2015 (10) TMI 86 - HC - Income Tax

Fringe Benefits - whether benefit cannot arise when the expenditure is incurred on non-employees ? - Whether ITAT was justified in law in holding that expenses which are specifically mentioned in section 115 WB (2) can be reduced from the valuation of fringe benefit if they have not been incurred for employees without appreciating that the CBDT Circular No.8 of 2005 categorically states that sub section(2) is an extension of sub-section (1) of section 115 JB of the Income Tax Act? - Held that - We find that the impugned order of the Tribunal has followed its decision in respect of the same respondent-assessee for A.Y.2006-07 and 2007-08 in respect of Fringe benefit Tax Returns. We have today by a separate order dismissed the revenue s appeal to the order of the Tribunal We have today by a separate order dismissed the revenue s appeal to the order of the Tribunal. Thus, for the reasons recorded in our order passed today we see no reason to entertain the proposed questions of law.

Summary

Issues:
1. Interpretation of provisions related to Fringe Benefits under the Income Tax Act, 1961.
2. Applicability of CBDT Circular No.8 of 2005 on the valuation of fringe benefits.

Analysis:
1. The appeal was filed against the order of the Income Tax Appellate Tribunal (Tribunal) for A.Y. 2007-08, questioning the Tribunal's decision on the treatment of Fringe Benefits. The main issue raised was whether Fringe Benefits can arise when the expenditure is incurred on non-employees, and if the deeming provisions of section 115WB(2) override the provisions of section 115JB(1) of the Income Tax Act. The High Court noted that a similar issue was decided in a previous case for A.Y. 2006-07 and 2007-08, where the Tribunal's decision was upheld. Consequently, the High Court dismissed the appeal based on the reasoning and decision provided in the previous case, stating that there was no reason to entertain the proposed questions of law.

2. Another issue raised in the appeal was regarding the treatment of expenses specifically mentioned in section 115WB(2) concerning the valuation of fringe benefits. The question was whether these expenses could be reduced from the valuation if they were not incurred for employees, considering the CBDT Circular No.8 of 2005. The High Court, relying on its decision in a previous case for the same respondent-assessee, where the Tribunal's order was upheld, dismissed the appeal without further discussion, citing the reasons recorded in the previous order. The High Court did not find any grounds to entertain the questions of law raised in this case.

In conclusion, the High Court dismissed the appeal under section 260A of the Income Tax Act, 1961, against the Tribunal's order for A.Y. 2007-08 regarding the treatment of Fringe Benefits. The High Court's decision was based on the reasoning and outcome of a previous case involving the same respondent-assessee for A.Y. 2006-07 and 2007-08. The Court found no merit in entertaining the questions of law raised in the appeal and hence dismissed it, with no order as to costs.