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TMI Blog2012 (9) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... 3). Therefore, the AO rightly rejected the rectification petition filed by the assessee, since it is not a mistake apparent from record within the meaning of section 154 as the taxability or otherwise of an ESOP expenditure u/s 115WB(1)(a) is highly debatable issue and such issue cannot be adjudicated in the proceedings u/s 154 and it is beyond the scope of section 154. Therefore, we confirm the order of the CIT (Appeals) – Decided against assessee. - I.T.A. No. 594/Mds/2012 - - - Dated:- 14-6-2012 - Shri Abraham P. George, Shri Challa Nagendra Prasad, JJ. Appellant by : Shri R. Vijayaraghavan, Advocate Respondent by : Shri Anirudh Rai, CIT DR ORDER PER Challa Nagendra Prasad, Judicial Member This is an appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout appreciating the fact that the amendment to section 115WB(1 )(d) are substantive in nature rather than clarificatory in nature and therefore cannot be applied retrospectively. 6. Without prejudice to the above grounds, the learned CIT(A) has erred in law and in facts, in subjecting the expenditure to fringe benefit tax even though the same has been not been allowed as a deductible expenditure in computing the total income of the Appellant. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, before commencement of / or during proceedings before the learned Commissioner of Income-tax (Appeals), as may be necessary. 3. The brief facts of the case are that the assessee filed its retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 115WE(3) of the Act. The Commissioner of Income Tax (Appeals) held that once the Assessing Officer has taken a conscious decision, the same cannot be treated as mistake apparent from record within the meaning of section 154 of the Act and therefore, the Assessing Officer rightly rejected the petition of the assessee under section 154 of the Act as there is no mistake apparent from record. 6. Against this order of the Commissioner of Income Tax (Appeals), the assessee came up in appeal before us. The counsel for the assessee submitted that the Commissioner of Income Tax (Appeals) is not justified in confirming the action of the Assessing Officer in bringing the ESOP expenditure to fringe benefit tax for the assessment year 2007-08 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5WB(1)(a) stating as under: 2. On verification of the Audit Report in Form 3CD, the statutory auditors M/s. Price Water House, Chartered Accountants, Chennai had described in Schedule 5, the nature of payments made to persons specified u/s. 40A(2)(b). It elaborates that an amount of Rs. 7,41,51,630/- has been paid to its holding company M/s. Caterpillar Inc. in respect of the shares of M/s. Caterpillar Inc. allotted free of cost to the Director and employees who are presently on deputation with the assessee company. The value of any benefit provided by the employer to its employees by way of allotment of shares, debentures, or warrants directly or indirectly under any Employees Stock Option Plan or Scheme of the company is a fringe benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Benefit: Rs. Fringe Benefit returned 18,489,642 Add: Privilege provided free of cost falling under the purview of section 115WB(1)(a) 74,151,630 Taxable Fringe Benefit Assessed 92,641,272 9. The assessee did not prefer any appeal before the Commissioner of Income Tax (Appeals) against the above addition made by the Assessing Officer while computing the fringe benefits. The assessee filed a rectification petition dated 18.01.2010 under section 154 read with section 115WE(3) of the Act to delete the addition made in the assessment order passed while computing fringe benefits by rectifying the same under section 154 of the Act. The assessee contended that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see preferred second appeal before us. 11. In our view, what the assessee wanted the Assessing Officer was to rectify the assessment order passed under section 115WE(3) deleting the addition made towards ESOP expenditure under section 115WB(1)(a) which, in our view, is not permissible since it is highly debatable issue. The Assessing Officer has taken a conscious decision to bring the ESOP expenditure to fringe benefits tax while computing taxable fringe benefits while passing the assessment order under section 115WE(3) of the Act. Therefore, the Assessing Officer rightly rejected the rectification petition filed by the assessee, since it is not a mistake apparent from record within the meaning of section 154 as the taxability or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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