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TMI Blog2015 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. - Tax Appeal No. 549 of 2009 Tax Appeal No. 550 of 2013 Tax Appeal No. 1095 of 2014 Tax Appeal No. 1096 of 2014 Tax Appeal No. 1097 of 2014 Tax Appeal No. 1098 of 2014 Tax Appeal No. 1099 of 2014 Tax Appeal No. 1100 of 2014 Tax Appeal No. 1101 of 2014 - - - Dated:- 5-12-2014 - K. S. Jhaveri And K. J. Thaker,JJ. For the Petitioner : Mrs Mauna M Bhatt, Adv. For the Respondent : Mr B S Soparkar, Adv. JUDGMENT (Per : Honourable Mr. Justice KS Jhaveri) 1. By way of these appeals, the appellant- Revenue has challenged (1) the judgment and order dated 16.11.2012 passed in ITA No. 184/Ahd/2010 for AY 2009-10, (2) ITA No. 609, 611/Ahd/2010 for AY 2009-10, (3) ITA No. 1343/Ahd/2010 for AY 2009-10, (4) ITA No. 185/Ahd/2010 for AY 2009-10, and (5) the judgment and order dated 11.1.2013 passed in ITA Nos. 153/2012 for AY 2007-08, (6) ITA No. 154/2012 for AY 2008-09, (7) ITA No. 156/2012 for AY 2006-07, (8) ITA No. 157/2012 for AY 2007-08, (9) ITA No. 158/2012 for AY 2008- 09, (10) ITA No. 283/2012 for AY 2006-07, (11) ITA No. 284/2012 for AY 2007-08, (12) ITA No. 285/2012 for AY 2008-09, (13) ITA No. 286/2012 for AY 2009-10, (14) ITA No. 329/2012 for AY 2006- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of (NT) allowances was not reflected in Form 16 for the relevant FY i.e. 2007-08. 5.1 The above facts were enquired for the FY 2008-09 as well (as Form 16 was not yet due for this year). But no evidence was produced to justify the non inclusion of these allowances in salary and no reasonable explanation was offered in support of not including the allowances reflected as CMRE and OTHER (NT) in the pay slip of salary income, therefore, the assessee was informed that it has been observed that in your ONGC office the employees are being paid certain allowances in the form of uniform allowances CMRE (Conveyance Maintenance Allowance) and some other allowances which are termed as NT (Non Taxable) and these are not included in the total salary of the employee. And the tax is not deducted on this allowances, therefore, this was enquired at the time of survey verification and also as per order sheet entry dated 25.2.2009 (in the case of ONGC Baroda-Basin Office), vide order sheet dated 23.2.2009 show case dated 24.2.2009 (for ONGC Ankleshwar Asset) and vide order sheet dated 18.2.2009 (for ONGC Baroda Workshop), the employer was asked to explain the following points and to fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was only those allowances, which are specifically excluded from the taxability by Rule 2BB, that are treated as exempt in the hands of the employees. After considering the replies filed by the assessee and the material on record, the assessment order came to be filed. The assessee has challenged the said assessment order by way of appeals before the CIT(A) which came to be partly allowed. Being aggrieved and dissatisfied with the said order of CIT(A), the Revenue preferred appeal before the ITAT which came to be partly allowed, against which, the present Tax Appeals are preferred by the Revenue. 10. Heard the learned advocates appearing for the respective parties and considered the submissions. Learned advocate for the appellant has taken us through the Circular of CBDT being No. 8/2005. Clause 74 of the said Circular reads as under: 74. Whether FBT is payable on expenditure incurred on providing safety shoes or uniforms or equipments to the employees or for the purposes of reimbursement of washing charges ? Ans. Any expenditure incurred for meeting the employers statutory obligations under the Employment Standing Orders Act, 1948, fall within the scope of the excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FBT was payable by the assessee on this expenditure, which was actually paid also, whether there is a liability of the assessee to deduct TDS from this expenditure incurred for the welfare of the employees. In this regard, we feel that provisions of section 17(2)(vi) and section 115 WB 2E with explanation are relevant and the same are reproduced below: 17. (1) (2) (vi) the value of any other fringe benefit or amenity (excluding the fringe benefits chargeable to tax under Chapter XII-H) as may be prescribed; 115WB(1) (2) The fringe benefit purposes, namely:- (E) employees' welfare. [Explanation - For the purposes of this clause, any expenditure incurred or payment made to- (i) fulfill any statutory obligation; or (ii) mitigate occupational hazards; or (iii) provide first is facilities in the hospital or dispensary run by the employer; or (iv) provide creche facility for the children of the employee; or (v) sponsor a sportsmen, being an employee; or (vi) organize sports events for employees, shall not be considered as expenditure for employees' welfare;] 10. From the provisions of section 17(2) (vi), we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly provided by an employer whether by way of reimbursement or otherwise to his employees is covered within the definition of fringe benefit on which FBT is payable. Asper subsection 2 of section 115WB, it is provided that fringe benefit shall be deemed to have been provided by the employer to its employee if the employer has in the course of business incurred any expenditure on or made any payment for various purpose which includes employees' welfare. As per clause-E of this sub-section, it does not come out that it has to be enquired and looked into whether the employee has incurred the amount given to him by the employer for the same purpose for which it was given to the employee. In our considered opinion, for this reason that the employer has paid FBT on a particular expenditure, it is considered as payment of income tax only on deemed income of the employee out of various expenditures incurred by the employer and hence, this is not relevant as to whether the employee has actually incurred those expenditures as intended by the employer. 12. Now, we examine the applicability of CBDT Circular No. 8 of 2005 dated 29.8.2005 (supra). From the relevant question of this Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry clear that on fringe benefit like uniform and washing allowance etc. provided by assessee to its employees otherwise than for a statutory obligation, is liable to FBT and same is not liable to income tax in the hands of the employee because the same cannot be considered as perquisites as per the provisions of section 17(2) (vi) of the Act. Once we come to this conclusion, it is abundantly clear that no TDS is required to be deducted by the employer from such expenditure incurred by the employer for the benefits of the employees. Accordingly, in the present case, we hold that TDS was not required to be deducted by the assessee-company from this expenditure incurred by it on providing uniform, washing charges and washing allowances etc., So this ground of assessee's appeal is allowed. 17. Mr. Soparkar has placed reliance on the decision of the Hon'ble Supreme Court in the case of R B Falcon (A) PTY. Ltd. v. Commissioner of Income-tax, reported in [2008] 301 ITR 309 (SC), more particularly, para-17, which reads as under: Fringe benefit tax is a new concept. The tax to be levied on the fringe benefit provided or deemed to have been provided by an employer to employ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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