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TMI Blog2021 (6) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... ic. Thus restore this issue back to the files of the Assessing Officer who directed to value the fringe benefit of free/concessional tickets as per the valuation of frequent flyer programme as provided by the assessee in its books of account as the same has also been accepted by the Department while making provisions for frequent flyer programme for earning JP mileage, and if there are costs for foreign travels the same should be eliminated from the same, thereafter, the Assessing Officer is also directed to reduce the cost recovered from the employees. Direct the Assessing Officer to verify from the special auditor' s report about the actual figure of the tickets issued.The assessee is directed to furnish the details of the amount recovered from the employees towards the cost/concession/free tickets. The Assessing Officer is directed to reduce the value of the fringe benefit to the extent of the cost of benefit recovered by the assessee from its employees - Ground raised by the Revenue is allowed for statistical purposes. - ITA No.6099/Mum/2019 - - - Dated:- 4-6-2021 - Shri M.Balaganesh, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the provision made in respect of Frequent Flyer Programme (FFP). Before us, the ld. DR vehemently argued that the valuation of fringe benefits in respect of free / concessional air tickets given to employees is to be done by following the valuation method prescribed in CBDT Circular No.8/2005 dated 29/08/2005. He also argued that the Frequent Flyer Programme of every airline operates on different parameters and that the value of FFP of one airline cannot be adopted for other airline. 3.1. Per contra, the ld. AR stated that all the arguments of the ld. DR had already been considered by this Tribunal while rendering the decision of Jet Airways referred to supra. He vehemently argued that the cost of free / concessional tickets provided to employees and their family members being stand by tickets are subject to load / vacancies and hence cannot be compared with cost of tickets issued to the general public which was adopted by the ld. AO for valuation of FBT. He argued that employees and their family members would be provided free / concessional tickets only if there is vacancy of seats in the airline. We find that the issue in dispute with regard to valuation of fringe benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of break-up value wherein it has taken aircraft fuel, CRs charges, food and cabin charges, printing stationery and has arrived value per ticket at ₹ 446.06. 3) J.P. Milage: The valuation method for this purpose adopted by the assessee is net of the concession given to the frequent flyers. 5. However, the submissions made by the assessee did not find favour from the AO who was of the opinion that provisions of Sec. 115WC(1A) squarely applies on the facts of the case and the method of computation of the value of FBT is also provided under the Act and accordingly proceeded to adopt the value of each concessional/free tickets at ₹ 5510/- as worked out by the special auditors and rejecting the No. of tickets as pointed out by the assessee, took the No. of tickets as pointed out by the special auditors and computed the value of taxable fringe benefit at ₹ 136,83,20,340/-. 6. Aggrieved, assessee agitated this matter before the Ld. CIT(A) but without any success. Ld. CIT(A) was convinced that provisions of Sec. 115WC(1A) r.w. CBDT Circular No. 8 dt. 29.8.2005 applied on the facts of the case and held that the AO has correctly computed the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tickets are only stand by tickets subject to load/vacancies which means that the tickets issued to the employees carry lowest priority. 7.2. Pointing out further difference between the two, the Ld. Counsel stated that in case of the flight is delayed or cancelled, passenger from the general public is entitled to hotel accommodation convenience and other facilities whereas the employees are not entitled to such facilities. Further if for some reason, the boarding is denied to the passenger from general public, it is the duty of the airline to provide alternative flight whereas the same facility is not provided to the employees of the company who have been given free/concessional tickets. The Ld. Counsel thus concluded that the cost of the ticket issued to the general public is not at par with the tickets issued to the employees. 7.3. In alternative, the Ld. Counsel suggested that if at all some value has to be allocated towards the cost of the fringe benefit provided by the employer, then the method consistently adopted by the company for making provision in case of the tickets to be issued under the Frequent Flyer Programme (FFP) should be adopted. Thereafter, the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per redemption variable cost per passenger. The computation of the cost of the ticket to be adopted for free/concessional tickets issued under FFP is accepted by the department in earlier years. The ascertaining of the liability is on a scientific basis. In this regard, it is pertinent to note that the Hon'ble ITAT, Mumbai for A.Y.1999-00 to A.Y.2005-06 has accepted the method followed by the assessee and has allowed the claim of the assessee in respect of the provision made on account of FFP. 7.4. The Ld. Counsel concluded that the value taken for A.Y. 2006-07 for the provisions of FFP at ₹ 446.06 is the most reasonable and fair value to be adopted for computing the fringe benefit on tickets provided free/concessional to the employees. 8. Per contra, the Ld. Departmental Representative strongly placed reliance on the orders of the lower authorities. The DR pointed out that the charging section as well as the computation section is absolutely clear and unambiguous in computing the value of fringe benefit and therefore the same should be adopted. 9. We have considered the rival submissions and perused the orders of the lower authorities. We have also cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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