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TMI Blog2014 (4) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee stationed at Dubai would attract FBT. A bald statement conceived out from the details provided by the assessee cannot attract disallowance. To justify the addition on FB, the revenue authorities should have relied on some evidence to justify that a particular employee received a certain benefit. In the instant case, the FBT has been imposed on the assessee for the payments made to employees in Dubai on account of sales promotion. The revenue authorities have not specified anything to prove that the expense was either not for the sales promotion or were actually utilized by the employees. - Disallowance deleted - Decided in favour of assessee. - ITA No.202/Mum/2011 - - - Dated:- 9-4-2014 - P M Jagtap And Vivek Varma, JJ. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of the business, but includes in partial measure, a benefit of personal nature . Section 115WB(1) defines 'fringe benefit' as 'consideration for employment' provided by way of - any privilege, service, - facility or amenity - provided by an employer - to his employees. Further, section 115WB(2) gives a list of expenses under different heads, which shall be deemed to be 'Fringe Benefits' provided by the employer to his employees. It was therefore, evident from the wording of the section that the above tax was payable only in respect of the 18 items of expenses which are incurred to give benefit to the employees and their family members. Only the specified percentage of expenditure incurred by or for the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 29.08.2005 (195 CTR 85-Copy enclosed), which reads, 20. Is FBT payable by an Indian company having employees based both in and outside India on its total (global) expenditure incurred by it for the purposes referred to in clauses (A) to (P) of sub-section (2) of section 115WB? Ans. FBT is payable on the value of fringe benefits provided or deemed to have been provided to employees based in India and determined on a presumptive basis in accordance with the provisions of section 115WC of the Income-tax Act. The value of such fringe benefits is determined, inter alia, as a proportion of the total amount of expenses incurred for some identified purposes. In the case of an Indian company having employees based both in India an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees or where the expenditure does not result in any benefit at all to employees, the deeming fiction under section 115WB(2) is not attracted and consequently, no FBT can be levied on the employer. In the present case, the sales promotion expenses, expenses on conveyance, tour and travel and gifts are incurred in the course of business and are not paid to employees. The said expenditure has arisen as a result of payments made to third parties such as dealers, vendors, service providers, etc. and is not incurred directly or indirectly for the benefit of the employees. In view of the above, these expenditure are not liable for FBT . 7. The same ratio was accepted in another case by the coordinate Bench at Bangalore, in the case of ACI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FBT is payable on the proportion (50 per cent, 20 per cent or 5 per cent, as the case may be) of the total amount of expenses incurred for the purposes referred to in clauses (A) to (P) of sub-section (2) of section II5WB and attributable to the operations in India. If the company maintains separate books of accounts for its Indian and foreign operations, FBT would be payable on the amount of expenses reflected in the books of accounts relating to the Indian operations. If however, no separate accounts are maintained, the amount of expenses attributable to Indian operations would be the proportionate amount of the global expenditure. Further, such proportionate amount shall bee determined by applying to the global expenditure the proportion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sales promotion. The revenue authorities have not specified anything to prove that the expense was either not for the sales promotion or were actually utilized by the employees. In these circumstances, relying on the Circular and the decisions of Toyota Kirloskar Motor Pvt. Ltd. (supra) and Infosys Technologies Ltd. (supra), we are of the opinion that Fringe Benefit provisions are outside the scope for the employees stationed outside India. 12. We, therefore, reverse the findings of the revenue authorities on the impugned issue and direct the AO to delete the disallowance. 13. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 9 th April,2014. - - TaxTMI - TMITax - Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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