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TMI Blog2010 (5) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... vel) have to be read together. In the case before us, items 1, 2 and 3 considered by the CIT(A) are for the purposes of carrying on the business activities of the assessee company by the agencies of the assessee company and it is only item 4, which is spent on the employees for attending the meetings, inspections and other official functions. From the reading of the provisions of section 115WB(2), it is clear that the benefits given to an employee directly or indirectly only would be taxable under Chapter XII-H. As rightly pointed out by the CIT(A), the other expenditure is incurred for agencies other than the employees, who are outside the scope of the provisions of section 115WB(2). Therefore, we do not see any reason to interfere with the order of the CIT(A). In the result, the appeal filed by the revenue is dismissed. - Smt.P. Madhavi Devi, Judicial Member and Shri A. Mohan Alankamony, Accountant Member For the Appellant: Preethi Garg, CIT-III For the Respondent: B.P. Sachin Kumar, CA ORDER P. Madhavi Devi: This is an appeal filed by the revenue against the order of CIT(A), Mangalore dated 16.10.2009. 2. The revenue has raised the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20% of the vehicle hiring charges i.e. ₹ 20,41,161/- to the total value of the fringe benefits returned by the assessee company. 4. Aggrieved by the order of the AO relating to the fringe benefits, the assessee filed an appeal before the CIT(A). 5. The CIT(A), on verifying the company's books of accounts and from the details therein, he observed that the expenditure incurred on hiring of vehicles consisted of amounts paid for vehicles engaged by different divisions and agencies of the company and the purposes for which vehicles were hired were as follows:- i) 24-hour consumer complaint and service stations Rs.31,79,094/- ii) Theft detection vigilance squads Rs.10,29,869/- iii) Consumer meter testing division Rs.26,81,475/- iv) Meetings, inspections and other official functions Rs.33,15,367 Total Rs.1,02,05,805/- After considering provisions of sub-section 2 of section 115WB and the Circular No.8/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accordingly. 8. The learned counsel for the assessee, on the other hand, submitted that the entire amount is for the purpose of running its business and is part and parcel of business expenditure. He further relied upon the order of the CIT(A) to the effect that the expenditure covered by the three items which are deleted, the benefit is not derived by the employees but is by the agencies, who are not covered by the provisions of clause (F) of sub-section 2 of section 115WB of the I T Act. In addition, he also placed reliance on the decision of the Single Member case of this Tribunal in the case of M/s Govardhan Associates in ITA No.1094/Bang/2009 for the asst. year 2007-08 wherein it has been decided that where there are no employees, the expenditure cannot be treated as for the purpose of fringe benefit tax under the provisions of section 115WE(3) of the I T Act. A copy of the said order is placed before us and the same is taken on record. 9. Having heard both the parties and having considered the rival contentions, we find that the Chapter XIIH has been introduced by the Finance Act of 2005 with effect from 1/4/2006. This Chapter contains sections 115WB (A) to (L) whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veyance, tour and travel (including foreign travel) , while the words tour and travel (including foreign travel) were omitted by Finance Act of 2006 w.e.f. 1/4/2007 and has been inserted into clause (Q) w.e.f. 1/4/2007; therefore, in the relevant asst. year, the words conveyance, tour and travel (including foreign travel) have to be read together. To understand the meaning of these words and whether they included any type of expenditure by the employer on conveyance, tour and travels etc. under the provision of fringe benefits, it is necessary to go through the Explanatory Memorandum of the Finance Bill of 2005, which has been reproduced in 273 ITR (St.) 196 and 197, wherein it is explained as under:- That the taxation of perquisites or fringe benefits provided by an employer to his employees, in addition to the cash salary or wages paid, is subject to varying treatment in different countries and these benefits are either taxed in the hands of the employees themselves or the value of such benefits is subject to a 'fringe benefit tax' in the hands of the employer. The rationale for levying a fringe benefit tax on the employer lies in the inherent difficulty in isola ..... X X X X Extracts X X X X X X X X Extracts X X X X
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