APPEAL FEES IN CASE OF APPEAL ABOUT FRINGE BENEFIT TAX (FBT) is Rs.250 and Rs.500/- for appeal before CIT(A) and ITAT respectively.

[C.A. DEV KUMAR KOTHARI]

 

APPEAL FEES IN CASE OF APPEAL ABOUT FRINGE BENEFIT TAX (FBT) is Rs.250 and Rs.500/- for appeal before CIT(A) and ITAT respectively.

CA Dev Kumar Kothari

 

Fringe benefits are provided by appellant:

Fringe benefit tax was payable at the relevant time by the specified type of employers in relation to fringe benefits provided to employees (and some other persons also). Thus the tax in nature of FBT is not tax on any income received by assessee / employer, and it is not tax on total income of the appellant who file appeal for redressal of grievances in relation to assessment of FBT.

Appeals against assessment of FBT:

The taxpayer / employer who is assessed for the fringe benefits provide can appeal against assessment order of the AO before the CIT(A) and against orders of CIT(A) and CIT before the ITAT. Assessee can also file a revision petition before CIT. There can also be an appeal if the CIT passes an order of revision u/s 263.

Appeal is not on 'total income':

An appeal against order of AO or appellate or revisionary authority in relation to FBT is not an appeal in relation to 'total income' of assessee. Therefore, the provisions relating to determination of fees payable in case of appeal on issues of 'total income of assessee' are not applicable and the case of FBT will be covered by the residuary provision for fees payable for filing of appeal.

Assessment orders:

In relation to 'total income' the Assessing Officer , by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment.- Vide S. 143(3)

Whereas in relation to 'fringe benefits the Assessing Officer, by an order in writing, make an assessment of the value of the fringe benefits paid or payable by the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment.-vide S. 115WE (3).

Therefore, we find that there is clear distinction between assessment of 'total income' of assessee and 'value of fringe benefits' provided by assessee.

Appeal before CIT(A):

The amount of fees payable for appeal before CIT(A) is governed by S. 249(1) which is reproduced below:

249. (1) Every appeal under this Chapter shall be in the prescribed form and shall be verified in the prescribed manner [and shall, in case of an appeal made to the Commissioner (Appeals) on or after the 1st day of October, 1998, irrespective of the date of initiation of the assessment proceedings relating thereto be accompanied by a fee of,-

(i) where the total income of the assessee as computed by the Assessing Officer in the case to which the appeal relates is one hundred thousand rupees or less, two hundred fifty rupees;

(ii) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, five hundred rupees;

(iii) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one thousand rupees;]

[(iv) where the subject matter of an appeal is not covered under clauses (i), (ii) and (iii), two hundred fifty rupees.]

Clearly the appeal in relation to fringe benefits will fall under clause (iii) and therefore fees payable will be Rs.250/-

Appeal before ITAT:

The amount of fees payable for appeal before ITAT is governed by S.253(6) which is reproduced below:

(6) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, in the case of an appeal made, on or after the 1st day of October, 1998, irrespective of the date of initiation of the assessment proceedings relating thereto, be accompanied by a fee of,-

(a) where the total income of the assessee as computed by the Assessing Officer, in the case to which the appeal relates, is one hundred thousand rupees or less, five hundred rupees,

(b) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than one hundred thousand rupees but not more than two hundred thousand rupees, one thousand five hundred rupees,

(c) where the total income of the assessee, computed as aforesaid, in the case to which the appeal relates is more than two hundred thousand rupees, one per cent of the assessed income, subject to a maximum of ten thousand rupees,

[(d) where the subject matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred rupees:]

A bare reading of the above provision clearly shows that clauses (a), (b) and (c) are applicable only when the appeal relates to 'total income'. In all other cases fees fixed is vide clause (d) and it is Rs.500/-. Other cases cover cases of FBT.

Other relevant provisions:

In section 2 (45) the expression 'total income' has been defined as follows:

(45) "total income" means the total amount of income referred to in section 5, computed in the manner laid down in this Act:

In this provision reference has been made to S.5. Therefore section 5 is also reproduced below:

Scope of total income.

5. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which-

(a) is received or is deemed to be received in India in such year by or on behalf of such person: or

(b) accrues or arises or is deemed to accrue or arise to him in India during such year: or

(c) accrues or arises to him outside India during such year:

Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6)* of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India.

(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which-

(a) is received or is deemed to be received in India in such year by or on behalf of such person: or

(b) accrues or arises or is deemed to accrue or arise to him in India during such year.

Explanation 1.- Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.

Explanation 2.- For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.

A conjoint reading of S. 2(45) and S. 5 clearly shows that by no stretch of imagination assessment of 'fringe benefits' can be considered as assessment of 'total income' of assessee. Fringe benefits are not received by assessee but are provided to other persons-mostly employees.

Appeal fees payable:

In view of the above provisions and analysis of the same and reasons given the fees payable for filing an appeal in relation to assessment of FBT will be Rs.250/- and Rs.500/- in case of appeal before CIT(A) and ITAT respectively. This will be irrespective of the amount of fringe benefits assessed by the AO. Applying the same the author has filed appeals before CIT(A) and ITAT paying fees accordingly. Recently Registry office of ITAT has raised an objection in relation to an appeal filed against order of CIT(A) stating that the fees payable will be 1% subject to maximum Rs.10000/- and therefore a short payment has been notified. An explanation will be sent to the Registry office on the following lines.

Draft letter to explain payment of fees for FBT appeal.

FROM FBT assessee Ltd.

To,

The Deputy / Assistant Registrar,

ITAT,….. India.

Dear Sir,

Reg: ITA No. / / 2010- clarification about fees for appeal.

Kindly refer to your letter no. dt. Conveying that fees paid by us is short by Rs.

In this regard we would like to inform you that the appeal is in relation to assessment of Fringe Benefits and not of total income of assessee. In the context of provisions of Income Tax Act, the assessment of income and assessment of fringe benefits are separate and independent proceedings.

It seems that confusion has arisen because learned CIT(A) has mentioned as follows;

5. Income assessed: Rs.1,54,53,271/-.

This appears to be as per that standard form of appeal order used for income tax without necessary modifications for fringe benefits. However, the aspect get clear when we find that at serial no. 7 learned CIT(A) has stated as follows:

7. Section under which the order appealed against was made: U/s 115 WE(2) (it should really be 115WE (3) - there is typing mistake)

This makes it clear that the appeal before the CIT(A) was in relation to Fringe Benefits assessed u/s 115WE and not 'total income' which is assessed u/s 143 or 144.

Provisions of appeal fees for appeal before ITAT:

As per S. 253(6) (d),fees payable is Rs.500/- when the matter concerns any matter not concerning 'total income of assessee'. This fact was clearly mentioned in the form no. 36 filed by us, and the same was accepted while accepting the appeal and issuing notice and fixing the case for hearing on 05.10.2010.

For your ready reference, the sub-section (6) of S.253 is reproduced below XXXXX set out:

A bare reading of the above provision clearly shows that clauses (a),(b) and (c) are applicable only when the appeal relates to 'total income'. In all other cases fees fixed is vide clause (d) and it is Rs.500/-, which we have already paid.

In section 2 (45) the expression 'total income' has been defined as follows:

(46) "total income" means the total amount of income referred to in section 5, computed in the manner laid down in this Act:

In this provision reference has been made to S.5. Therefore section 5 is also reproduced below:

Xxx set out

A conjoint reading of S. 2(45) and S. 5 clearly shows that by no stretch of imagination assessment of 'fringe benefits' can be considered as assessment of 'total income' of assessee. Fringe benefits are not received by assessee but are provided to other persons - mostly employees.

We may also mention that in case of appeal before the CIT(A) also similar view was taken and fees amounting to Rs.250/- was paid as per S/249(1)(iv) and the same was discussed and accepted. Kindly see the form no. 35 in which this aspect has been clarified as follows:

To be enclosed:

1) Challan for appeal fees of Rs.250/- u/s 249(1)(iv).

For your reference S.249(1) is also reproduced below:

XXXX set out

The provisions of S. 249(1) and 253 (6) have similar significance.

In view of the above we submit that fees of Rs.500/- paid by us u/s 253 (6) (d) is correctly determined and paid. There is no short fall in payment of fees. Please reconsider the matter, withdraw the objection and regularize the appeal for final hearing.

Kindly confirm the same so that we can prepare for the appeal and file paper book in due course .

Thanking you

For FBT assessee Ltd.

 

Managing Director.