2020 (10) TMI 92 - HC - Income Tax

Fringe benefit tax on expenditure incurred towards visa charges and others u/s 115WB(2)(F) 115WB(2)(q) - Whether the expenses incurred towards visa charges and others are not liable for fringe benefit tax as the same was legitimate business expenditure? - HELD THAT - Assessee has incurred expenditure on visa charges. The aforesaid expenditure does not render any benefit to the employees in the guise of foreign travel or tour. The visa s and other related expenditure had been incurred by the employer to send its employees to the work place abroad for the purposes of business for scientific tenures and not to move around the country for sight seeing. Expenditure under the head tours and travels is normally recurring in nature but, in the instant case, the employees of the assessee had not under taken frequent tours and travels. The expenses have been incurred for visa charges to make the employees eligible to undertake an entry to foreign country and stay at the work place in that country. Expenditure has been incurred for business necessity and not for providing any domestic benefit or amenity to the employee. The payment for visa and other charges are statutory obligations and fringe benefit tax cannot be levied - Aforesaid charges have not been paid as consideration for payment and therefore, the same cannot be subjected to levy of fringe benefit tax. The concurrent findings of facts have been recorded by the CIT (Appeals) and Tribunal on the basis of meticulous appreciation of evidence on record, the aforesaid findings cannot be said to be perverse. - Decided in favour of assessee.

Summary

Issues:
1. Whether expenses incurred towards visa charges and others are liable for fringe benefit tax?
2. Whether the appellate authorities were correct in reversing the finding of the Assessing Officer regarding fringe benefit tax on visa charges and others?

Analysis:
1. The appeal pertained to the Assessment year 2006-07, focusing on the legitimacy of expenses incurred towards visa charges and others for fringe benefit tax. The Assessing Officer added an amount towards fringe benefits related to visa charges, which was contested by the assessee. The Commissioner of Income Tax (Appeals) allowed the appeal, stating that the expenses were for business purposes, not providing fringe benefits to employees. The Income Tax Appellate Tribunal upheld this decision, leading to the current appeal.

2. The revenue argued that the expenses should be subject to fringe benefit tax, citing Section 115WB(2) of the Income Tax Act. They emphasized that the Tribunal's finding that visa charges did not benefit employees was incorrect. They relied on relevant case law to support their position.

3. The assessee contended that fringe benefit tax was introduced in 2006 and withdrawn in 2010. They argued that the expenses were for business purposes, not personal benefits to employees. They highlighted the Finance Minister's speech and the rationale behind introducing fringe benefit tax. The assessee also relied on the decisions of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal.

4. The court examined the provisions of Section 115WB, distinguishing between direct fringe benefits and deemed fringe benefits provided by the employer to employees. It noted that the expenses on visa charges were for business purposes, not personal benefits to employees. The court emphasized that the charges were statutory obligations and not for providing domestic benefits to employees. The concurrent findings of the lower authorities were deemed reasonable and not perverse.

5. Ultimately, the court ruled in favor of the assessee, stating that the expenses on visa charges were incurred for business necessity, not for providing domestic benefits to employees. The court found no merit in the revenue's appeal and dismissed it accordingly.