2012 (8) TMI 90 - AT - Income Tax

Disallowance of contribution made to superannuation fund - the provision made towards pension fund was held to be liable for fringe benefit tax - Held that - As per the amended provisions with effect from the assessment year 2007-08, the amount of contribution, referred in clause (c) of sub-section (1) of section 115WC, which exceeds Rs. 1 lac in respect of each employee, is to be taken into consideration for the purpose of valuing the fringe benefit tax - that the contribution to superannuation fund in present case being less than Rs. 1.00 lac per employee is not liable for fringe benefit tax - the matter is restored back to the file of AO to verify the actual payment of contribution which exceeds Rs. 1 lac in respect of each employee - in favour of assessee for statistical purposes

Summary

Issues:
1. Disallowance of contribution to superannuation fund under section 115WC(1)(b) of the Act for assessment year 2007-08.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the disallowance of a contribution made by the assessee to the superannuation fund. The learned Counsel for the assessee argued that an amendment in section 115WC(1)(b) of the Act, introduced by the Finance Act, 2006, exempted contributions up to Rs. 1 lakh per employee from fringe benefit tax. The Counsel cited a previous ITAT order and contended that the amendment was retrospective. The Assessing Officer had levied fringe benefit tax on the contribution of Rs. 25.25 crores made during the assessment year 2007-08. However, the Commissioner of Income Tax (Appeals) upheld the decision, stating that the amendment did not apply to the contribution made for the previous year. The tribunal found no merit in the decision and referred to the amended provisions that required contributions exceeding Rs. 1 lakh per employee to be considered for valuing fringe benefit tax.

The tribunal directed the matter to be sent back to the Assessing Officer to verify contributions exceeding Rs. 1 lakh per employee. The decision was to be made in line with the amended provisions and a previous ITAT decision. The tribunal highlighted the welfare aspect of the amendment, aiming to align it with deductions under section 80C and 80CCD. The tribunal emphasized that contributions below Rs. 1 lakh per employee were not liable for fringe benefit tax. Consequently, the appeal of the assessee was allowed in part for statistical purposes.