2015 (7) TMI 443 - AT - Income Tax

Exemption u/s 115WB - Fringe benefits Tax - FBT - Disallowance of expenses - Held that - CIT(A) has observed that the action of the AO in treating the entire amount of expenses booked under the second category was not justified as these expenses were primarily in respect of car hire facilities for the employees during the weekends for which a separate arrangement was made as a regular shuttle service from home to office and back. - CIT(A) has further observed that as distinct from the regular facility for commutation of the staff from home to office and vice versa, separate facility was provided in respect of the employees who had to stay on in the office beyond the prescribed office time and who could not avail the benefit of regular shuttle service for the employees. - CIT(A) has also noted that the Ld. Counsel of the assessee was asked to furnish the details of expenses that were in respect of commutation of staff from home to office hours or during the weekends and other car hire facilities. - CIT(A) has rightly held that 75% of the expenses booked in the category 2 in respect of which disallowance was made by the AO could be attributed to the facility of commutation offered by the assessee to its employees from home to office and back and hence were exempt under the Exemption Clause under section 115WB(3). In view of above, we are of the view that the Ld. CIT(A) has rightly confirmed the addition to the extent of 25% of such expenses - No infirmity in impugned order - Decided against Revenue.

Summary

Issues:
- Disallowance of expenses under section 115WB(3) of the I.T. Act for the asstt. year 2008-2009.

Analysis:
The Revenue filed an appeal against the order passed by the Ld. Commissioner of Income Tax (Appeals) for the asstt. year 2008-2009. The main contention was regarding the disallowance of expenses under section 115WB(3) of the I.T. Act. The Ld. CIT(A) had held that 75% of the expenses in question were exempt under the Exemption Clause of Section 115WB(3) as they were related to the facility of commutation offered by the assessee to its employees. The Revenue disputed this decision.

During the hearing, the Ld. Counsel for the assessee argued that the expenses were primarily related to car hire facilities for employees during weekends for commuting from home to office and back. The Ld. CIT(A) had carefully considered this argument and found that the expenses were indeed related to the facility of commutation and hence exempt under the law.

Upon reviewing the records and the Ld. CIT(A)'s order, the Tribunal found that the expenses were justified as they were primarily for commuting purposes and fell under the Exemption Clause of Section 115WB(3). The Tribunal agreed with the Ld. CIT(A) that 75% of the expenses were attributable to the commutation facility provided by the assessee to its employees. Therefore, the Tribunal upheld the Ld. CIT(A)'s decision and dismissed the Revenue's appeal.

In conclusion, the Tribunal found no fault in the Ld. CIT(A)'s order and upheld the decision regarding the exemption of 75% of the expenses under Section 115WB(3). The appeal of the Revenue was dismissed, and the order was pronounced on 11.3.2015.