY OR AMENITY DIREC TLY OR INDIRECTLY PROVIDED BY AN EMPLOYER, WHETHER BY WAY OF REIMBURS EMENT OR OTHERWISE, TO THIS EMPLOYEES (INCLUDING FORMER EMPL OYEE OR EMPLOYEES) THE ABOVE DEFINITION OF FRINGE BE NEFITS IS FAIRLY WIDE. IT INCLUDES ALL TYPES OF FACILITY OR AMENITY PROVIDED TO THE EMPLOYEES. OBVIOUSLY, PROVIDING OF RESIDENTIAL QUARTERS TO EMPLOYEES IS A FACILITY OR AMENITY PROVIDED TO THE EMPLOYEES. THIS EXPENDITURE DOES N OT FALL WITHIN THE EXCLUSION PROVIDED IN THE EXPLANATION REFERRED TO A BOVE. CONSIDERING THESE FACTS, THE ASSESSEES PLEA TO EXCLUDE THE EXPENDITU RE ON REPAIRS AND ITA NO.983/BANG/10 PAGE 3 OF 10 MAINTENANCE OF RESIDENTIAL QUARTERS, FROM THE TAXAB LE FRINGE BENEFITS CANNOT BE ACCEPTED. 4. AGGRIEVED, THE ASSESSEE CARRIED TH E ISSUE TO THE LD. CIT (A) FOR SUCCOR. 4.1. AFTER DUE CONSIDERATION OF THE ASSESSEE S CONTENTIONS AS WELL AS CRITICALLY ANALYZING THE PROVISIONS OF S.115WB(1) O F THE ACT AND ALSO THE BOARDS CIRCULAR NO.8 OF 2005 DT.29.8.2005, THE LD. CIT (A)-LTU HAD OBSERVED THUS 3.1.(VI) INCIDENTALLY, THE BOARD HAS FURTHER CLARI FIED VIDE ANSWERS TO QUESTIONS 75 & 77 THAT EVEN REIMBURSEMENT OF EXPEND ITURE ON BOOKS AND PERIODICALS TO EMPLOYEES WAS IN THE NATURE OF E XPENDITURE FOR THE PURPOSES OF EMPLOYEE WELFARE WHILE EXPENDITURE INCU RRED FOR THE PURPOSE OF PROVIDING TRANSPORT FACILITY TO EMPLOYEE S CHILDREN WAS ALSO IN THE NATURE OF EXPENDITURE ON EMPLOYEES WELF ARE FALLING WITHIN THE MEANING OF CLAUSE (E) OF SUB-SECTION (2) OF SEC .115WB. CONSIDERING THAT EVEN EXPENSES THAT INDIRECTLY BENE FIT EMPLOYEES WELFARE IS LIABLE TO FBT, IT FOLLOWS AS A NATURAL C OROLLARY THAT EXPENDITURE INCURRED DIRECTLY FOR THEIR WELFARE SUC H AS REPAIRS & MAINTENANCE OF THEIR RESIDENTIAL QUARTERS WOULD DEF INITELY BE LIABLE TO FBT. IT IS ALSO OF RELEVANCE TO NOTE THAT IT IS A SETTLED LAW THAT UNLESS A CIRCULAR IS WITHDRAWN OR IS HELD TO BE ULTRA VIRE S BY COURTS, THEY ARE VALID AND HAVE TO BE FOLLOWED;. IN VIEW OF THE FOREGOING ANALYSIS AND TAKING INTO C ONSIDERATION THE CLARIFICATION PROVIDED IN THE BOARDS CIRCULAR NO.8 OF 2005 DT. 29.8.2005, IT IS CRYSTAL CLEAR THAT THE EXPENDITURE OF RS.2,76,54,629/- INCURRED ON REPAIRS & MAINTENANCE OF EMPLOYEES QUA RTERS FALLS WITHIN THE SCOPE OF CLAUSE (E) OF SUB-SECTION (2) O F SEC.115WB RELATING TO EMPLOYEES WELFARE AND IS ACCORDINGLY L IABLE TO FBT. 5. NOT SATISFIED WITH THE FINDINGS OF THE CIT(A), THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, SHRI A.C. RAJU, THE LD. A R CAME UP WITH A SPIRITED AND LONG DRAWN-OUT SUBMISSION, THE GIST OF WHICH IS SUMMARIZED AS UNDER: ITA NO.983/BANG/10 PAGE 4 OF 10 ILLUSTRATING, ESPECIALLY THE PROVISIONS OF S. 115 WB (3), THE LD. A. R HAD EMPHASIZED THAT - FOR THE PURPOSE OF SUB-SECTION (1), THE PRIVILEGE , FACILITY OR AMENITY DOES NOT INCLUDE PERQUISITES IN RESPECT OF WHICH TA X WAS PAID OR PAYABLE BY THE EMPLOYEE OR ANY BENEFIT OR AMENITY I N THE NATURE OF FREE OR SUBSIDIZED TRANSPORT OR ANY SUCH ALLOWANCE PROVIDED BY THE EMPLOYER TO HIS EMPLOYEES FOR JOURNEY BY THE EMPLOY EES FROM THEIR RESIDENCE TO THE PLACE OF WORK OR SUCH PLACE OF WOR K TO THE PLACE OF RESIDENCE; - NONE OF THE ABOVE EXPENDITURE ENUMERATED IN S.115 WB (2) INCLUDE REPAIRS AND MAINTENANCE OF RESIDENTIAL QUARTERS; TH AT THE EMPLOYEES WERE BEARING THE RENTAL EXPENSES FOR THE RESIDENTIA L QUARTERS THEY OCCUPY WHICH WERE RECOVERED FROM THEIR SALARIES, TH AT AS PER S.115 WB (3) THESE TYPE OF EXPENDITURE WHERE THE EMPLOYEE WAS MADE LIABLE TO PAY TAX/WHERE THE COST OF SERVICE WAS RECOVERED FROM THE EMPLOYEE WILL NOT BE CLASSIFIABLE AS FRINGE BENEFITS (FB); - THAT THE FB ARE LEVIABLE ON THE BENEFITS DIRECTLY OR INDIRECTLY PROVIDED TO THE EMPLOYEES. THE BENEFITS COULD BE I N THE NATURE OF USE OF COMPANY CARS, MEDICAL REIMBURSEMENT, HEALTH INSU RANCE, ENTERTAINMENT ETC., USE OF HOTEL BOARDING AND LODGI NG EXPENSES, TELEPHONE EXPENSES, GUEST HOUSE EXPENSES. THESE WE RE THE EXPENDITURE CLASSIFIABLE AS FB TO EMPLOYEES. THE E XPENDITURE TOWARDS REPAIRS AND MAINTENANCE OF RESIDENTIAL QUAR TERS WERE IN NO WAY CONNECTED TO BENEFITS OF EMPLOYEES. THESE TYPE S OF EXPENSES WERE NOT INCLUDED IN ANY OF THE TAXABLE FB ENUMERAT ED IN THE SECTIONS; IN RESPECT OF CIT(A)S REFE RENCE TO S.115WB (2) IN HER IMPUGNED ORDER AT PAGE 4, IT WAS COUNTERED THAT - - THOSE EXPENSES WERE NOT WITHIN THE AMBIT OF FB. THOSE EXPENSES WERE NOT THE BENEFITS PASSED ON DIRECTLY OR INDIREC TLY TO THE EMPLOYEES. THOSE EXPENSES WERE INCURRED FOR SAFE-G UARDING THE ASSETS OF THE ASSESSEE. REPAIRS AND MAINTENANCE OF RESIDENTIAL QUARTERS WERE OWNED BY THE ASSESSEE AND WERE INCURR ED FOR SAFEGUARDING THE ASSETS; - THAT IF THE EXPENSE IN QUESTION DOES NOT FALL IN ANY OF THE ABOVE CATEGORIES, THEN THE COMMON PARLANCE TEST WILL HAVE TO BE APPLIED, I.E., THE WORD EMPLOYEES WELFARE, THE EXPENSES IN QUESTION MUST HAVE SOME NEXUS WITH EMPLOYEES. IF THE PURPOSE FOR INCURRING THE ITA NO.983/BANG/10 PAGE 5 OF 10 EXPENSE IS TO PROTECT THE ASSESSEES LEGITIMATE BUS INESS RATHER THAN WELFARE OF/BENEFIT TO THE EMPLOYEES, THE EXPENSE WO ULD NOT BE EMPLOYEE WELFARE IN THE ORDINARY, NATURAL AND POP ULAR SENSE OF THE TERM. - RELIES ON IN THE CASE OF CIT V. LALA SHRIDHAR (19 72) 84 ITR 192 (DEL) - WITH REGARD TO THE REFERENCE TO CIRCULAR NO.8 OF 2005 BY THE CIT (A), THE CONTENTION OF THE ASSESSEE WAS THAT ALL TH E EXPENSES STATED IN QNS.73, 75 AND 77 (IN CIRCULAR NO.8) WERE FACILITIE S PROVIDED TO AN EMPLOYEE. IN THE INSTANT CASE THERE WERE NO FACILI TIES PROVIDED. THE EXPENDITURE INCURRED INCLUDES PAINTING, MINOR MAINT ENANCE WORK, REPAIRS SUCH AS ELECTRICITY ETC., WHICH WAS IN THE NATURE OF SAFEGUARDING THE ASSETS AND TO UPKEEP THE PROPERTY OF THE ASSESSEE. THE EXPENDITURE WAS IN NO WAY CONNECTED TO STAFF WE LFARE. - IN CONTRAST WITH THE RULING OF THE JURISDICTIONAL HONBLE COURT IN THE CASE OF CIT V. MYSORE CEMENTS LTD. (1990) 51 TAXM ANN 219 (KAR) WHEREIN IT WAS HELD THAT THE EXPENDITURE ON CONSTRU CTION OF WORKS QUARTERS WHERE OWNERSHIP OF THE QUARTERS DOES NOT V EST WITH THE ASSESSEE AMOUNTS TO BE EXPENSES IN THE NATURE OF TH E EMPLOYEES WELFARE, HOWEVER, IN THE PRESENT CASE, IT WAS ARGUE D, THE RESIDENTIAL QUARTERS WERE OWNED AND MAINTAINED BY THE ASSESSEE AND THAT THE EXPENSES INCURRED WERE PURELY IN THE NATURE OF SAFE -GUARDING AND UP-KEEPING OF ITS ASSETS AND NOT PROVIDING FACILITI ES TO THE EMPLOYEES; - YET ANOTHER CASE WAS BEFORE THE HONBLE MADRAS H IGH COURT [ CIT V. MADRAS CEMENTS LTD. (2002) 254 ITR 423 (MAD)] WH EREIN IT WAS RULED BY THE HONBLE COURT THAT THE MONEY GIVEN TO EMPLOYEES TO ENABLE THEM TO FORM ROADS, ERECT STREET LIGHT-POSTS IN A HOUSING COLONY FORMED BY THEM WAS MONEY SPENT ON THE WELFAR E OF EMPLOYEES. THE LAND WAS NOT OWNED BY THE COMPANY AND, THUS, IT WAS ARGUED BY THE ASSESSEE THAT THE MONEY GIVEN TO THE EMPLOYEES WAS A DEDUCTIBLE REVENUE EXPENDITURE AND WAS IN THE NATURE OF EMPLOY EE WELFARE EXPENSES AND LIABLE TO FBT U/S 115WB (2) (E). HOWE VER, IN THE PRESENT, IT WAS PORTRAYED THAT THE TENEMENTS WERE O WNED BY THE ASSESSEE AND THE EMPLOYEES HAVE NO CONCERN OR ANY R IGHT OVER THE PROPERTY AND, THUS, THEY WERE NOT DIRECTLY OR INDIR ECTLY BENEFITED BY THE EXPENDITURE INCURRED FOR UPKEEP OF THE PROPERTY OWNED BY THE ASSESSEE. IN CONCLUSION, THE LD. A R WAS VERY VEHEMENT IN HIS URGE THAT THE PROVISIONS OF S.115WB (2)(E) HAVE NO APPLICATIO N TO THE FACTS OF THE ITA NO.983/BANG/10 PAGE 6 OF 10 ISSUE ON HAND AND, THUS, THE ASSESSEES CASE DOESN T FALL WITHIN THE AMBIT OF S.115WB FOR FBT. 5.1. ON HIS PART, SHRI HARSH A PRAKASH, THE LD. DR WAS VERY SPECIFIC IN HIS URGE THAT THE DEFINITION OF F RINGE BENEFITS IN S.115WB (1)(A) OF THE ACT, AS RIGHTLY POINTED OUT BY THE AO , IS FAIRLY WIDE WHICH INCLUDES ALL TYPES OF FACILITIES OR AMENITIES PROVI DED TO THE EMPLOYEES. IT WAS, THEREFORE, PLEADED THAT SINCE THE STAND OF THE AO HAS BEEN VINDICATED IN SUSTAINING THE DISALLOWANCE BY THE LD. CIT (A) I N HER IMPUGNED ORDER UNDER CHALLENGE, NO INTERVENTION BY THIS BENCH IS C ALLED FOR AT THIS STAGE. 6. WE HAVE DECISIVELY EXAMINED THE RI VAL SUBMISSIONS AND ALSO ATTENTIVELY PERUSED THE RELEVANT RECORDS INCLUDING THAT OF THE IMPUGNED ORDER OF THE LD. CIT (A)-LTU WHICH IS UNDER CHALLEN GE. 6.1. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS BEEN MAINTAINING RESIDENTIAL QUARTERS AT VARIOUS TOWNS A ND CITIES OF KARNATAKA FOR WHICH IT HAD CLAIMED AN EXPENDITURE OF RS.2.76 CROR ES TOWARDS REPAIRS AND MAINTENANCE. HOWEVER, THE LD. AO TOOK A STAND THAT AS PER S.115WB(1)(A) OF THE ACT, THE DEFINITION OF FRINGE BENEFITS INC LUDES ALL TYPES OF FACILITY OR AMENITY PROVIDED TO THE EMPLOYEES AND, THUS, THE AS SESSEES PLEA TO EXCLUDE THE EXPENDITURE ON REPAIRS AND MAINTENANCE OF RESIDENTIAL QUARTERS FROM THE TAXABLE FRINGE BENEFITS CANNOT BE ACCEDED TO. 6.2. THE LD. CIT (A) ALSO TOOK A SIMILA R VIEW BY SEEKING REFUGE IN BOARDS CIRCULAR NO.8 OF 2005 DT.8.2005 TO JUSTIFY HER STAND. ITA NO.983/BANG/10 PAGE 7 OF 10 6.3. HOWEVER, THE LD. A R TOOK A STAND THAT NONE OF THE EXPENDITURE ENUMERATED IN S.115WB (2) INCLUDE REPAIRS AND MAINT ENANCE OF RESIDENTIAL QUARTERS. THERE IS CONSIDERABLE FORCE IN THE ARGUM ENT OF THE LD. A R THAT THE EXPENSES INCURRED FOR REPAIRS AND MAINTENANCE OF RESIDENTIAL QUARTERS WERE NOT THE BENEFITS PASSED ON TO THE EMPLOYEES EI THER DIRECTLY OR INDIRECTLY. THE RESIDENTIAL QUARTERS WERE OWNED BY THE ASSESSEE AND TO SAFEGUARD ITS ASSETS, THE ASSESSEE HAD TO INCUR EXP ENDITURE BY EFFECTING NECESSARY REPAIRS AND ALSO THE BUILDINGS WERE BRACE D UP WITH WHITE WASHING AND PAINTS FOR THEIR LONGEVITY WHICH CANNOT BE CATEGORIZED THAT THE EXPENSES IN THE NATURE OF EMPLOYEES WELFARE. IT I S NOTEWORTHY TO BRING ON RECORD THAT THE ASSESSEE HAD NOT LET ITS RESIDENTI AL QUARTERS TO EMPLOYEES AS FREE ACCOMMODATION WHEREAS EACH EMPLOYEE WAS R EQUIRED TO PAY RENT FOR THE QUARTER OCCUPIED BY HIM/HER DEPENDING UPON THE TYPE OF QUARTER(S) ALLOTTED. OF COURSE, THE HOUSE RENT FOR THE OCCUPATION OF SUCH QUARTER HAS BEEN RECOVERED FROM THE EMPLOYEES SALA RY EVERY MONTH [SOURCE: P 6 OF PB AR]. AS DISCUSSED ABOVE, THE AS SESSEE HAD INCURRED EXPENDITURE TO UPKEEP THE RESIDENTIAL QUARTERS FOR HUMAN HABITATION. THIS CANNOT, AT ANY STRETCH OF IMAGINATION, BE TERMED TH AT THE ASSESSEE HAD PROVIDED FACILITY OR AMENITY TO ITS EMPLOYEES WHERE BY THE PROVISIONS OF S. 115WB(2) OF THE ACT HAVE A ROLE TO PLAY. 6.4. WE SHALL HAVE A GLIMPSE OF THE JUDICIAL VIEW ON THIS POINT. (I) IN THE CASE OF CIT V. MOTOR IN DUSTRIES CO. LTD. (1988) 173 ITR 374 (KAR), THE HONBLE JURISDICTIONAL HIGH COURT IN ITS WISDOM HAD RULED THAT - 8. .AN EXPENDITURE OR ALLOWANCE REFERRED TO IN THIS SUB- CLAUSE SHOULD BE SUCH, WHICH WHILE IT MAY REFER TO AN ASSET OF THE ASSESSEE USED BY THE EMPLOYEE, IT SHOULD ALL THE SA ME CONSTITUTE AN ITA NO.983/BANG/10 PAGE 8 OF 10 AMENITY OR BENEFIT TO THE EMPLOYEE. WHERE THE EXPEN DITURE DOES NOT ADD TO THE BENEFIT OR AMENITY, AVAILABLE TO THE EMP LOYEE EVEN IF THE EMPLOYER INCURS THE EXPENDITURE, WHATEVER BE THE RE ASON THERE-FOR, IT CANNOT BE ADDED AS A PERQUISITE TO THE EMPLOYEE OR DISALLOWED IN THE EMPLOYER'S ASSESSMENT FOR A SIMILAR REASON. THE BUI LDING IN THE PRESENT CASE BELONGS TO THE ASSESSEE. THE REPAIRS T O THE BUILDING HELPS TO RETAIN THE BUILDING AS A GOOD ASSET WITH WHICH T HE ASSESSEE AS AN EMPLOYER IS CONCERNED AND PROTECT IT FROM DETERIORA TION OR DESTRUCTION. DEPRECIATION ALLOWANCE CLAIMED ENABLES THE ASSESSEE EITHER TO SET ASIDE THE AMOUNT TO REPLACE THE BUILD ING OR TO COMPENSATE HIM FOR THE WEAR AND TEAR OF THE BUILDIN G. NEITHER OF THESE ITEMS RENDERS ANY SERVICE TO THE EMPLOYEE, WH O, FOR THE TEMPORARY PERIOD OF HIS EMPLOYMENT, RESIDES IN THE BUILDING. EVEN IF NOT DOING THE REPAIRS WOULD RESULT IN AN ACCIDENT O R DANGER TO THE EMPLOYEE RESIDENT THEREIN, IT WILL BE PREPOSTEROUS TO HOLD THAT DOING REPAIRS IS A POSITIVE SERVICE TO THE EMPLOYEE. THE MORE CORRECT THING WOULD BE TO SAY THAT ASKING AN EMPLOYEE TO STAY IN A BUILDING IN A STATE OF REPAIR WOULD BE A DISSERVICE TO HIM AND DA NGER TO HIM. THERE IS NO PROVISION IN THE INCOME-TAX ACT WHICH STIPULA TES THAT AVOIDING A DISSERVICE TO AN EMPLOYEE OR NOT SUBJECTING HIM TO A DANGER OR DISASTER WOULD AMOUNT TO A PERQUISITE TO AN EMPLOYE E. THE REPAIRS DONE TO THE BUILDING OR THE DEPRECIATION CLAIMED IN RESPECT OF THE BUILDING ARE EXPENSES DIRECTLY RELATED TO THE ASSES SEE AS AN OWNER OF THE PROPERTY . (II) THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. MADRAS CEMENTS REPORTED IN (2002) 254 ITR 423 (MAD) HAD RU LED THAT THE MONIES GIVEN BY THE ASSESSEE TO THE EMPLOYEES TO ENABLE THEM TO FORM ROADS AND ERECT STREETLIGHTS, ETC., IN A HOUSI NG COLONY FORMED BY THEM WERE MONEY SPENT ON THE WELFARE OF THE EMPLOYE ES. THE LAND WAS NOT OWNED BY THE COMPANY. THE AMOUNT GIVEN/SPEN T WAS A SUBSIDY OR A BENEFIT GIVEN TO THE EMPLOYEES WHICH W AS USED FOR THE PURPOSES OF ERECTING STREETLIGHTS, FORMING ROADS, E TC. THE EXPENDITURE SO FAR AS THE COMPANY WAS CONCERNED WAS CLEARLY IN THE NATURE OF REVENUE EXPENDITURE. WITH DUE RESPECTS, WE WOULD LIKE TO POINT OUT THAT THE HONBLE COURT TOOK A VIEW THAT THE MONIES GIVEN BY THE ASSE SSEE TO ITS EMPLOYEES TO FORM ROADS ETC., IN A HOUSING COLONY FORMED BY I TS EMPLOYEES AND THE LAND IN QUESTION WAS NOT OWNED BY THE ASSESSEE WHEREAS IN THE PRESENT ITA NO.983/BANG/10 PAGE 9 OF 10 CASE, THE ASSESSEE KPTCL WAS THE OWNER OF THE R ESIDENTIAL QUARTERS AND TO UPKEEP ITS ASSETS IT HAD INCURRED EXPENDITU RE TOWARDS REPAIRS & MAINTENANCE WHICH PURELY IN THE NATURE OF SAFEGUAR DING ITS ASSETS AND NOT FACILITIES PROVIDED TO ITS EMPLOYEES AS PORTRAY ED BY THE REVENUE. 6.5. TAKING INTO ACCOUNT THE FACTS A ND CIRCUMSTANCES OF THE ISSUE AS DELIBERATED UPON IN THE FOREGOING PARAGRAPHS AND ALSO IN CONFORMITY WITH THE JUDICIAL VIEW ON THE ISSUE, WE ARE OF THE CONSI DERED VIEW THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TERMING THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS THE REPAIRS AND MAINTENANCE OF ITS ASSETS FALLS WITHIN THE AMBIT OF S.115WB OF THE ACT. IT IS ORDERED ACC ORDINGLY. 6.6. BEFORE PARTING WITH THE ISSUE, WE WOULD LIKE TO EMPHASIS THAT THE BOARDS CIRCULAR NO.8 OF 2005 IN WHICH THE LD. CIT (A) HAD PLACED STRONG RELIANCE TO DRIVE HOME HER POINT. SHE SOUGH T THE BOARDS CLARIFICATION TO STRENGTHEN HER STAND THAT EVEN REIMBURSEMENT OF EXPENDITURE ON BOOKS AND PERIODICALS TO EMPLOYEES W AS IN THE NATURE OF EXPENDITURE FOR THE PURPOSES OF EMPLOYEES WELFARE W HILE EXPENDITURE INCURRED FOR THE PURPOSE OF PROVIDING TRANSPORT FAC ILITY TO EMPLOYEES CHILDREN WAS ALSO IN THE NATURE OF EXPENDITURE ON E MPLOYEES WELFARE FALLING WITHIN THE MEANING OF CLAUSE (E) OF SUB-SECTION (2) OF S.115WB. HOWEVER, WE WOULD LIKE TO EMPHASIZE THAT IN THE INSTANT CASE , THE ASSESSEE HAD INCURRED EXPENDITURE TO UPKEEP ITS ASSETS WHICH DOE SNT MEAN TO INFER EVEN REMOTELY THAT THE BENEFITS AND AMENITIES PROVIDED T O ITS EMPLOYEES EITHER DIRECTLY OR INDIRECTLY AND, THUS, THE BOARDS CIRCU LAR REFERRED SUPRA CANNOT COME TO REVENUES RESCUE IN ANY WAY. ITA NO.983/BANG/10 PAGE 10 OF 10 7. IN THE RESULT , THE ASSESSEES APPEAL IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 31ST DAY OF MAY, 2011. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST MAY, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.