2014 (1) TMI 439 - AT - Income Tax

Payment made for visa charges liable to fringe benefit tax or not u/s 115WB(2)(F) of the Act - Held that - Following Assistant Commissioner of Income Tax, Circle 11(4), Bangalore. Versus M/s. Infosys Technologies Ltd. 2012 (12) TMI 804 - ITAT, BANGALORE - The expenses incurred under the head Visa Charges and Others is a legitimate business expenditure incurred by the assessee - They are statutory in nature and are neither paid to the employees nor incurred for the benefit of the employees of the assessee company - These charges are not incurred or paid as a consideration for employment - the expenses under the head Visa Charges and Others are not liable for FBT are correct, for the above reasons and is in accordance with law - Payment on account of Visa charges and others are legitimate business expenses and cannot be considered as paid to the employees or incurred for the benefit of employees - These payments are not consideration for employment Decided against Revenue.

Summary

Issues:
Appeal against CIT(Appeals) order regarding fringe benefit tax on Visa charges and other expenses.

Analysis:
1. The appeal by the revenue concerns the CIT(Appeals) order for assessment year 2008-09, specifically focusing on the treatment of expenses under the head 'Visa charges and other account' totaling Rs.136.57 crores for fringe benefit tax liability.

2. The revenue argues that these expenses fall under conveyance, tour, and travel, making them liable for fringe benefit tax as per section 115WB(2)(F). However, the CIT(Appeals) directed the AO to delete the addition based on a previous decision for A.Ys. 2006-07 & 2007-08, where it was held that Visa and other charges do not constitute fringe benefits.

3. The Tribunal referred to a similar case involving the assessee for A.Y. 2006-07, where it was established that legitimate business expenditures not benefiting employees are not subject to FBT. The Tribunal emphasized that Visa charges are statutory payments, not intended for employee benefit, and are legitimate business expenses.

4. Citing the decision in the A.Y. 2006-07 case, the Tribunal dismissed the revenue's appeal, affirming that Visa charges and related expenses are not payments made to employees or for their benefit. These expenses do not constitute consideration for employment and are excluded from FBT as legitimate business expenditures.

5. The Tribunal's decision underscores that expenses such as Visa charges, which are necessary for conducting business outside India, do not attract FBT as they do not provide direct benefits to employees. The ruling aligns with the legislative intent to tax collective employee benefits, excluding legitimate business expenditures that do not result in individual employee benefits.