2011 (7) TMI 1314 - AT - Income Tax

Summary

Issues involved: The judgment involves the addition of perquisites u/s 15 read with section 17(2)(iv) of the Act to the total income of the assessee, based on expenses incurred through credit cards and paid by the employer company.

Summary:

1. Background and Assessment Proceedings:
The assessee, an individual and Director in a company, filed a return declaring total income. The Assessing Officer (AO) added expenses paid by the employer company through credit cards as perquisites u/s 17. The assessee appealed to the CIT(Appeals) claiming double taxation due to fringe benefit tax paid by the employer.

2. Decision of CIT(Appeals):
The CIT(Appeals) upheld the addition of expenses as perquisites, citing personal nature of expenses and lack of evidence for business purpose. He referred to legal precedents and dismissed the appeal, directing the AO to verify certain contentions.

3. Tribunal's Decision:
The Tribunal considered the CBDT Circular on fringe benefit tax, which clarified that such tax is a levy on employees for privileges provided by the employer. Referring to AO's acceptance in previous assessments, the Tribunal held that only the balance amount, not covered by fringe benefit tax paid by the employer, should be added to the assessee's income as perquisite. The Tribunal set aside the CIT(Appeals) order and remanded the matter to the AO for recomputation.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the treatment of expenses covered by fringe benefit tax and directing the AO to reevaluate the perquisite value.