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TMI Blog2011 (11) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the value of fringe benefit. Decided in favor of assessee for statistical purposes. - IT APPEAL NOS. 63 AND 491 (MUM.) OF 2010 - - - Dated:- 25-11-2011 - J. SUDHAKAR REDDY, V. DURGA RAO, JJ. P.K.B. Menon for the Appellant. S.E. Dastur for the Respondent. ORDER J. Sudhakar Reddy, Accountant Member These cross appeals are directed against the impugned order dated 8th October 2009, passed by the Commissioner (Appeals)-II, Mumbai, for assessment year 2006-07, wherein he has partly allowed the appeal against the order under section 115WE(3) of the Income Tax Act, 1961 (for short "the Act") passed by the Assessing Officer. 2. The assessee is a company and is in the business of life insurance. It filed its fringe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbership 1,03,194 Guest House Expenses 1,67,128 Agents Entertainment Refreshment 6,21,079 Advertisement 38,90,359 2,50,94,714 Total Value of Fringe Benefit 2,88,66,266 3. Aggrieved, the assessee carried the matter before the first appellate authority. The Commissioner (Appeals) granted part relief. On the issue of expenditure incurred on office telephone and conveyance, the Commissioner (Appeals) concluded that the deeming provision does not refer to expenditure which are wholly and necessarily being incurred for business or profession and that it only refers to expenses incurred in the course of his business or profession which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (iii) FBT cannot be levied in respect of expenditure incurred in connection with persons who are not employees of the assessee. He submitted that the additional evidence has to be admitted and the issue is required to be restored to the file of Assessing Officer for verification as to whether any benefit whatsoever resulted to the employees in the light of the company's policy on travelling and mobile telephone. 5. On the issue of conference expenses, he submitted that the Assessing Officer or the Commissioner (Appeals) should have asked for the segregation of expenditure between the employees and non-employees and accordingly, decided the matter. 6. On the issue of club expenses, he submitted that payments were made to Life Insuranc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers; 1318xa. (c) any contribution by the employer to an approved superannuation fund for 1318xb employees;" 10. Sub-section (2) of section 115WB is a deeming provision where certain expenditures incurred by the employee, fringe benefit are deemed to have been provided by the employer to his employee. In our opinion, sub-section (1) of section 115WB which defines "fringe benefit" under Chapter-XII-H, control sub-section (2) and any expenditure incurred by an employer in the course of his business or profession, which is not a consideration for employment, cannot be considered as "fringe benefit". Thus, the deeming provisions of sub-section (2) of section 115WB, applies only when the expenditure is in the nature of considered for emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the employee by reason of his employment as far as expenditure on office telephone is concerned. "13. In the light of the above background I am constrained to conclude, even within the framework of deeming provisions, that: 1. the phrase "consideration for employment" occurring in Subsection 1 of Section 11 5WB has not been superseded by the deeming provision contained in Sub-section 2 of the said section (except where specifically provided as in Clause B of Sub-section 2). 2. a benefit to employees, collective or may be individual, must necessarily be associated or be inherent for the expenditure to be treated as fringe benefit. In the absence of any inherent benefit to employees, even under the deeming provisions, fringe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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